New Lease Denied for Tenant Who Breached Terms

When an unsatisfactory tenant applied to extend the lease on the shop and house premises she rented, the landlord wished to terminate it instead and seek a new tenant.

The landlord opposed the renewal of the tenancy on the grounds that:

  • the tenant had not complied with her obligations to keep the property in good repair;
  • the tenant had persistently been slightly late in paying the rent due; and
  • the tenant had substantially breached her obligations under the lease in connection with the use of the property and its management – in particular, thwarting the landlord in attempting to gain access to the premises.

Surprisingly, the case was argued all the way to the Court of Appeal.

The Court addressed each issue in turn.

Firstly, was the state of repair of the property as a result of the tenant's breach such that the proper interests of the landlord would be prejudiced by the granting of a new lease?

Secondly, were persistent but minor delays in paying the rent sufficient cause to justify the landlord's objection to a renewal of the lease?

Thirdly, were the breaches of a nature and importance to conclude that the granting of a new lease would prejudice the proper interests of the landlord?

The Court concluded that the late payment of rent did not constitute good grounds for refusing to renew the lease, but the other two issues did. In particular, the Court made the point that it was not necessary for the tenant's breaches to have affected the rental value of the property or the value of the freehold reversion.

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