What should a landlord do where it misses the deadline to serve a counter-notice under the Landlord and Tenant Act 1954 to oppose the grant of a new lease on redevelopment grounds (or subsequently the landlord has development aspirations)?

The answer is to seek a landlord redevelopment break in the new lease. When a break will be exercisable from will always depend on the specific facts of the case, but in the recent judgment of B & M Retail Limited v HSBC Bank Pension Trust (UK) Limited a landlord obtained an immediate redevelopment break option subject to 6 months’ prior notice.

The landlord had entered into an agreement for lease with Aldi (conditional on planning and vacant possession being obtained by February 2025) who would undertake redevelopment works on the landlord’s behalf . The landlord’s evidence persuaded the Court there was a real possibility of obtaining planning permission and carrying out redevelopment during the term of the new lease.

The judgment makes clear that the policy of the Act is not to protect a tenant’s security of tenant at the expense of redevelopment. While consideration can be given to a tenant’s circumstances the Judge made clear that “the Court will only look to upset redevelopment ambitions if there is a major factor pointing the other way”.  A landlord’s desire to redevelop can and often will trump the detriment to a tenant.

Despite a lack of suitable alternative premises for the tenant to move to in the area, the following were particularly helpful to the landlord obtaining an immediate break option:

  • The development would create jobs (possibly more than the tenant’s business did);
  • The tenant had been on notice of the landlord’s intentions for two years but didn’t adduce evidence of what steps it had taken to seek alternative premises;
  • Unfairness to the landlord. The rental value of the redeveloped property would be substantially higher than the renewal rent and without development there would be a potential loss of value to the landlord’s interest; and
  • The long-stop date in the agreement for lease placing a tight timetable on the landlord.

A tenant is not as a matter of course entitled to a reasonable period in a new lease before a break option can be utilised. It appears that in a situation involving a well-resourced tenant with a large property portfolio, a landlord with a firm proposal to redevelop will have a strong argument for an immediate break right (subject to the usual statutory minimum notice period of 6 months). Particularly if it can evidence substantial detriment from a delay.