A recent unopposed lease renewal decision has reinforced the principle that the Court will not grant a landlord a break right in a lease renewal, unless the landlord is able to evidence that its future plans for the premises (e.g. redeveloping the premises, or occupying the premises for its own business needs) are “sufficiently on the cards”.

In BMW (UK) Limited v K Group Holdings Limited (link to the decision below) the Court was asked to determine, amongst other things, whether the landlord of the premises (the BMW dealership at Aldford House on Park Lane) should have the benefit of a break right permitting it to terminate the lease on 6 months’ notice (exercisable at any time between the second and fifth anniversaries of the lease), on the basis that the landlord purportedly intended to occupy part of the premises for the purposes of its own car-related business.

In making its decision, the Court had to decide whether the landlord’s plans were “sufficiently on the cards”, “genuine and workable”, and such that they amount to “a possibility of a bona fide decision to operate a break clause if one be granted”, and to balance the landlord’s plans against the effect they would have on the tenant. However, the Court held that the landlord’s evidence supporting its intention was “so vague and unsupported by anything other than his say-so…that it does not satisfy [the] evidential test”, and that “there was an element of tactics about the proposed break clause, which was a reaction to BMW’s proposed rent being perceived as far too low”. Accordingly, the shortcomings in the landlord’s evidence did not outweigh “the dramatic effect the break clause would have on BMW”.

This decision serves as a reminder to landlords that when seeking a break in a lease renewal (or indeed, when seeking to oppose renewal on the basis of ground (f) or ground (g)), it is important to compile as much evidence as possible to support the landlord’s intention (and to get one’s ducks in a row as early as possible, when doing so).

With special thanks to Stephen Jourdan KC of Falcon Chambers for sharing this useful decision. The decision, together with Stephen's fuller summary, can be found here.