Why lease renewals shouldn’t be left to the last minute

Property litigation lawyer, Hayley Bamber, examines a case which considered the implications of seeking to amend a lease renewal claim after the expiry of the statutory s26 notice period provided under the Landlord and Tenant Act 1954 (“1954 Act”).

What is the case about?

In Pembury Estates & Lettings Ltd v Panzer Properties Ltd and Ors, the tenant commenced proceedings under the 1954 Act for the renewal of a lease created by deed in 2002.

The claim was issued only a few days before the expiry of the tenant’s s26 notice at which point the tenant’s statutory right under the 1954 Act to renew its lease would have ceased and the tenant would have had no security of tenure to remain at the property. The claim was therefore issued at the very last minute to protect the tenant’s property rights.

The landlord, who was the defendant in the case, opposed the claim for a new lease on the basis that the 2002 lease had been excluded from the provisions of the 1954 Act and therefore the tenant had no statutory right to a new lease at all.

The tenant then filed an amended claim arguing that its statutory right to a new lease arose in respect of an express oral or implied monthly periodic tenancy that was granted in 2005 not the 2002 lease.

This amendment was filed without seeking or obtaining permission to do so. The landlord therefore applied to strike out the amendment and for summary judgment on the original claim.

At the hearing of the defendant’s application, the tenant made an oral application for permission to rely on the amended claim.

The landlord opposed the application, arguing it had been made 10 months after the expiry of the statutory period provided for under s26 of the 1954 Act and therefore the stringent test contained in the Civil Procedure Rules (CPRs) must be met to amend the claim.

What did the court decide?

The court found in favour of the landlord that the statutory notice period under the 1954 Act was a relevant time limit for the purposes of limitation and it therefore could not entertain an application to amend a claim for a new lease under the 1954 Act if the application was made after the expiry of that notice period. The claimant’s permission to amend its case was refused and the original claim was struck out.

What does this mean for landlords and tenants?

Frequently a tenant will issue lease renewal proceedings under the 1954 Act shortly before the date in the notice, often to protect their position. However, this case demonstrates that it’s crucial in those circumstances to ensure those proceedings have been properly drafted because it will not be possible to revisit them later if errors of law or fact are subsequently identified.

The tenancy will have determined immediately before the date in the notice and if the un-amended claim is unsustainable, and original lease expired, there will be no continuation under the provisions of the Act, and they will have a substantial costs liability.

The onus is very much on the tenant not to wait to the last minute before issuing lease renewal proceedings. Even if negotiations are going well there is no guarantee that new terms will be agreed.

This means steps should be taken to protect any rights that have arisen under the 1954 Act so that there is plenty of time to correct any errors or to amend the claim before the expiry of any notice.

For more information on the law surrounding lease renewals, or any other landlord and tenant issues, contact Hayley Bamber on 01772 258321.