In the case of Saville-Edells & Saville-Edells v Jan (2021), heard at the Central London County Court on 15 December 2021, the Court considered the amount of rent and interim rent payable by tenants of a shop in Kensington, London, who was in the process of renewing their lease under the Landlord & Tenant Act 1954 (‘the 1954 Act’).
Valuers representing the Landlord sought to demonstrate that there was no ongoing weakness in rents and also made the point that the effect of the pandemic on rents was different depending on the location of the premises; for example, premises that previously benefited from a strong commuter presence may well have done very badly whereas a unit used for distribution of goods would have done very well. Further, people have tended to shop more locally rather than going to shopping destinations and this would favour the retailers in Kensington Church Street (where the Tenants are based). However, the Judge considered that this argument was not sufficiently strong to dissuade him from the intuitive, view that the pandemic has had a depressive effect on rents.
Whilst the Judge accepted that different areas may well be affected differently by the pandemic, the Judge agreed with the Tenants’ Valuer that there must still be considerable uncertainty amongst retailers and prospective retailers as to what the future holds for them.
Accordingly, the Court ordered a lower rent than argued for by the Landlord’s Valuer.
The case arose because the Tenants’ lease had expired. However, as the lease was not ‘contracted-out’ of the security of tenure provisions within sections 24-24 of the 1954 Act, the Tenants were claiming a new lease under those provisions pursuant to their statutory right.
The Landlord and Tenants had actually agreed all the terms for a renewal lease except:
(a) as to the annual rent to be payable under the new lease;
(b) whether an interim rent should be assessed at a different level to the new lease rent; and
(c) whether new rights of access linked to compliance with EPC regulations should be included in the new lease for the Landlord.
The Court’s decision
The Court decided the new rent should be £28,350pa, rather than the £45,000pa argued for by the Landlord.
However, the interim rent (payable for the period from the expiry of the old tenancy until the Court hearing) was set at £30,550pa, as it covered a period from before the onset of the pandemic when market conditions were more certain and rents slightly greater.
As regards new rights of access, these were denied to the Landlord. The Court considered the new rights as unnecessary for the protection of the Landlord’s position and felt that the existing right of access would be sufficient for access for EPC-related purposes.
This recent case serves as interesting authority to landlords and tenants alike who are currently, or considering, engaging in the 1954 Act lease renewal process where an interim rent is payable for the time prior to the onset of the pandemic.
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