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propertylawyer, Solicitor
Category: Property Law
Satisfied Customers: 288
Experience:  Property solicitor with expertise in commercial and residential property transactions.
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I have a commercial tenant whom i have served a section 25

Customer Question

I have a commercial tenant whom i have served a section 25 on the grounds that i have received planning permission to convert the premises to residential.
The tenant has has occupied these [1st flr] premises for approx. 10 years. previous to this, he was my tenant on a different floor [grnd flr] in the same building for about 4 years. The tenant has no lease. How much compensation is the tenant entitled to?
Submitted: 1 year ago.
Category: Property Law
Expert:  propertylawyer replied 1 year ago.

I can check and confirm.

How much is the current rent and rateable value?

The tenant can challenge a section 25, particularly on this ground. What other things have you done in respect of the potential conversion?

Customer: replied 1 year ago.
I believe the rateable value is appr £ 2500pa
I have the architect's plans for the work. a construction firm who have priced the job and are ready to carry out the works.
Could you explain to me on what grounds you think the tenant can challenge the section 25?
Expert:  propertylawyer replied 1 year ago.

Compensation is calculated by applying a multiplier to the rateable value of the property. The compensation will be doubled if the tenant and any predecessor have been in occupation of the property for the purpose of the same business for 14 years or more.

Therefore, calculations for the compensation are asfollows:

  • For less than 14 years occupation: the rateable value of the property x the appropriate multiplier x 1.

  • For 14 years or more: the rateable value of the property x the appropriate multiplier x 2.

Rateable value

The rateable value of the property is established by reference to the valuation list that is in force on the date of service of the notice under section 25 of the LTA 1954.

Surveyors can assist in establishing the rateable value.

Expert:  propertylawyer replied 1 year ago.

The tenant is entitled to receive the compensation on "quitting" the property. Therefore, payment should take place when the tenant gives vacant possession and not at the point where an agreement on the level of compensation is reached.

Expert:  propertylawyer replied 1 year ago.

You ate relying on ground f. To rely on Ground (f), the landlord must do more than merely state that it will demolish or reconstruct the premises. The intention must have moved "out of the zone of contemplation" and into "the valley ofdecision".

The landlord must show both :

  • A firm and settled intention.

  • A reasonable prospect of achieving that intention.

The development the landlord intends to carry out does not need to be set in stone, with all matters such as planning permission and building contracts completed. However, the landlord must:

  • Have a fixed intention to proceed.

  • Have contemplated the issues that it will have to resolve.

  • Show there are not too many hurdles to overcome.

The more advanced the landlord's redevelopment plan is, the better the landlord's position.

Firm and settled intention

To evidence its intention to demolish, reconstruct or carry out works to the premises, the landlord should consider and take steps to obtain:

  • Board minutes documenting its intention, if it is a company.

  • Planning permission for the development.

  • Plans and drawings for the development.

  • Consents from third parties and rights to light issues that may impact the development.

  • A building contract.

  • Financing.

  • Vacant possession of any other part of the development site.

  • A business plan for future use.

This is not a definitive list. However, it is importantfor the landlord to show the court it has seriously considered the development and the above elements will assist the discharge of the evidential burden ofdoing so.

If you cannot establish the above criteria then the tenant could successfully oppose your s.25 notice.

Any questions or queries?

Happy to assist further with any queries regarding my answer.

Please can I kindly request that you accept /positive rate my reply otherwise the website will not pay me for assisting you. Many thanks.

Expert:  propertylawyer replied 1 year ago.


Just wondering if you have any questions or queries in relation to my reply.

I am happy to assist further.

Please can I kindly remind you to accept my answer. the website works on the customer accepting the answer. If you do not accept the website will not pay me for the time spent researching and answering you question. Many thanks.

Expert:  propertylawyer replied 1 year ago.

Please can you accept my answer. I spent time researching and responding to your query. You now know how much compensation is due. In additional I have made you aware of what you need to establish to avoid the tenant challenging your ground F s.25 notice. Thanks.