Section 25 notice received.

[markwatles]

We purchased a hairdressing business 3 years ago from my wifes then boss (she has worked there 30 years, hairdressers established for 58 years). The lease was assigned over, but unfortunately the landlord died a few months later. His family then offered the premises to ourselves but as the property requires extensive work we decided not to buy.

Since then the property has been sold. Our lease expired in Sept 2005 but we have been holding over on existing terms.

Our new landlord has offered a new 6 year lease outside the L&T act (no right of renewal), full repairing, insurance, service charge etc. As we have taken out a 15 year loan (secured against our dwelling) to buy the business, these terms are unacceptable. We have also offered to give up the 1st floor of the premises as he wants to develop that area, but as we will not accept these terms he has now served a section 25 notice to develop the ground floor (our salon). He obtained planning permission earlier this year for both developments for which we received no notification from the council or him.

As he had offered us a lease (though unacceptable) how can he now say he intended to develop the ground floor? We have also offered to let him carry on these ground floor developments even if we have to cease trading for a while. Losing this business will also put 4 people out of work.

Any comments please.

[yeahbutno]

If your original lease was L&T protected, then my initial reaction is that your LL is trying it on in a big way, however, I'm not an expert on the rules regarding the non-renewal of a lease on the grounds of development. I suggest you need to employ the services of a surveyor with experience in this area as a matter of urgency.

[markwatles]

Cheers. I have consulted a solicitor and am awaiting outcome. Just wanted to know if any of you knowledgeable people had come across this before.

[Editor]

You need to respond before the Section 25 Notice expires to protect your own interests. Hopefully your solicitor is conversant with commercial property matters or he can bring in a chartered surveyor that is.
You don't say if your original lease was inside the Act or FRI, if so there could be a question with repairing obligations, but generally speaking the landlord could not impose dramatically different or less favourable terms than the original lease.
I presume the original offer was an informal one and not served as a formal notice, so the opposing Section 25 now severed in effect overrides this.
With planning permission, if the landlord puts together a good case for re-developement, he may well succeed.
If you decide to oppose you would need your professional help in court which would obviously run-up costs.
You need good professional advisors to say at an early stage the chances of your success given all the facts at their disposal so you can make an informed decision and not run-up unnecessary expense on a futile mission.

[markwatles]

Thanks for the advice. To fill out a bit more detail the original lease was within the L&T act and was internal repairing obligation only (decor etc). The actual shop has been partitioned and roughly a quarter of the floor space has its own separate entrance. This has always been let as a separate entity with its own lease but is now vacant.

As it does not have its own toilet facilities it is pretty much a dead duck regarding any future rental purposes, (we have, as a gesture of goodwill, allowed previous occupiers the use of our toilet facilities). Again we have tried to be accomodating and have offered to take this unit on ourselves and given the LL the opportunity to either leave it as a stand alone unit and take it on with our lease, or indeed let him develop the area and amalgamate it into our salon area. We are prepared to let him develop as long as we remain in situ.

We have had the property valued for rental purposes and been given a figure of £8700 (with this additional unit), this is a realistic valuation for the area. The LL has his own ideas and has put a figure of between £10500 & £12500 for the same area. Considering we are at present paying £5400 for the ground floor (excluding the small unit) AND the whole of the first floor (which we are prepared to release, for his own development purposes) his figures seem way over the top.

As he was prepared to offer a new lease to ourselves (and also applied for planning to convert the small unit to a taxi office) surely this would mean his intention was not to develop the ground floor at all. It would appear his sole intention is to get our old lease off us and impose his new draconion one.

This can to some extent be proved, as in previous corres. from his solicitors they have stated 'unless we accept the terms of his lease they will take hostile action under paragraph (f) section 25 of the L&T'

I am amazed that in these times such blatant intimidatory actions can be used. To compound the matter even further the LL entered our premises last week, and, in front of customers & staff declared he would have us evicted in Sept 2007. (this being the date in section 2 of the notice we have just received). My wife was considerably upset by his actions, and our solicitor has written to his side to stop him from repeating this threatening behavior.

At this point can I inform you that my wife had worked in the salon for 27 years prior to us aquiring the business 3 years ago.

As we have a loan for the business secured against our dwelling we have no option but to fight this in court (losing would mean the loss of our house as we would not have an income to pay off this loan, this still has 12 years left to run and was only taken out because we had security of tenure).

As previously stated we have no option but to fight his actions. My wife plus three others would lose their liveliehood. My reasons for entering this forum are a). to get some idea of chances of winning and b). investigate any compensation issues if he achieves his ambitions. Regards.

[jeffrey]

On 5th para., there's no such thing as "paragraph (f) section 25".

Perhaps they meant ground (f) in section 30(1)- oppostion to new tenancy when L intends to demolish/reconstruct.

Tell them that they made a mistake (always fun).

[markwatles]

Apologies, my mistake!

[daveyjp]

Your landlord is trying it on and not very well. Under the new procedure his new terms should have been served with a s25 notice. Serving new terms without a s25 then threatening you with a s25 opposing a new tenancy should you not like what he is offering would be frowned upon and goes against how negotiations for leases should be carried out.

You should be aware that if the landlord wants you out so he could get a better return from his taxi operator who would use the whole of the property this is a valid opposition for a new tenancy under Ground 'e'.

[markwatles]

Thanks for your reply. The rental on the property is not a major concern to ourselves as we are quite prepared to pay the market rent for the area we occupy.

[markwatles]

Further to the previous postings, we have now received a letter from the LL solicitors informing us that the LL intends 'extensive redevelopment' of the property, they have also advised that we are no longer able to serve a section 26 notice to negotiate a new lease. Is this correct?

As the shop is basically a small hairdressing salon I do not understand what is meant by 'extensive redevelopment' as the planning permission granted is to remove a non supporting wall from an annexed area of the shop & return it to its original size. We have informed the LL that we are willing to allow this development and would close the business for a period of time to enable him to carry this work out.

We have a meeting with counsel in early June to discuss this matter, but I wondered if anybody has any comments on this matter.

Regards.

[jeffrey]

1. No s.26 Notice is necessary, as L served Notice under s.25.
2. So you do have presumptive right to new lease on terms to be agreed.
3. I previously commented on s.30(1)(f)- L's ground to oppose new lease on intention to demolish or reconstruct. If this ground was cited in s.25 Notice, it is for L to apply under s.29(2) to end your lease. Even if L wins, he still has to pay statutory compensation under s.37.

[markwatles]

A further development has now occurred. The lease we have commenced in Sept 2000 until Sept 2005 For the sum of 5476.00 per annum. There was provision for a rental increase in Sept 2003.

The old LL did not always increase the rent on these review dates according to the previous leaseholder.

We were assigned the lease in Jan 2004 for the sum of 5476.00. This was 4 months after the provision for a rent review, so I can only presume the old LL did not wish to increase the rent at that time.

The old LL then died and the property sold in Jan 2006, we have continued to pay this rate to th new LL and are holding over under the terms of the old lease with all the before stated problems.

We have now received a proposed rental increase from the new LL set at 9000.00 per annum, this he states is due from Sept 2003!

Surely this cannot be the case.

Again your advice would be much appreciated.

[jeffrey]

Answer will depend on wording of Rent Review clause- esp. whether "time is of the essence"- it usually isn't, so a late review might be valid, but the precise wording may be significant.