Tip of the Week: Compensation Avoidance Strategies - DAC Beachcroft

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Tip of the Week: Compensation Avoidance Strategies

Published On: 1 March 2016

Although it restricts flexibility of an estate (and, for NHS Bodies, is contrary to the guidance in paragraph 6.16 of Health Building Note 00-08 (Part B)) it is not uncommon for healthcare providers to find themselves with tenants who are protected under the Landlord and Tenant Act 1954. One of the ways of dealing with this problem is to oppose the tenant's statutory right to a lease renewal.

When doing so, you should exercise caution when relying solely on grounds (e), (f) or (g) of s30 of the Landlord and Tenant Act 1954 (being, respectively, (e) the chance to grant a letting of the whole (where the current tenancy was of part), (f) re-development requiring vacant possession, and (g) occupation and use by the landlord). In these circumstances, your tenant will be automatically entitled to statutory compensation on quitting the property (calculated at the rateable value of the property but doubled if the tenant and any predecessor in business have been in occupation of the property for 14 years or more).

However, if one of the 'fault' grounds is relied upon, such as (b) (persistent non-payment of rent), the tenant is only entitled to compensation if it proves at trial that you were only successful on the grounds of (e), (f) or (g) to the exclusion of any other grounds. Therefore it can pay to consider which of the other grounds you can also rely on. You might stop an automatic pay-out.

For more information please contact: 

Anne Batanero, Partner
T: +44(0)117 918 2037
E: abatanero@dacbeachcroft.com

Sakis Tombolis, Partner
T: +44(0)20 7894 6682
E: stombolis@dacbeachcroft.com

Nicola Fairbairn, Associate
T: +44(0)191 404 4019
E: nfairbairn@dacbeachcroft.com