New lease denied to a late paying business tenant
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- New lease denied to a late paying business tenant
- Acting in good faith?
- New interest in project bank accounts?
A tenant recently received a nasty shock when he was denied a new lease because he had been persistently late in paying his rent under the old lease.
In the recent case of Aksu v Enfield LBC, the tenant acknowledged that his payment record had been "lamentable", but argued that this should not prevent the renewal of his lease. The landlord opposed the grant of a new lease under s.30(1)(b) of the Landlord and Tenant Act 1954, because of the persistent late rental payments. By way of compromise, the tenant offered a guarantor and a rent deposit.
The Court of Appeal considered whether the tenant had provided very good grounds to explain all the past delays in payment. He had not. Then the Court looked at whether the tenant had provided very good grounds for assuring the Court that the delays would never recur. There was, however, no evidence produced that the tenant would be any more reliable in paying rent in the future.
The Court held that the offer of a guarantor or a rent deposit was no answer to the short-comings of the tenant – these matters went not to the reliability of the tenant, but to the landlord's remedies if there was a default. The upshot was that the tenant could not have a new lease.
Although cases on s.30(1)(b) of the 1954 Act are rare, landlords should be relieved that the Court took such a practical approach. Landlords do not want to have to enforce security, when in fact they should be entitled to expect to receive prompt rent payments direct from the tenant.
From the tenant's perspective, if a tenant is having trouble paying his rent on time, he should engage with the landlord to explain the reason for the delays, when payment can be expected and to seek to agree a payment plan.