The Code and the 1954 Act in Lease Renewals

First Decision on the Interaction between the Code and the 1954 Act in Lease Renewals. David McCann of Hanover Law was solicitor on record in the reported Judgment in Vodafone Limited v Hanover Capital Limited [2020] EWMisc 13 (CC).

This case dealt with:

1. Term length; and
2. How rents of renewal of electronic communications site tenancies under the Landlord and Tenant Act 1954 fall to be valued on renewal under Section 34.

This was the first known decision on these important issues following the Upper Tribunal’s decision in Ashlock that a renewal of such a subsisting Agreement must be via the 1954 Act Lease renewal process and not pursuant to Part 5 of the Code.

Hanover Law instructed as Counsel Kester Lees and Fern Schofield.

The Circumstances

David acted for the owner and landlord of a site in Stockport, Manchester.  There was a Lease in existence under the Schedule 2 of the Digital Economy Act 2017.  It fell to be renewed under Part 2 of the 1954 Act.  The unopposed proceedings were commenced in the Manchester County Court but, due to the importance, were transferred to the Upper Tribunal.

The Key Issues Determined by the Court

1. Section 35 requires a counter-factual assumption to be made, namely that the subject site has been advertised and marketed.
2. The existence of the Code and the willing tenant’s potential rights under it should be taken into account in that hypothetical negotiation.
3. In respect of the treatment of the ‘new Code’ comparables:-
   1. Professional costs ought to be annualised and would be included in the comparable;
   2. Payments referrable to inducements fell to be disregarded due to the willing landlord hypotheses.

Conclusions

This reported case very much swung the pendulum in favour of landlords in dealing with Lease renewals under the Code.

Telecommunication tenants do in the main take a very robust stance in negotiations on the basis that it is not often proportionate for landlords to fight uncontested Lease renewals to ensure the best terms. This is a case, therefore, that should assist landlords up and down the country dealing with Lease renewals of this type.

If it is that you wish to discuss this case further or need assistance in a Lease renewal then please contact David McCann.