Section 25 notices & partial re-development (Part 1: Vacant Possession)

When the contractual term of a protected business tenancy comes to an end, the landlord might wish to either end or renew the lease by serving a section 25 notice on the tenant in accordance with the Landlord & Tenant Act 1954.

This two-part blog examines some issues that might arise when serving a section 25 notice for a new lease where the landlord wishes to re-develop part of the property.  For a more general overview, see our Practice Note Bringing a business lease to an end and associated precedents, and also our overview on Redevelopment.

Scenario

Imagine a scenario where a tenant occupies the ground and first floors under a lease, with the first floor being let to a sub-tenant on an assured shorthold tenancy (AST).  The landlord serves a section 25 notice with a proposal for a new lease.  However, due to the proposed re-development of the building, the new lease includes the ground floor only.

Must the tenant provide vacant possession?

A key issue where redevelopment is involved is ensuring vacant possession and - in this particular situation - a question arises: 'Is the tenant required to provide vacant possession of the sub-let first floor?'

The answer will d