Statutory compensation when renewal is refused on ground (f) only (LTA 1954, s.37)
Nadia Rahman has run her bookshop in York from the same premises since 2009, first under a 2009 lease and then under a renewal lease granted in 2019, which is not contracted out. Her landlord served a s.25 notice opposing a new tenancy on grounds (b) (persistent delay in paying rent) and (f) (intention to demolish or reconstruct). Nadia applied to court for a new tenancy. The court rejected ground (b), finding the rent arrears trivial, but upheld ground (f) and refused a new tenancy. The rateable value of the holding is £36,000. Assume the appropriate multiplier is 1 and the lease does not exclude compensation.
What compensation, if any, is Nadia entitled to on quitting the holding?
Choose one answer to see the reasoning.
Worked answer
Correct answer C: £72,000, twice the rateable value, because she occupied for business for the whole 14 years before termination and renewal was refused on a compensation ground only.
THE RULE TO REMEMBER
Where renewal is refused solely on grounds (e), (f) or (g), the tenant receives the rateable value (times the multiplier), doubled after 14 years' business occupation.
Statutory compensation when renewal is refused on ground (f) only (LTA 1954, s.37)
Section 37(1A) of the Landlord and Tenant Act 1954 gives the tenant compensation on quitting where the court is precluded from ordering a new tenancy by reason of any of grounds (e), (f) or (g) (the compensation grounds) and not of any other ground. The test looks at the ground on which the court actually refused renewal, not every ground in the notice. Ground (b) failed, so the refusal rests on ground (f) alone, and compensation is payable. Under s.37(2) the amount is the appropriate multiplier times the rateable value, doubled where the s.37(3) conditions are met: business occupation of the premises for the whole of the 14 years immediately preceding termination. Nadia has traded there since 2009, so by termination she will have more than 14 years' occupation. Compensation is 1 × £36,000 × 2 = £72,000.
Why A is wrong: Under s.37(1A) what matters is that the court refused renewal on a compensation ground and not on any other; ground (b) failed.
Why B is wrong: Single compensation applies only if the 14-year business occupation condition in s.37(3) is not met.
Why D is wrong: Compensation is available for any of grounds (e), (f) and (g), not only ground (g).
Why E is wrong: The maximum is twice the rateable value (times the multiplier); there is no higher multiple for longer occupation.
A little more practice done.
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