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The conflicting rights between landlords and tenants
April 2016 was a defining month for the conflicting rights between landlords and their tenants. The High Court passed judgement in the case of Timothy Taylor Ltd v Mayfair House Corporation in which the defendant landlord was held to be acting entirely unreasonably when carrying out building works to the property without the full involvement of the existing tenant.
What happened in Timothy Taylor?
A high class modern art gallery, Timothy Taylor is located in the basement and ground floor of Mayfair House, adjacent to the renowned 5* Connaught hotel in London's famous district of Mayfair. In 2013, the landlord of the property embarked on a series of works to completely redesign the upper 4 floors of the 5 story building to create a number of new high class lettable apartments.
Throughout the building work, the existing tenants were not consulted or involved in the work, which led to excessive noise being omitted from the building site, and resulted in staff illness and a loss of custom. In addition to this, scaffolding fully encompassed the building and the façade of the gallery.
The judgement considered the lack of benefit from the works for the tenant and the conduct of the landlord throughout the process, and held that the actions of the landlord were entirely unreasonable in the circumstances and damages were awarded to the tenant.
What does this mean for landlords?
The case emphasises that landlords must ensure they act reasonably to ensure they do not breach the covenant for quiet enjoyment with their existing tenants. The level of reasonableness depends on a few defining factors:
- Is the work carried out mutually beneficially for both landlord and tenant?
- Is the work required for the repair and maintenance of the building?
- Is the work solely for the benefit of the landlord?
- Does the tenant in any way benefit from the work being carried out?
The first two bullet points above are where the landlord needs less justification for carrying out invasive work. As the building work may benefit both the landlord and tenant, a less stringent reasonableness test needs to be met.
However, if as a landlord, you are carrying out building works for your own commercial benefit, of which existing tenants see no reward, the Timothy Taylor case has set down a far more robust reasonableness requirement.
How can landlords avoid being in breach?
Influencing the judgement in the case was the location, value and nature of the property in question. An art gallery needs a relaxed and peaceful ambience, not one drowned out by the rumble of pneumatic drills and cement mixers. The case did however provide useful guidance for all manner of landlords who are about to embark on a project to redevelop their property.
It appears liability can be avoided in the following ways by ensuring:
- The landlord involves the tenant as much as possible in the process from the beginning.
- The landlord meets with the tenant to discuss the impact on the property and how best it can be mitigated.
- The landlord takes into account any wishes of the tenant and ensures that they are listened to and their wishes acted upon.
- The landlord designs any scaffold to have the least visual impact on the property.
- The landlord potentially offers financial compensation, or a rent reduction during the works to compensate for the disturbance.
If the above steps can be taken, the landlord will be in a position of strength to rebut a claim of unreasonableness when breaching the covenant of quiet enjoyment.