8 September 2026
1954 Act Consultation – Ground G
In the ninth instalment of our deep dive into the Law Commission’s second consultation on the Landlord and Tenant Act 1954 (the “1954 Act”) we consider the Commission’s proposals on the landlord’s ground of opposition under Ground G of the 1954 Act, allowing a landlord to oppose the grant of a new lease because they intend to occupy the premises for business or residential purposes.
Ground G is a mandatory ground of opposition, which means if the landlord is able to prove the ground, the court must refuse the renewal of a new tenancy, with the tenant entitled to statutory compensation.
To establish opposition on Ground G, the landlord must satisfy the following requirements:
- there must be a firm and settled intention
- to occupy the holding
- for business or residential purposes; and
- there must have been at least 5 years of ownership
The requirement to have a firm and settled intention is the same as Ground F considered in our previous article here.
Reliance on Ground G is subject to the landlord satisfying the “five-year rule”, which requires there to have been at least 5 years of ownership of the reversionary interest immediately preceding the termination of the current tenancy. The five-year rule is intended to protect tenants by preventing landlords from removing the tenant and taking over the business itself. The rule does not apply where the protected tenancy was granted by the landlord who intends to rely on Ground G.
One of the practical difficulties for landlords in satisfying Ground G has been developed by case law and, in particular, the Court of Appeal’s decision in Nursey v P. Currie (Dartford) Ltd, which established the principle that where a landlord intends to demolish or substantially reconstruct the “holding” (the property included in the tenancy) before occupation, the landlord cannot satisfy the requirement because it does not intend to occupy the “holding”. Subsequent decisions have introduced some flexibility to the rule, but the law remains unclear.
THE LAW COMMISSION'S PROPOSALS
Options for reforming Ground G
The Commission acknowledges that Ground G can be unfairly used by landlords to “take over” a tenant’s business by carrying out the same business from the premises and thereby benefiting from the tenant’s goodwill. The Commission considers three options for reform:
1. Explicitly preventing a landlord from relying on Ground G with a view to carrying out the same business as the tenant
While this approach would directly address the issue, difficulties may arise when attempting to determine what qualifies as the same or “substantially the same” business. The proposal would also end legitimate and beneficial business transactions.
2. Extend the five-year rule
The five-year rule was considered to be a protection against so-called “rascal” purchaser-landlords who acquire reversions to exploit tenants’ goodwill. The Commission suggests that one way to strengthen the five-year rule might be to extend its duration to say, ten years or more and to amend the rule so that it applies to the landlord who granted the tenancy as well. However, the concern with this proposal is that it could stymie routine investment activity and may adversely affect the market by encouraging landlords to require leases to be contracted out of the 1954 Act.
3. Revise the basis of compensation
Rather than place restrictions on the use of Ground G, the Commission proposes that the 1954 Act could provide for enhanced compensation where the landlord acquired the reversion within a defined period and intends to occupy and carry out the same or a substantially similar business to that operated by the tenant. This approach would mean that the tenant is compensated for the goodwill it loses. However, the Commission acknowledges the potential difficulties with deciding the measure of compensation based on goodwill and the disparity this could lead to with compensation payable under other no-fault grounds.
Abolishing the rule in Nursey v Currie
4. The Commission provisionally proposes to abolish the rule in Nursey v Currie so that any proposed alterations to the holding before the landlord enters into occupation will not be a relevant consideration in satisfying Ground G. The purpose of this proposed change is to remove the trap which requires a landlord to rely on both Ground G and Ground F (intention to redevelop) where they intend to occupy the holding but would need to make alterations before occupation.
The Commission invites views on how the practical issues which arise under Ground G need to be reformed and if so, how.
COMMENT
While the Commission seeks to address the practical issues with the use of Ground G it is difficult to see how the proposals will gain universal support from both landlords and tenants in order to strike a balance between competing interests of ownership, investment and security of tenure.
In our next article, we will be exploring the Commission’s proposals on compensation for tenants when a protected tenancy ends.
Consultees are invited to respond by 16 September 2026.
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Rob Mullarkey
Senior Associate, Real Estate Disputes
