Fifty shades of grey for landlords

Fifty shades of grey for landlordsWith the launch of the Protocol for Applications for Consent to Assign or Sublet it seems an ideal time to touch upon the issues commonly surrounding ‘landlord’s consent’. 

Most leases contain ‘qualified covenants’ whereby the tenant is only permitted to do something if the landlord has first given its consent.

The Landlord and Tenant Act 1988 (LTA) places obligations on the landlord, to give its consent except where it is reasonable to withhold it; once it receives a written application from the tenant for consent to assign or sublet. The landlord must also give its consent within a reasonable period of time.

What is reasonable?

The landlord is entitled to take into account:

  • any previous and persistent failures by the tenant to remedy breaches of the lease;
  • the ability of the proposed assignee or sub tenant to pay the rent and perform the obligations of the lease; and
  • the wider commercial view and consider the mix of tenants and uses in its properties. This is particularly relevant if the landlord owns an estate such as a business park. 

A reasonable period of time is normally considered to be in the region of weeks rather than days or months.

Lessons for tenants:

If tenants believe that they are being treated unreasonably there are three possible courses of action:

  • ‘self-help’ the tenant does what it was intending to do anyway;
  • issue court proceedings for a declaration that the landlord has unreasonably withheld consent; and
  • issue a damages claim for breach of the statutory duty owed under the LTA. 

Tenants must remember that the obligations of reasonableness are only implied into clauses relating to assignments and subletting, therefore in any other areas (such as alterations) where the landlord’s consent is likely to be required, express provisions should be made that the landlord’s consent cannot be unreasonably withheld or delayed.

Lessons for landlords:

Landlords should deal with any applications for consent in a commercial and timely manner in order to avoid the threat of court proceedings.

Landlords should set out any reasons for refusing to give consent in a written statement to the tenant. Landlords cannot add further reasons or justification at a later date. 

Landlords also have three remedies against tenants who proceed without consent:

  • forfeit the lease; if the tenant is in breach of covenant of the lease then the landlord may be entitled to bring the lease to an end if the tenant refuses to remedy the breach.
  • claim for damages; reflecting the amount the landlord may have required the tenant to pay to relax a covenant.
  • apply for an injunction; requiring the tenant to do or to cease to do something.

The above is by necessity a very brief description of what is in practice quite a complex area, therefore please do not hesitate to contact us if you would like detailed advice on any of the issues above.

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