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ArticleLandlord’s consent Both landlords and tenants need to exercise great care in their approach to applications by the tenant for landlord’s formal consent to assignment or subletting of the premises or works of alteration. Landlords will normally be under a stringent statutory duty in responding. Where the lease has the commonplace form of qualified restriction on alienation, so that the tenant may not alienate without the prior consent in writing of the landlord, there is always a proviso, implied by statute if not expressed in the lease, that such consent must not be unreasonably withheld. Statute dictates that the landlord must, within a reasonable time, give consent in writing unless it is reasonable not to do so; where consent is refused, the reasons for refusal must be given in writing within a reasonable time. Crucially, statute places the burden of proof in all this on the landlord: he must prove his compliance with his statutory duties. Yet parties should beware of making blind assumptions about whether the landlord’s hands are tied in a particular case. The proposed transaction should be carefully considered in the light of the precise terms of the relevant lease covenant. There will sometimes be doubt as to whether the tenant’s application has even got off the ground, i.e. whether it meets the pre conditions for a permitted alienation (subject to landlord’s consent) under the lease. In Allied Dunbar v Homebase the Court of Appeal ruled that there had never been any legal restraints on the landlord in deciding to reject the proposed subletting; a requirement in the lease that the proposed sub lease rent must be not less than the headlease rent was breached by a collateral agreement by the tenant to re-imburse part of the sub tenant’s rent. However, a different result was reached in the later case of NCR v Riverland Portfolio, in relation to a reverse premium paid by the tenant to the sub tenant. There is no clear and simple rule here; as ever, the particular facts of the case and the lease terms are all-important. In contested cases the commercial stakes are often high and the remedies the court may order against the losing party can be very severe. For further enquiries please contact Nick Horton (view full profile) on 01892 701313 or email nhorton@ts-p.co.uk. You will require the Adobe Acrobat Reader to read PDF files, this
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