Granting Licences – Unreasonable Withholding of Consent
Granting Licences – Withheld consent to assign or alter.
Our previous article “Granting Licences – when consent required” explained the circumstances in which a landlord might validly give consent to a tenant’s application.
In this article we will consider situations where the landlord might reasonably withhold that consent.
Upon receipt of a request for consent to assign the property, therefore, the landlord MUST
- Give consent (except where it is reasonable not to)
- Give that consent within a reasonable time and not unreasonably delay his response
- Serve written notice of his decision
- State whether any conditions are attached to the consent and what those are
- If refusing consent, provide reasons for his withholding of it.
Breach of these obligations by the landlord are breach of a statutory duty and a tenant can claim damages against a landlord for a breach.
However, tenants should tread carefully, as the duty placed on the Landlord will not be triggered unless and until the request for consent is correctly served in accordance with the obligations of the lease. An application for consent to assign made by email was held NOT by be sufficient in the 2012 case of Eon UK PLC v Gilesports Ltd. It was irrelevant that the landlord had received the request. It is imperative that the Tenant makes the request formally in accordance with the lease terms.
Unless the lease specifically allows it, the landlord may NOT charge a premium for giving consent. The landlord is however entitled to recover his reasonable costs (such as legal or surveyors fees) incurred as a result of the request for consent and the preparation of a licence.
The standard conditions of sale do specifically provide for exchange of contract prior to the consent of the landlord to the assignment being granted. The seller is responsible for the cost of obtaining the consent and the contract can be rescinded if the consent is not forthcoming 3 days before the intended completion date. In practice however, this causes uncertainty as the parties do not know whether consent will be granted right up until completion. Usually a seller who requires consent will arrange this well in advance.
The 2016 case of No 1 West India Quay (Residential) Limited v East Tower Apartments Ltd explored a scenario where the landlord had both reasonable and unreasonable reasons for withholding. In that case, the landlord had agreed to the assignment of some apartments within a block without any conditions. The landlord thereafter sought to impose conditions on a request for an assignment, such as bank references for the incoming tenant, a surveyor’s inspection to advise on any breach of covenant and payment of the landlord’s fees. The court found that the “bad” reasons (payment of a fee that could not be justified or broken down) negated the otherwise “good” reasons for withholding consent (bank references and the surveyors inspection) and that the consent therefore had been unreasonably withheld.
If you would like any advice on consent to assign or to alter please do not hesitate to contact Analise Broomhall on email@example.com.