Leases often require tenants to obtain their landlord’s consent before assigning a lease. Where this is the case, section 1(3)(a) Landlord and Tenant Act 1988 applies and the landlord must provide consent unless it is reasonable not to do so.
The landlord must give its decision and reasons for it within a reasonable time.
West India Quay v East Tower Apartments (2018)
In the recent case of No.1 West India Quay (Residential) Ltd v East Tower Apartments Ltd (2018), the landlord owned a number of residential apartments on long leases. The tenant had leased 42 apartments from the landlord, each with a 999-year term.
The tenant wanted to sell the apartments through assigning the leases. The tenant required the landlord’s consent to do so. The landlord granted consent for eight apartments to be sold, on condition that all service charges should be paid up to date and costs of £1,250 plus VAT met.
However, the landlord refused consent for the rest as the tenant had refused to:
(1) pay the landlord’s legal costs of consent being £1,250 plus VAT and other charges;
(2) allow a prior inspection of the apartments to check for breaches of the lease; and
(3) provide bank references for assignees.
At the first court hearing the court decided that the landlord’s reasons for refusal were unreasonable. The landlord appealed to the High Court.
The High Court decided that the inspection and bank reference reasons were reasonable but the requirement to pay the landlord's legal costs was not reasonable due to the costs being too high.
Overall, the court decided that the refusal of consent was unreasonable due to the landlord providing one bad reason, even though there were two good reasons provided.
The landlord made a further appeal, this time to the Court of Appeal
The Court of Appeal decided that where consent is refused and there is a mixture of reasonable and unreasonable reasons, the unreasonable reasons will not automatically invalidate the refusal as long as the good and bad reasons can stand alone.
Landlords should welcome this decision as it creates a common sense approach to determining whether the reasons for refusing consent will stand. Practically, landlords should make sure that they consider, properly justify and set out their reasons for refusal in writing.
The property team at Short Richardson & Forth has extensive experience in the law of landlord and tenant. If you would like guidance on a request for consent to assign, or any other matter, get in contact with one of the team on 0191 232 0282.