Almost all commercial tenants covenant within a lease not to, for example, assign, sublet, make alterations or change the permitted use of a premise unless they have obtained the consent of their landlord. This enables landlords to keep control of occupation and the physical state of theirpremises. However, by way protection of the tenant’s position, the relevant provisions usually expressly state that the consent of the landlord is “not to be unreasonably withheld or delayed”. This provides tenants with the ability to challenge any unreasonable decision of a landlord should it become necessary.
Whilst express wording in the lease is preferable, and from the point of view of a tenant should be insisted upon when negotiating lease terms, their absence does not mean a tenant is unprotected. Depending on the circumstance requiring consent, there are various statutory provisions which prevent a landlord from acting unreasonably. These include provisions such as section 19(1) of the Landlord and Tenant Act 1927 which states that where consent to dealing with the lease is required (for example if a lease is to be assigned), consent should not be unreasonably withheld. Similarly, with regard to alterations, if there is a complete prohibition relating to carrying out works, a tenant may be able to carry out improvements to a premises upon service notice on the landlord and, if necessary, obtaining a Court order if the landlord objects. Equally, if the lease permits works with consent, a landlord may not unreasonably withhold consent if the works can be seen as improvements works.
Is there an accepted definition of ‘unreasonably withholding consent’?
No. Case law has shown that the definition of ‘unreasonable’ is fact specific to and varies from lease to lease. The length of time a landlord may have to consider an application, the level of costs it may seek to require, the requirements it may have that go beyond the prescribed requirements set out in the lease will very much depend on the circumstances. For example, the withholding of consent and the time required to consider an application to an assignment of a lease to a tenant with poor financial credentials from a very prosperous one may take longer to evaluate and subsequently be reasonable to withhold than an application to one that is financially sound, with potentially better covenant strength than the current tenant.
What can I do if I believe consent is being unreasonably withheld?
Before you do anything, make sure you consider your application and check that you are complying with the obligations under the lease. If in doubt, take legal advice. Whilst frustrating, circumstances may dictate that it would be wiser to accept the landlord’s decision and refrain from taking any action or otherwise revise and re-submit the proposals to avoid any further costs.
If you are convinced consent is being unreasonably withheld you could consider:
- Challenging the landlord’s behaviour which could ultimately lead to Court proceedings; or
- Proceeding with the alterations/additions/assignment regardless of the lack of consent and with the risk that you may be required to reinstate the position in the event the landlord is held to not be unreasonably withholding consent.
How can I minimise this issue?
If you are taking a new lease, negotiate with your landlord and define within your lease when it will be both reasonable and unreasonable for the landlord to withhold consent. However, how the process will work in practice is, of course, not only down to the decisions and behaviour of the landlord and its advisors on a case by case basis but also to you, as tenant, when making your application.