Landlord's consent and collateral advantage

A landlord was held to have been unreasonable in refusing consent to a tenant’s application, because it had sought to obtain a collateral advantage not provided for in the lease.

A lease permitted residential use but the tenant was obliged to obtain the landlord’s consent (not to be unreasonably withheld) before an application for planning permission could be made. The landlord refused consent arguing that to give it would increase the chance of a successful enfranchisement claim by the tenant and such refusal was reasonable since it protected the landlord’s interest.

The Court of Appeal, however, decided that this was not a reasonable basis for refusal.

It was common ground between the parties (and the Court agreed) that the general principles concerning the reasonableness of a landlord's refusal of consent pursuant to a tenant's covenant not to apply for planning permission without the landlord's consent (not to be unreasonably withheld) are the same as apply to a tenant's covenant not to assign or sublet without the landlord's permission (not to be unreasonably withheld).

The tenant’s planning obligation was not intended to prevent the permitted residential use. In trying to withhold consent to the planning application, the landlord was seeking to obtain a collateral advantage of imposing a restriction on residential use not contained in the lease. Anybody could apply for planning permission to change the property’s use and it appeared inconceivable that the intention was to prevent the tenant from doing so (especially when the tenant could benefit from a permission obtained by a third party).

Landlord’s concerns around the estate management implications of the tenant potentially being able to enfranchise were met by the legislation.

Each case must be determined on its own merits and whether a withholding of consent is reasonable will depend on ascertaining the purpose of the relevant lease provision and considering the circumstances at the time of the tenant’s application. However, the decision gives some assurance to tenants that landlords should not be able to withhold consent to obtain a collateral advantage not provided for in the relevant document.

While the case relates to residential property, it does helpfully confirm, more generally, that the same principles concerning the reasonableness of a landlord's refusal of consent that apply to a tenant's covenant not to assign or sublet without the landlord's permission (not to be unreasonably withheld), also apply to a tenant's covenant not to apply for planning permission without the landlord's consent (not to be unreasonably withheld).

Rotrust Nominees Ltd v Hautford Ltd [2018] EWCA Civ 765.