Whether a landlord can refuse consent where it perceives a risk of enfranchisement claim
In Rotrust Nominees Ltd v Hautford Ltd , the tenant was required by the terms of its 100-year lease to request the consent of the landlord to any application for planning permission; consent was not to be unreasonably withheld by the landlord. The tenant wanted to change the use of two floors of the building from office space to residential, but the landlord refused to grant consent on the grounds that, if successful, the tenant was more likely to make a claim for enfranchisement under the Leasehold Reform Act 1967.
The landlord claimed that its refusal to grant consent was reasonable as it protected its freehold interest in the building and the value of its investment. Further, the landlord wanted to retain control of the building to protect its estate management capabilities.
The Court of Appeal dismissed the landlord’s appeal, finding in favour of the tenant. In examining the lease terminology, the lease expressly authorised residential use of the building so it could not be held that the landlord wished to exclude usage for this purpose, nor that it was required to grant consent to residential use.
Stating that the landlord was trying to obtain a ‘collateral advantage’, presumably against the intentions of the original parties who granted a long lease which it could be anticipated would be subject to an application for planning permission during the course of its term, the Court also noted that estate management was controlled by statute under the LRA 1967 and this was sufficient to protect the landlord’s interests.
Advice and action for landlords
There is no general principle in cases where landlords refuse consent on the grounds of a perceived future enfranchisement, and each case is decided on its facts. In this case, the Court found that the landlord’s withholding of consent was unreasonable due to the lease term and the express granting of consent for the property to be used for residential purposes.
User clauses in leases should not be subject to clauses requiring landlord’s consent to planning applications, which serves as a rewriting of a lease rather than the interpretation of existing provisions.
The Court of Appeal dismissed the landlord’s appeal, finding that the lease expressly authorised residential use of the building so it could not be held that the landlord wished to exclude usage for this purpose.