Is a landlord entitled to withhold consent to a tenant request to assign or underlet a business tenancy?
20 March 2019 by Natasha Swift
The Landlord and Tenant Act 1988 imposes various duties on a landlord in relation to the grant of a licence to assign or sublet a property under a business lease. The duty to give consent is dealt with under Section 1.
The overriding duties for a landlord regarding consent are, firstly to give consent where it is reasonable to do so and secondly, to give consent within a reasonable time.
When it is unreasonable to withhold consent?
Determining whether a landlord has unreasonably withheld consent is usually a question based on the facts of a case. However, as guidance, the case of Ashworth Frazer Limited V Gloucester City Council 2001 offers guidance in that a landlord is not entitled to refuse consent to an assignment/sublet on grounds that have nothing whatever to do with the relationship of the landlord and tenant in regards to the subject matter of the lease.
Where this principle is met, there must be consideration as to whether consent has been withheld reasonably. The landlord has to show that its conduct was reasonable and not that the conduct was either right or justifiable. For example, where a proposed assignee’s business cannot show financial stability and therefore the landlord believes it can reasonably withhold consent to an assignment.
What constitutes a reasonable time?
It is important that a landlord responds with a decision on the application for consent within a reasonable time, this usually being considered as days and weeks rather than months.
What constitutes reasonable time is considered on the fact of the case. However, the period may be affected by the actions of the landlord and tenant, for example:
- What information has the landlord received and what additional information is being requested;
- How the tenant responds to the request for information;
- Whether the tenant communicates that there is an urgency to the landlords decision.
Confusingly, in the case of Go West Ltd v Spigarolo [2003] EWCA Civ 17, the landlord initially refused consent. The landlord then subsequently consented and argued unsuccessfully, that the consent was still given in a reasonable time. The Court found that the reasonable time ended when the landlord made the first decision to refuse consent.
Please contact the Commercial Property team for further information on call 01206 700113 or email [email protected].