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Requests for consent under leases – A warning to landlords

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The recent decision by the Court of Appeal in the case of Singh v Dhanji [2014] highlights again the need for landlords to act with care in considering whether to grant consent to applications by tenants for consent under leases.

This case relates to a request by the tenant for consent to assign the lease, but the principles could equally apply to the landlord’s duty to provide consent for other matters, such as for the tenant to carry out works.

The lease in this case stated that the landlord was not permitted to unreasonably withhold consent. The landlord initially refused consent to the tenant’s application due to alleged breaches of the lease, including unauthorised alterations carried out by the tenant.

The landlord later granted consent subject to conditions that these breaches were remedied. The landlord was found to have unreasonably withheld consent and was ordered to pay damages and interest in excess of £200,000.

Most commercial leases contain restrictions on the tenant dealing with the lease or property in certain ways, for example assignments, underlettings, creating charges and carrying out alterations.

The burden will be on the landlord to show that any conditions or reasons for refusal of consent are reasonable. However, it is important that both the landlord and the tenant carefully consider what may be ‘reasonable’ when consent is sought..

Refusing to provide consent to a tenant, even for what seems to be legitimate reasons, can result in the landlord being liable to the tenant where the reasons for refusal do not really adversely affect the landlord.

In addition, statute can also override specific provisions in the lease and impose certain obligations which may not necessarily be in the lease. This means that in certain circumstances tenants may have the right to proceed with some plans without the landlord’s consent and landlords may have additional obligations to the tenant which are not set out in the lease.

It is important to seek legal advice at an early stage about any consent under lease issues to reduce the risk of potentially costly disputes.

For more advice on this, or any other commercial property law matter, please contact Simon England on 01772 258321 or Simon.England@harrison-drury.com


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