Covenants not to assign a lease without first obtaining landlord’s consent are made subject to a qualification (by virtue of the Landlord and Tenant Act 1988) that such consent won’t be unreasonably withheld.
The application of the principles set out in the 1988 Act is, inevitably, specific to each instance where a dispute arises. Perhaps surprisingly, relatively few cases are reported and the recent No 1 West India Quay v East Tower Apartments is an interesting commentary on the application of the Act.
In the West India case, an application was made to assign residential apartments (the Act applies equally to residential as commercial properties). A dispute arose regarding various issues (including the address to which the application for consent should have been sent to). The decision of the County Court (that the landlord had unreasonably withheld consent) was appealed to the High Court.
The Court considered whether it was reasonable for the landlord to demand:
- bank references for the proposed assignee;
- an inspection of the property (at the tenant’s cost); and
- the tenant pay legal and surveyors fees of £1250 plus VAT.
The High Court considered that the requirement to provide a reference and to pay for an inspection of the properties was reasonable. The fees demanded were however unreasonably high and that demand (in spite of the other acceptable demands) had the effect of making the landlord’s position unreasonable.
This case provides a reminder of both the importance of responding quickly to applications made for a consent and considering carefully whether any demands made of tenants seeking to assign (if not expressly specified in the lease as preconditions to assignment) would be viewed favourably if they came before a court.