Commercial Property: At What Point Is Withholding Consent To Tenant’s Proposed Works Unreasonable?
It’s not uncommon for tenants to consider altering commercial property to align with their business needs. Securing the landlord’s consent could, however, hold things up.
As any commercial landlord and tenant will know, the lease will typically include a requirement that the landlord’s consent must first be obtained – with the proviso that such consent is not to be unreasonably withheld or delayed. (Even without that proviso, it is implied into the lease under s19(2) Landlord and Tenant Act 1927).
A tenant asked the court for a declaration that the landlord had unreasonably withheld consent to altering a building from mixed use to residential use. Further, the tenants argued that the refusal meant it was discharged from the covenant requiring the it to seek approval.
The court refused to grant the declarations.
Reasonable
The tenant was a property investment company wanting to convert a mixed use building into residential flats – including the addition of three floors to the building.
The landlord withheld consent of the works proposed for several reasons. Particularly, there was an absence of preliminary drawings from a structural engineering for part of the works which had not been made available for view.
The proposed works were viewed by the landlord as a ‘package’. That was an important factor leading the court to decide that it was not unreasonable in relying upon the tenant’s failure to produce those drawings as grounds for withholding consent. Those drawings were requested to provide a level of assurance as to the effect of the proposals on the structural integrity of the building.
The tenant had also failed to give unconditional undertakings for the landlord’s reasonable costs in relation to the applications, and the negotiations for the grant of additional rights needed for the works to be carried out. The landlord was not acting unreasonably in withholding consent for that reason either.
Not every reason was, however, considered a reasonable reason to withhold consent. The perceived ‘lack of clarity’ in the tenant’s proposed works, allegedly preventing the landlord from making an informed decision, was not a good reason. The judge pointed out that the proposed works may develop over time. All that was required was for the landlord to be aware it was being asked to consent to certain works and that their scope was sufficiently clear.
What does this mean?
Landlords are entitled to withhold or delay consent for proposed improvements to property if they have reasonable grounds to do so. This case illustrates what may or may not amount to acceptable reasons, depending on the circumstances.
It’s also clear that tenants need to provide sufficient reassurances to the landlord before expecting consent to be given. However, landlords cannot expect to have detailed plans – a scope of the tenant’s proposed works only needs to be ‘sufficiently clear’.
Messenex Property Investments Ltd v Lanark Square Ltd [2024] EWHC 89 (Ch)
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