Q: Currently we have a situation where one of our leaseholders wishes to assign his lease to his current sub-lessee. This sub-lessee has caused us many problems over a number of years – parking too many vehicles in our car park, storing personal property in communal areas, keeping dogs that foul the lawns etc, etc. We have received no support from the current leaseholder when we have attempted to enforce our regulations.
We would like to refuse to agree the Assignment – do you think we have the legal right to do this?
FPRA Legal Adviser Nick Roberts replies:
The matter is covered by paragraph 3(a) of the Fourth Schedule of your lease. In my experience it is fairly unusual for long leasehold flats to be subject to such a restriction, at least outside the Central London area, and therefore fairly unusual around Southampton (I was for a long time in practice there), but the provision is perfectly valid and enforceable.
There is a good deal of case law dealing with what are reasonable grounds to refuse permission to assign. Most of it was decided in the context of commercial lettings, where it would be almost unknown for there not to be such a restriction. Although generally permission is refused on financial grounds, it is quite clear that the character and identity of the proposed assignees can be taken into account. The position here seems particularly clear-cut, as you have direct evidence of how they are likely to behave. They cannot argue that if the matters that you are complaining of are a breach of the lease then you should have done something about it previously: it would be accepted that it is difficult to enforce restrictions, particularly against sub-tenants, and that you cannot be compelled to accept them as head-tenants (leaseholders) and then have to try to enforce the lease terms against them.
I would, however, offer some words of warning. Requests for Licence to Assign are covered by the Landlord and Tenant Act 1988. As soon as you receive a request in writing for permission to assignment (whether it is from the current leaseholder or his solicitor) then you are under an obligation to deal with the request as quickly as is reasonably possible. There is no set time limit (say, 14 or 28 days) – it will depend on the complexity of the case, and various considerations, most of which are unlikely to be relevant here. If you require further information, then you must request it promptly. Once you have all the information you require, you should certainly be thinking of giving a full response within 10 working days. It may be, however, that you feel that, as soon as you receive any request, you already have enough information to respond (negatively) to the request. You would therefore be under an obligation to give your refusal, in writing, and to give brief reasons in writing. You are not required to give details of the evidence that you would be relying on. You should note that, once you have given your reasons, that is it. If the matter should come to court, you would not be entitled to add any further reasons that might subsequently come to your attention. You therefore need to get the reasons right first time.
It is also fair to say that refusal of consent may not be without its consequences. If the leaseholder should object, and wish to argue that consent was not being reasonably withheld, he would be able to apply to the County Court for the court to rule on the matter. When the lease says that you cannot withhold consent unreasonably, the court has the final word on that, though it is accepted
that the test is not whether the judge agrees with your decision: the test is whether the decision that you have come to is one which a reasonable landlord might make. The burden of proving that you have refused reasonably is on you. It seems to me, on the basis of what you have said, that you would clearly be acting reasonably. You should, however, bear in mind that if the court did rule against you, you would be liable for the leaseholder’s costs; you might also be liable for damages for any loss resulting from his lost sale. In practice this might not matter, as, if the court ruled against you, then presumably the sub-tenant would still be around, and could still proceed if (and on present infomation I do not think it likely) the court ruled against you.
The converse is also true on costs: if the leaseholder challenged your decision, and lost, then he would be likely to be held liable for your legal costs. So, if he realises his case is weak, he is unlikely to challenge your decision.