Supreme Court provides further guidance on when landlords may reasonably refuse a tenant’s request

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Supreme Court provides further guidance on when landlords may reasonably refuse a tenant’s request

08 Nov 2019

Sequent Nominees Ltd (Formerly Rotrust Nominees Ltd) (Sequent) v Hautford Ltd (Hautfort) [2019] UKSC 47

The UK’s highest Court has this week ruled that a freeholder was entitled to refuse consent for a leaseholder to apply for planning permission that might substantially enhance the tenant’s ability to buy out the freehold.

In this case, the Soho property’s lease included a covenant that the tenant may not apply for planning permission without the landlord’s consent which could not be “unreasonably withheld”. The Tenant sought consent from the landlord to change the use of the first and second floor from office space to residential use. If planning permission for the change of use was granted, the tenant would acquire the right to buy out the landlord and convert its leasehold interest to full ownership, through enfranchisement. This was the case even though there was a clause in the lease suggesting that the tenant may use the building for residential purposes.

The Supreme Court held that the landlord’s refusal was reasonable. The covenant afforded the landlord some protection from a devaluing of its property and it was reasonable for the landlord to rely on it.

For landlords, it is vital to draft leases that give you the option to reasonably refuse the tenant’s proposals where your freehold investment is at risk. This is particularly important where long leases are concerned and commercial considerations will evolve.

For assistance in negotiating and preparing leases for your business, contact Steve Jackson or Nick Nyunt. For queries in relation to the granting and withholding of consent, please contact Rebecca Jones of the firm’s property dispute resolution team.

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