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Viewpoint - 04/04/2024

Expert help protects the interests of landlord and tenant

What constitutes 'reasonable' grounds on refusing consent for tenants making alterations to a building?

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Commercial property leases will most likely contain clauses requiring tenants to obtain the consent of the landlord before making alterations to a building. Such clauses typically state that consent cannot be unreasonably withheld or delayed. Here, we ask the question, what constitutes ‘reasonable’ grounds for refusing consent – a topic that continues to be a source of contention and legal dispute.

Some recent court cases provide valuable guidance on this issue, shedding light on the delicate balance that landlords must strike.

In the case of Messenex Property Investments Ltd v Lanark Square Ltd (2024) the tenant sought consent to add additional floors to a building and convert commercial space to residential accommodation. Following negotiation, the landlord refused consent, citing four primary reasons: lack of structural drawings, potential trespass issues, the absence of an undertaking on costs from the tenant and a general lack of clarity in the proposal. The court ruled that the first and third reasons were, indeed, reasonable grounds for refusal, allowing the landlord to withhold consent.

Notably, the court clarified that a tenant’s application for consent need not be in writing under Section 19(2) of the Landlord and Tenant Act 1927. The assessment of reasonableness takes into account the cumulative information provided until legal proceedings commence. This highlights the importance of landlords carefully evaluating evolving proposals, as initially refusing consent on the basis of limited facts risks being deemed unreasonable if further information is subsequently provided.

In another case, Jacobs v Chalcot Cresent (Management) Company Ltd (2024) the landlord had not provided consent for alteration in a flat after nine months, prompting the tenant to seek a declaration of unreasonable withholding. The landlord had relied on advice from a surveyor who admitted to lacking expertise in fire safety, a crucial aspect of the proposed alterations. The court found the landlord’s conduct unreasonable, citing the failure to appoint suitably qualified consultants and the unwillingness to consider alternative mitigating measures instead of outright refusal.

The cases offer valuable lessons to both landlords and tenants in considering consent for alterations. Ensuring that appropriate specialists are engaged by both parties is essential. Providing the correct information to inform an application for consent and properly considering an application using knowledgeable professionals will result in an expert, informed, commercially pragmatic approach which will ultimately, protect the interests of both the landlord and tenant.

The experts at Lambert Smith Hampton are well-positioned to guide clients through this process, diligently conducting holistic initial assessments, robust technical reviews, liaising with further advisors, scrutinising drafting, monitoring works and reviewing completion documentation. In the intricate world of commercial property leases, striking the correct balance between tenant alterations and landlord consent is paramount.

If you want to find out more, please contact me on my details below:

Bradley Swingler

Bradley Swingler
Associate Director - Building Consultancy

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