age of consent
A hot topic for landlords and
tenants over the past few years has been landlord’s consent to
assignments and underlettings.
The news has generally made worrying
reading for landlords who must now respond to their tenants'
applications in ever quicker time (days rather than weeks or
months), or face a hefty compensation claim.
Two recent cases have offered the
landlord some hope that the tide has turned and that the courts
will be more sympathetic to the plight of landlords who have
genuine concerns over their tenants' proposals to sublet.
In Riverland (NCR Ltd -v- Riverland
Portfolio No. 1 Ltd (No. 2), 2005) the tenant, NCR,
encountered difficulty finding someone willing to take on its lease
because the property was rented at over market value. Eventually,
the tenant found a subtenant but only upon payment of a reverse
premium. The tenant applied to its landlord for consent to sublet
which was refused.
The Court of Appeal found that the
landlord had not been too slow in considering the tenant’s
application for consent to sublet. The court made some observations
which may be of interest to landlords:
- landlords are entitled to take
adequate time to consider an application and it is in neither
party’s interests for the process to be rushed. In this
case, three weeks was considered a reasonable time because of
the complexity
- landlords are entitled to take into
account the covenant strength of an undertenant, because this will
eventually impact upon the value of the landlord’s freehold
In Tesco (Crestfort Ltd & Others
-v- Tesco Stores Ltd & Magspeed Ltd) the landlord again refused
the tenant’s application for licence to sublet but Tesco went ahead
and sublet anyway in breach of its lease. Tesco correctly believed
that the landlord would not wish to forfeit the lease but was
wrongly advised that the landlord had no other effective
remedy.
The High Court clearly disapproved of
Tesco’s approach and so granted an injunction requiring the
underlease to be surrendered and ordered Tesco to pay substantial
damages to the landlord equal to the amount which the landlord
could have achieved for relaxing the restrictions in the lease
which had prevented Tesco from subletting in the first place.
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