Travis Perkins – Real Estate Bulletin – Spring 2024

In this quarter’s update, we look at three cases.

• Consent to alterations – Landlord’s refusal 
• Consent to alterations – Landlord’s refusal…again
• Forfeiture – waiver

Consent to alterations – Landlord’s refusal

A tenant wanted to carry out substantial alterations to an upper floor flat. The lease of the flat contained a qualified covenant against alterations, meaning the tenant needed the landlord’s consent to carry out works, but the landlord could not unreasonably withhold its consent.

The tenant initially asked for consent in August 2019, but by February 2020, the tenant felt the landlord was unreasonably delaying progressing the application and by May 2020, the tenant started the works without the landlord’s consent.

In July 2020, the landlord formally refused consent to the works, providing a letter from its surveyor which stated that the proposed internal layout of the flat was, amongst other things, “unsatisfactory in the context of fire safety and prejudices the fire safety of the block as a whole”, although the letter did not go into any more detail as to what this meant. The tenant then sought a declaration that the landlord had unreasonably withheld its consent.

Ultimately, the tenant was successful and the landlord was found to have acted unreasonably. The landlord’s surveyor had recommended that the landlord obtain an opinion from an expert in fire engineering, but the landlord did not do so, so it was not appropriate to put fire safety issues forward as a reason to refuse consent. In addition, the landlord could have granted consent that was conditional on mitigation measures being put in place to address the fire safety concerns.

Practical tips:

• Practical tip – although it is for a tenant to prove that a landlord has acted unreasonably when it comes to giving consent to alterations, landlords need to remember that they must give clear and express reasons for withholding consent (in this case, the landlord sought to introduce a second reason at the hearing relating to the impact of the works on the structural integrity of the building, but had not pleaded this ground as part of its case and could not therefore rely on that issue, which could have been addressed by getting expert advice in any event)
• Practical tip – unlike applications for consent to assign or sublet, there is no statutory duty to give written reasons for refusing consent, but clarity when communicating with tenants is key to avoiding litigation

Consent to alterations – Landlord’s refusal…again

A tenant applied for consent to carry out major alterations to a property to convert it from mixed-use to purely residential. Although the lease demised the whole building, it excluded the basement under the building, which comprised a parking area retained by the landlord. The lease included a prohibition on the tenant erecting any additional or new buildings or structures on the premises and on making any structural or external alterations or additions without the landlord’s consent, which was not to be unreasonably withheld or delayed. There was also a covenant against overloading the premises.

The tenant’s works were substantial and involved adding three floors to the roof of the building to create nine new flats, and works to convert the ground floor from commercial to residential use, creating five additional flats. The tenant got planning permission for the redevelopment in April 2020 and applied to the landlord for consent to the works and the change of use in May and June 2020 respectively.

Discussions between the parties were extensive, and in March 2023, just a month before its planning permission expired, the tenant issued proceedings against the landlord alleging it had unreasonably withheld consent. 

As part of the discussions, the landlord wanted to see and approve both preliminary drawings and final architectural and structural drawings, as well as risk assessments and method statements (unsurprising, given the extent of the works), but the tenant did not provide these. This was one of the four reasons relied upon by the landlord in defending the proceedings. Other reasons included a potential trespass onto the landlord’s retained property and a lack of clarity as to the proposed works.

The court found that the landlord had not unreasonably withheld consent. At least one of the reasons (the one relating to the drawings) put forward by the landlord was reasonable and sufficiently standalone, so even if some of the other reasons were not, this did not mean the landlord had acted unreasonably in the round.

Practical tips:

• Practical tip – as we saw in the case above, the statutory duties on a landlord when considering applications for consent to works are different to those that apply to applications for consent to assign or sublet. In relation to works, there is no statutory obligation to deal with the application within a reasonable time (although this is often expressly included in the lease itself)
• Practical tip – although the discussions between the parties went on for nearly three years, the tenant did not allege unreasonable delay and it is worth bearing in mind that the clock doesn’t start ticking until the landlord has all the information it reasonably needs to make a decision. Tenants should ensure landlords have everything they need to consider an application

Forfeiture – waiver

A tenant failed to pay service charges due under its lease and the landlord sought a money judgement for the unpaid amount. The tenant argued this meant the landlord had waived its right to forfeit the lease, but the Tribunal found that pursuing a tenant through the county court for a money judgement did not amount to waiver.

Practical tips:

• Practical tip – the ability to forfeit a lease is an important remedy for landlords and has serious consequences for a tenant
• Practical tip – although the right to forfeit has to be set out in the lease, it’s very easy to waive this right by conduct which indicates the landlord considers the lease to be continuing, even though it is aware of the tenant’s breach
• Practical tip – there is no previous authority on this issue, so it’s a useful case, but landlords should still take advice on what actions they should or should not take when they become aware that a tenant is in breach of its lease