A council’s ability to rely on lease restrictions to prevent a tenant from carrying out a development without agreeing provisions to secure the council’s development objective secures a practical benefit.
The Court of Appeal has considered this issue dismissing an appeal from the Upper Tribunal (Lands Chamber) in Great Jackson Street Estates Ltd v Manchester City Council [2025] EWCA Civ 652.
Great Jackson held a lease from the council of two redundant warehouses which it wanted to demolish and replace with two 56-storey residential tower blocks. The lease, which had 60 years to run, contained covenants preventing the redevelopment without the council’s consent.
The council had offered to grant a new lease of the site for 250 years to facilitate the implementation of anticipated planning permission for the development but terms could not be agreed. Great Jackson sought the council’s consent to the proposed development under the terms of the existing lease but while the council remained strongly in favour of the development it was not willing to consent to it being carried out under the existing lease.
The tribunal dismissed Great Jackson’s application to modify the lease covenants on the following grounds:
(a) That the restrictions were obsolete. Use of the site for warehousing was obsolete but part of the purpose of the covenants was to protect the council’s reversionary interest. It had a legitimate strategic interest in continuing to influence the use of land on the fringe of the city centre and securing its orderly and appropriate development.
(aa)That the proposed use was a reasonable use of the land and its completion would cause the respondent no substantial loss or disadvantage. The proposed use accorded with the development plan and the restrictions impeded it. They secured to the council a practical benefit in preventing Great Jackson from carrying out the development without agreeing provisions to ensure that it was completed and within a reasonable time. Such control was a substantial advantage.
(c) That the objector would not be injured by the proposed modification. However, modification of the restrictions would mean the loss of the practical control the council currently had over the redevelopment of the site.
The applicant appealed the decision under (aa) arguing that the restrictions secured no practical benefit to the council.
The Court of Appeal was satisfied that the tribunal had made an evaluative judgment in reaching its conclusions on the grounds of the application. The covenants were being used for their intended purpose, to afford control over the development of the site, not to force Great Estates to enter into a new lease.
Louise Clark is a property law consultant and mediator