If a tenant agrees to use a flat as a private dwelling for himself and his family, and for no other purpose, does that preclude him from subletting the flat to a person who is not a member of his family? The Lands Chamber of the Upper Tribunal ruled that it did in Burchell v Raj Properties Ltd [2013] UKUT 443 (LC), even though there were no restrictions on alienation in the tenant’s lease.
The tenant tried to persuade the tribunal that a covenant to use the flat as a private dwelling “for” the tenant and his family, as opposed to “by” them, should be construed as requiring use for their benefit (as opposed to requiring them to occupy the flat themselves), and claimed that such use could legitimately include a subletting to a third party. He drew attention to the complete absence of any restrictions on alienation in the lease and to the fact that the user covenant referred to the “lessee” with a small “l”. He suggested that this must mean that the occupier need not be the leaseholder himself, because all the other references to the leaseholder in the lease began with capital “L”.
The landlord disagreed. It accepted that the tenant was entitled to sub-let, but only to family members, and highlighted the advantages of owner-occupation. It suggested that flats that were owner-occupied tended to be better kept and managed, and to have a better environment, because those responsible for maintenance and decision-making were resident in the building.
The tribunal upheld the landlord’s construction of the lease. It dismissed the de-capitalisation of the word “lessee” in the user clause as a typographical error, accepted the landlord’s explanation of the rationale for requiring owner-occupation, and refused to strip the user covenant of its natural meaning.
Each case will turn on its own particular facts. However, the tribunal was not prepared to attribute modern expectations and priorities to the parties to a lease granted in 1988, despite the current trend for “buy-to-let” investments. It ruled that the absence of covenants against subletting did not signify that it was permissible to sublet and that other aspects of the parties’ agreement could impact on the legality of such arrangements.
Did the tribunal have the power to vary the covenant to omit the words “for the lessee and his family” from the terms of a new lease extending the term, which was to be granted in accordance with the Leasehold Reform, Housing and Urban Development Act 1993? Section 57 provides that any new lease should be on the same terms as the existing lease, unless a provision needs to be modified or excluded to remedy a defect in the lease or it would be unreasonable to include it in the light of changes that have occurred since the date of the existing lease.
The tribunal rejected the tenant’s argument that the user clause was defective. It was also unable to find a reason that would justify a statutory modification of the existing lease and suggested that the parties should consider modifying the user covenant by agreement. Unfortunately for the tenant, this may come at a price (if the landlord is prepared to agree to any modification at all).
Allyson Colby is a property law consultant
