Landlords are often constrained by both statute and the lease, when setting the conditions for granting consent to alter. Avon Freeholds Ltd v Garnier [2016] UKUT 477 (LC) suggests a landlord may be able to require a significant capital payment for retrospective consent as well as payment of usual professional costs.
The tenant of a flat installed a new cloakroom with shower without obtaining prior landlord’s consent. This was accepted as being in breach of the lease covenant not to make non-structural alterations without the landlord’s prior written consent, not to be unreasonably withheld. When the tenant tried to sell the flat the buyer required retrospective consent to be obtained. The landlord’s first response was to ask for £500 plus VAT to inspect the flat, decide whether to grant consent and identify whether surveyors/solicitors would be needed. The tenant paid, inspection took place but two weeks passed without confirmation from the landlord of consent. When chased (because the sale was about to abort), the landlord said consent would be granted quickly if the tenant paid a further £1,000 plus VAT for the licence for alterations and a capital sum of £5,000. The tenant remonstrated, but under pressure of losing the sale, paid up.
The tenant then applied to the FTT to order repayment of both sums and partly succeeded. On appeal the main issue was whether the FTT had had jurisdiction to hear the case. The UT decided it had not, because the tenant had agreed to pay the £6,200 and this expressly ousted the FTT jurisdiction (para 5(4), Schedule 11 Commonhold and Leasehold Reform Act 2002 (“the Act”)). The UT also rejected the argument that the tenant had “agreed” under duress and therefore the agreement should be disregarded.
It is the other comments of the UT which are intriguing:
- They indicated two safe ways for a residential tenant to pay the landlord the disputed sum without ousting the FTT jurisdiction. Either make the payment without saying anything (under para 5(5) Schedule 11 this does not amount to agreement) or make it under express protest and reserving the right to invoke Schedule 11.
- They ruled that the contractual requirement (in the lease) not to withhold consent unreasonably only applied to applications for consent in advance of the works being carried out. Where the application was for retrospective consent, the lease constraints did not apply and the landlord could set whatever terms it wished, though this contractual freedom might be limited by a relevant statutory regime. For dwellings, Schedule 11 of the Act restricts recovery of unreasonable administration charges unless the tenant has agreed them. There is no equivalent for commercial property.
All leases with a qualified covenant against alterations have an implied requirement not to withhold consent unreasonably (s19(2) Landlord & Tenant Act 1927). That section permits the landlord to require payment of a reasonable sum to compensate for any damage or diminution in value of his interest, and payment of proper legal or other expenses. Maybe these statutory restraints will also be held to apply only where the consent for the alterations is sought in advance, not retrospectively.
Sue Highmore is a property law consultant
