The Landlord and Tenant Act 1988 (the “LTA 1988”) imposes on a landlord various statutory duties in relation to the grant of a licence to assign, underlet, charge or part with possession of a property (henceforth referred to as “to deal with the property”). The duties, set out in sections 1 and 2 of the LTA 1988, are:
- to give consent, except where it is reasonable not to do so;
- to give said consent within a reasonable time; and
- to give the tenant written notice of the landlord’s decision.
These statutory duties apply where a lease (a) includes a covenant by the tenant not to deal with the property without the consent of the landlord, (b) the requirement is subject to the qualification that consent is not to be unreasonably withheld, and (c) the qualification is either explicitly stated or implied by section 19(1) of The Landlord and Tenant Act 1927 (the “LTA 1927”).
The duties arise when a tenant serves a written application for consent on the landlord. Any application must be properly served in accordance with the provisions of the lease or, if the lease is silent in respect of notice, in accordance with section 23 LTA 1927. If the tenant fails to serve the notice properly, the duties do not arise and the tenant does not have the protection afforded under the LTA 1988.
What constitutes “reasonable time” for the landlord to provide its decision will depend on the facts and circumstances. Nevertheless, this will generally be measured in terms of days or weeks rather than months. Factors that may affect the duration of time include what information the landlord requests, how the tenant responds to the request for information and whether the tenant communicates to the landlord a sense of urgency/limit on time. Yet in NCR Ltd v Riverland Portfolio No. 1 Ltd  EWCA Civ 312 where unusual and complex issues were raised, the court held that the landlord should make a decision within a “comparatively short period”, which was held to be a period of two weeks. In addition, where the consent requested is in respect of a residential lease to be assigned for a substantial premium that will diminish as time progresses, the court is likely to consider that a landlord’s consent should be provided in a much shorter time span.
Where a landlord fails to comply with its statutory duties under the LTA 1988, a tenant can apply to the court for a declaration that the landlord is unreasonably refusing consent. Should the court grant the declaration, the tenant can proceed to assign the lease without the need for a formal consent. In addition, in the absence of consent by the landlord, the tenant can proceed without consent and if it is subsequently determined that the landlord unreasonably withheld its consent, the assignment would be considered lawful.
Further, where the landlord is found to be in breach of its statutory duties, the tenant can seek remedies which include damages and in certain circumstances, an injunction. Exemplary or punitive damages may also be claimed if the normal requirements for those damages are present. In determining if there has been an unreasonable delay by the landlord in its response to the tenant’s request for consent, the court may consider whether the tenant has suffered any loss as a result of the landlord’s delay.
Even if the landlord initially refuses consent and later then grants consent, the landlord may still be in breach of its statutory duty; however, whether or not a tenant would be able to claim damages will depend upon the tenant being able to show that it has suffered a loss as a result of the initial refusal.
The moral of the story for landlords – be timely in providing a reply to a tenant’s request for consent to deal with a property.
For more information please contact our Property Team.
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