The question was recently looked at by the High Court in relation to a large Docklands development. The tenant was selling off several of its 42 flats which were held on 999 year leases. Under the terms of the lease, the tenant was required to obtain the consent of the landlord (which was not to be unreasonably withheld). As a condition of the consent the landlord required payment of all the arrears plus an administration fee of £1,250. The tenant paid without any complaint on the first flat. He then sought to sell off another three. At this stage the landlord advised that the charges would again be £1,250 for each flat, there would be a surveyor's fee of £350 for an inspection of each flat and they would require a bank reference for the buyers. The tenant refused to provide the bank references or allow the inspection (because it did not wish to pay the fee). Separately, the tenant decided to challenge the administration fee of £1,250 being charged for each sale.
The High Court found that although the tenant was wrong in denying the inspection and also not providing the bank reference, the administration fee of £1,250 was unjustified and therefore by insisting on that fee, the landlord was unreasonably withholding consent which was unlawful. Two mistakes by the tenant but the one by the landlord proved fatal.
This case clearly confirms a point that is now becoming more established that covenants requiring consent cannot be used by unscrupulous landlords to profit from a process
(Case reference: 1 West India Quay v East Tower (2016) ewhc 2438(ch))
Avi Barr is a solicitor and partner at Read Roper and Read handling a range of landlord and tenant matters, both commercial and residential