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Change of use

Planning permission

Consent to apply for planning permission required

Rotrust Nominees Ltd v Hautford Ltd
[2018] EWCA Civ 765

Summary

A landlord had acted unreasonably in refusing to consent to a tenant applying for planning permission for change of use to residential use of two floors of a six-storey building that it rented on a 100-year peppercorn lease. The user covenant permitted residential use, and the clause requiring the tenant to obtain the landlord's consent to planning applications was not intended to preclude the residential use of those floors in order to prevent the tenant from seeking to enfranchise under the Leasehold Reform Act 1967.

More detail

Although there appeared to be no reported case concerning the reasonableness of a landlord's refusal to consent to a tenant's application for planning permission where such an application required the landlord's consent, the applicable general principles were the same as applied in the case of a tenant's covenant not to assign or sublet without the landlord's permission, such consent not to be unreasonably withheld.

The test of reasonableness was objective, and the starting point was to ascertain the purpose of the covenant intended by the original parties to the lease, being obviously to protect the landlord's property interests. The reasonableness of the landlord's withholding of consent would depend on the precise circumstances at a particular moment so it had to be judged at the time of the application.

On the proper interpretation of the covenant its purpose did not include precluding the residential use of the first and second floors in order to prevent enfranchisement of the property.

The fact that permission to change the first and second floors to residential would substantially enhance the tenant's prospects of enfranchising made no difference. The lease was granted against the legislative background of the 1967 Act but cl.3(11) expressly authorised use of the entire property for residential purposes.

The fact that the landlord happened to own the neighbouring properties did not alter the analysis. In any event, if and insofar as management of the landlord's estate might be relevant to the question of the reasonableness of the landlord's refusal of consent, such wider management considerations were sufficiently met by the provisions in s.10(4) of the 1967 Act for the insertion of restrictive covenants in the transfer of the freehold.


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