Withholding of consent to alterations by leaseholders

A leaseholder wishing to make physical alterations to the premises may require the consent of their landlord to do so. Two recent cases raise important lessons for both landlords and tenants in this area.

A lease may contain a provision requiring the tenant to obtain the consent of the landlord before carrying out any alterations. However, such consent cannot be unreasonably withheld. This rule is implied into all leases requiring consent by the landlord to alterations by section 19(2) of the Landlord and Tenant Act 1927. This means that the rule is to be treated as being part of the lease agreement (thus binding the landlord to follow it) even if it is not expressly stated in the text of the lease and even if the landlord tries to insert a clause disapplying s.19(2).

Relevant case law

In Messenex Property Investment Limited v Lanark Square Limited [2024] EWHC 89 (Ch), the landlord had refused consent to two sets of works at a four-storey mixed-use building in East London. These were (i) the addition of three more floors to the building and (ii) the conversion of the ground floor from office to residential space, together with the relocation of bicycle storage from the basement to the ground floor. The landlord’s reasons for refusing consent included that the tenant had not provided preliminary drawings from a structural engineer. The High Court found for the landlord and held that the landlord’s refusal of consent to both the rooftop works and the ground floor works based on the lack of preliminary structural engineer’s drawings had been reasonable.

In Jacobs v Chalcot Crescent (Management) Company Ltd [2024] EWHC 259 (Ch), the landlord withheld consent to alterations to a flat in North London on the basis that the proposed works presented a risk to the fire safety of the block. The County Court at Central London made an order declaring that the landlord had not unreasonably withheld consent. The district judge held that the landlord had withheld consent based on concern about fire damage to the structural integrity of the building (which would have been prejudicial to the landlord’s property interests) and that it had been reasonable for the landlord to withhold consent on that basis. The lessee appealed to the High Court on five grounds. The appeal was allowed on two of those grounds and the court ruled in the lessee’s favour.

Reasons relied on for refusing of consent

These two cases show that the reasons put forward by a landlord for refusing consent are just as important as whether those reasons are reasonable. In Messenex, the court held that the failure to provide structural engineer’s drawings had been a reason for the landlord withholding consent. The court applied the principle in the cases of Tollbench v Plymouth City Council (1988) 56 P & CR 194 and Iqbal and others v Thakrar and another [2004] 3 EGLR 21 that a landlord can only rely in litigation, as grounds for withholding consent, on reasons which featured in the landlord’s decision-making at the time that consent was refused. This means that landlords cannot simply rely on reasons which are reasonable if they did not actually have them in mind when refusing consent. Since the landlord regarded the two sets of works as a collective, the lack of structural engineer’s drawings had been a reason for refusing consent even though the documentary evidence between the parties did not fully support this conclusion.

Landlords also need to put forward a valid basis for refusing consent in court proceedings if such proceedings are brought in response to the refusal of consent. Failure to do so could have repercussions, whether at first instance or on appeal. In Jacobs, the High Court held that the district judge was not entitled to find that the landlord had reasonably withheld consent based on concern about fire damage to the structural integrity of the building. In reaching this decision, the High Court judge applied the approach in the Court of Appeal case of Al-Medenni v Mars UK Limited [2005] EWCA Civ 1041 that judges may only adjudicate on issues which have been presented by the parties to the litigation in accordance with our adversarial (rather than inquisitorial) system. In an adversarial system, a court must concern itself only with each side’s case and not try to ascertain what in fact happened.

Damage to the structural integrity of the building had never been pleaded by the landlord at the start of the trial. Counsel for the landlord had raised the issue of fire safety in their written outline submissions but couched in terms of the Building Regulations 2010, not structural integrity. Fire damage to the structural integrity arose only during the hearing of oral evidence during the closing submissions (by which time it was too late to examine it substantively) and even then only incidentally.

Reasonableness of reasons for refusing consent

The reasonableness of the reasons for refusing consent depends on the circumstances of the case. Both cases illustrate the importance of citing appropriate expert evidence where it is necessary to do so. This applies to both leaseholders (who have the burden of proving that consent has been unreasonably withheld) and landlords. In Jacobs, the landlord had not sought the expert opinion of a fire engineer, relying instead on the opinion of their Building Surveyor. In Messenex, the landlord had removed the requirement to provide structural engineer’s drawings for the ground floor works. However, the court held that it was reasonable to refuse consent to both sets of works even though the lessee had only failed to provide drawings for the rooftop works because of the close relationship between the two works.

At the same time, landlords must consider alternative solutions to refusal of consent. In Jacobs, the court held that the landlord could have made consent conditional on the installation of a misting (sprinkler) system on the second floor (where the lessee’s flat was located) to prevent fire from spreading up the building.

Conclusion

This case law shows that landlords and leaseholders must be able to cite appropriate evidence in support of their submissions. At the same time, landlords must have a valid basis for withholding consent. Their reasons for refusing consent must be properly cited, at the time of the refusal and in litigation arising from it.

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