Underleases: getting around pre-conditions

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By Gemma Sargent-Busquets

It is common for leases to include a covenant preventing the tenant from underletting the whole of the premises without the landlord’s prior consent — such consent not to be unreasonably withheld or delayed.

Section 1 of the Landlord and Tenant Act 1988 (LTA) then applies so the landlord is obliged to give consent unless it is reasonable not to do so. It is also obliged to give its written decision within a reasonable time, stating its reasons for refusing or, if the consent is subject to conditions, specifying these conditions in the decision.

There is a raft of case law on the issue of whether the landlord has acted reasonably in withholding consent or whether the conditions it is seeking to impose are reasonable. However, tenants could find themselves in tricky situations where their lease stipulates pre-conditions to the right to underlet that have to be satisfied before the provisions of the LTA 1988 come into play…

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