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Review Your SQE 1 Practice Records

Examination Timing: 00H01M53S

Mr. Brown, the freeholder (the Landlord), has granted a commercial lease of a property to a tenant, Book Haven, a bookstore. The lease stipulates that the property may only be used for retail purposes. Book Haven, an independent trader struggling to pay the rent, seeks the Landlord's consent to assign the lease to Green Grocer, a supermarket operated by a highly profitable national chain. Mr. Brown wishes to withhold consent because he operates another supermarket opposite the property and is concerned that Green Grocer will take trade away from his own business. The lease contains an alienation covenant stating, "The Tenant shall not assign underlet or charge the Property without the prior written consent of the Landlord." 

Can Mr. Brown lawfully withhold consent to the assignment on the basis of the assignee’s business?

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Under English law, particularly the Landlord and Tenant Act 1988, a landlord must act reasonably when withholding consent to an assignment of a lease. Competition with the landlord's business is generally not considered a reasonable ground for withholding consent. The landlord's duty is to consider the assignee's suitability based on factors directly related to the lease and the property, such as the financial standing and ability to adhere to lease terms. In this case, withholding consent solely on the grounds of potential competition would likely be deemed unreasonable. 

Key Point: The reasonableness of withholding consent for lease assignment is governed by the Landlord and Tenant Act 1988, which requires landlords to provide valid reasons directly related to the lease and the property. Competition from the assignee is not a valid ground for withholding consent, emphasizing the need for landlords to act fairly and reasonably in these matters.

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