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Was landlord's refusal to consent to planning permission reasonable?
The question of whether a landlord was reasonable in refusing consent for planning permission for a change of use because of the fear of enfranchisement (ie acquiring the freehold) was addressed in Rotrust Nominees Ltd v Hautford Ltd.
In that case, the Court of Appeal found that a commercial landlord acted unreasonably by withholding consent to apply for planning permission to change the use of the middle two storeys of a building.
The case revolved around a 100-year lease of a Soho building which permitted residential use but, if the tenant wanted to apply for planning permission, first the tenant had to ask the landlord for permission (which could not be withheld unreasonably). The landlord did refuse consent and argued that the tenant's ability to buy the freehold would be enhanced if it successfully obtained planning permission. The landlord told the court that it wished to retain control of the freehold for estate management purposes.
The Court of Appeal said that residential use was allowed under the terms of the lease anyway and, noting that the facts of the case were important in all such cases, batted away the landlord’s arguments. On the question of the landlord’s concerns about enfranchisement, the court said that their management interests should be capable of being sufficiently preserved by the inclusion in the transfer of the freehold of appropriate restrictive covenants under section 10(4) of the Leasehold Reform Act 1967. The landlord’s refusal was therefore unreasonable. Not only did the Court of Appeal find against the landlord but it also refused it permission to appeal to the Supreme Court.