Assignment and underletting

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Restrictions on alienation

Forms of alienation covenant

In the absence of any provision in the lease to the contrary, a tenant has the right to assign its interest in the lease and to create subleases. It is, however, a rare lease which does not restrict the tenant's freedom in this respect. Restrictions on alienation generally take the form of covenants on the part of the tenant prohibiting certain types of dealing. Such prohibitions may be 'absolute', 'qualified' or 'fully qualified' in form.

An absolute covenant (one that prohibits an action without allowing for landlord’s consent) is a complete bar if it covers the proposed transaction.

A qualified covenant prohibits a transaction without the landlord’s consent (but without requiring that the consent should not be unreasonably withheld). However, section 19(1)(a) of the Landlord and Tenant Act 1927 imports that requirement into any covenant that requires landlord’s consent for assigning, underletting, charging or parting with possession and applies ‘notwithstanding any express provision to the contrary’. Such covenants are therefore ‘fully qualified’.

In addition, qualified covenants in certain building leases are of no effect and the tenant may assign,

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Latest Property Disputes News

Property Disputes weekly highlights—21 November 2024

This week's edition of Property Disputes weekly highlights includes: a Court of Appeal case on the court’s jurisdiction to vary a suspended possession order, Upper Tribunal decisions on the impact on limitation of non-payment of an application fee, and the reasonable repair assumption in determining rateable value, and a High Court case regarding adverse possession and trespass. It also includes the launch of the Law Commission’s consultation on the right to renew business tenancies under Part 2 of the Landlord and Tenant Act 1954, as well as the UK Judiciary’s release of the Senior President of Tribunals’ annual report for 2024.

Law Commission launches consultation on right to renew business tenancies

The Law Commission has launched a consultation to examine how the right to renew business tenancies under Part 2 of the Landlord and Tenant Act 1954 (LTA 1954) functions and whether it meets the needs of business tenants and landlords. The consultation seeks to assess the efficacy of the current ‘contracting out’ model and explore alternative models, including mandatory security, the abolition of security of tenure, and a ‘contracting-in’ approach. It also examines which types of business tenancies should benefit from security of tenure. The consultation closes on 19 February 2025, with a second consultation paper expected to follow based on the responses received.

Court had jurisdiction to vary and convert suspended order to outright possession order (Kerr v Poplar HARCA)

Property Disputes analysis: In Kerr v Poplar HARCA [2024] EWCA Civ 120, the Court of Appeal considered whether the court had jurisdiction to vary a suspended possession order (SPO) made following a possession claim for rent arrears, to make an outright order for possession on the grounds of anti-social behaviour. The court held that a SPO originally based on a discretionary ground for possession can be converted into an outright possession order even where the new ground for possession is mandatory. Written by Laura Tweedy, mediator and barrister, and Callum Reid-Hutchings, barrister, both of Gatehouse Chambers.

UK Judiciary releases Senior President of Tribunals' annual report for 2024

The Right Honourable Sir Keith Lindblom, Senior President of Tribunals, has published his 2024 annual report, highlighting a busy year for the tribunal system. The report addresses the impact of policy and legislative changes across various chambers, as well as increasing caseloads. Sir Keith, in his final year as Senior President, reflects on progress towards strategic objectives set in 2020, emphasising the tribunals' commitment to maintaining access to justice and upholding the rule of law. The report includes accounts from the Honourable Mrs Justice Eady DBE on the Employment Appeal Tribunal, President Judge Barry Clarke on Employment Tribunals in England and Wales, and President Judge Susan Walker KC on Employment Tribunals in Scotland.

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