Licence to sublet where subtenant "holding over"

[theycantdothat]

A grants B a lease of a shop for 30 years on a lease which contains an absolute prohibition against subletting.

Despite the prohibition A grants B a licence to sublet to C for ten years with no requirement to contract out of statutory security of tenure. B sublets to C for ten years without contracting out. The ten years expires and C continues in occupation. The tenancy is continuing by virtue of Part II L&T 1954 and the head lease has 15 years left to run.

A is now putting pressure on B and C to agree a new sublease but wants a substantial premium to grant a licence to sublet. It seems to me that B and C can just sit tight. The tenancy is the tenancy consented to by A and the fact that the ten years has expired is of no consequence. A cannot insist on the grant of a new sublease.

What though would be the position if C requests a tenancy under section 26 L&T Act 1954 and there are no statutory grounds for opposing a renewal or B chooses in any event not to oppose the renewal? If it goes to court it seems that the court must order the grant of a new tenancy and that B must grant it even though his lease has an absolute prohibition against subletting. A whistles for his premium.

If it is indeed the case that B can be ordered to grant a new lease to C despite the absolute prohibition against subletting, does that justify B granting a new lease to C without obtaining consent?

Is it simply the case, if a landlord grants consent to sublet (whether the prohibition is absolute or qualified) and the sub-tenant has the benefit of Part II protection, that he cannot object to the grant of a new tenancy?

[diy]

I don't know the answer, but could B acquire C or the reverse - i.e. could they merge in someway?

[atticus]

Is the head lease continuing?* Is the head lease contracted out?

* sorry, 15 years to run.

[atticus]

A has a problem. And no direct relation with C. The lease to B has 15 years to run.

C sits tight until B does something eg serves a s25 notice. I can see no advantage to C in serving an s26 notice unless extremely confident of achieving a rent reduction.

B should not grant a new lease that expires later than the day before expiry of its own lease. Otherwise it ceases to have a reversionary interest.

[dls]

It seems to me that A has waived the clause. He knew he was consenting to a new business tenancy and that therefore this amounted to a lease which might be renewed.

It is important to remember that the policy behind all this is to protect those who create a business.

It is a long way from 100% though.

[theycantdothat]

It seems to me that A has waived the clause. He knew he was consenting to a new business tenancy and that therefore this amounted to a lease which might be renewed.

It is important to remember that the policy behind all this is to protect those who create a business.

It is a long way from 100% though.

I am inclined to agree.