Discussing UK law. Links: swarb.co.uk | law-index | Acts | Members Image galleries

Licence to sublet where subtenant "holding over"

Licence to sublet where subtenant "holding over"

Postby theycantdothat » Thu Oct 13, 2016 12:01 pm

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?
theycantdothat
 
Posts: 1053
Joined: Fri Nov 02, 2012 7:36 pm

Re: Licence to sublet where subtenant "holding over"

Postby diy » Thu Oct 13, 2016 12:12 pm

I don't know the answer, but could B acquire C or the reverse - i.e. could they merge in someway?
My suggestions are not legal advice
User avatar
diy
 
Posts: 2326
Joined: Fri Nov 02, 2012 10:06 pm

Re: Licence to sublet where subtenant "holding over"

Postby atticus » Thu Oct 13, 2016 1:13 pm

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

* sorry, 15 years to run.
User avatar
atticus
 
Posts: 18629
Joined: Sun Nov 11, 2012 2:27 pm
Location: E&W

Re: Licence to sublet where subtenant "holding over"

Postby atticus » Thu Oct 13, 2016 1:32 pm

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.
User avatar
atticus
 
Posts: 18629
Joined: Sun Nov 11, 2012 2:27 pm
Location: E&W

Re: Licence to sublet where subtenant "holding over"

Postby dls » Thu Oct 13, 2016 5:54 pm

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.
David Swarbrick (Admin) dswarb@gmail.com - 0795 457 9992
User avatar
dls
Site Admin
 
Posts: 11780
Joined: Thu Nov 01, 2012 1:35 pm
Location: Brighouse, West Yorkshire

Re: Licence to sublet where subtenant "holding over"

Postby theycantdothat » Thu Oct 13, 2016 10:23 pm

dls wrote: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.
theycantdothat
 
Posts: 1053
Joined: Fri Nov 02, 2012 7:36 pm


Return to Landlord and Tenant Law

Who is online

Users browsing this forum: No registered users and 1 guest