Tenant alterations - A word of warning from the Supreme Court

Posted by Ince on 18th May 2020 -

The very recent Supreme Court case of Duval v 11-13 Randolph Crescent Ltd [2020] UKSC 18, provides a stark reminder to landlords and tenants to carefully review the terms of the lease when a request for consent to make alterations is made by a tenant.

If a landlord gives consent to a tenant to carry out alterations, despite an absolute prohibition on such alterations in the lease, the landlord will be in breach of its obligation to enforce the lease covenants should another tenant in the building require the landlord to enforce it

 

The Background

A tenant requested consent to carry out works to her flat which involved the removal of a large part of a load bearing wall. There was an absolute prohibition on such structural alterations in the lease.

The landlord covenanted in the lease to enforce covenants such as the absolute prohibition on structural alterations, on being asked to do so by other tenants in the block.

Another tenant in the block objected to the works. Despite this objection, the landlord granted a licence for the works subject to the tenant securing appropriate insurance. The objecting tenant issued proceedings against the landlord to seek a declaration that the landlord did not have the power to permit the tenant to breach the absolute prohibition in the lease.

 

The Court

The Court of Appeal found in favour of the objecting tenant. The landlord appealed to the Supreme Court but it dismissed the landlord’s appeal; it unanimously held that a landlord who has permitted a tenant to carry out alterations in breach of an absolute prohibition in its lease, would be in breach of its obligation to enforce the lease covenants at the request of another tenant in the block of flats.

The landlord was not free to licence works in breach of, or to waive compliance with, the absolute covenant, without the agreement of all the other flat tenants.

 

Conclusion

This case does not provide a new or unique interpretation of the terms of a lease for landlords and tenants but it is a strong reminder to landlords particularly that when faced with requests for consent to alterations these must be treated with strict adherence to the terms of the lease.

We have a number of freehold owning company clients and regularly speak with the directors about lease management issues. They have had to respond to such requests in the past. The directors are not always experienced in property matters, particularly where the company is formed by the residents. This could potentially lead to a seemingly reasonable request from a tenant being permitted when in fact the terms of the lease prohibit it.

The above mentioned case ought to be a reminder for landlords that they risk legal action from disgruntled tenants if they do not comply with the lease. It is imperative to check (and double check) the lease and if necessary to seek legal advice on the issue.

Should you wish to discuss this matter please do feel free to get in touch with David Quinn at 029 2167 2707 or by email on [email protected].

David is a Managing Associate in the team of specialist Property Litigation lawyers at Ince. He regularly advises landlords and tenants in relation to lease management issues and strategies.