Sub-letting Fees From Freeholder

[chris horne]

Hi Jeffrey,

I have recently written about a recent correspondence from my freeholder informing me of their intention to charge a sub-letting fee for the first time. Is there any requirement in Landlord & Tenant Law requiring them to justify this payment by quoting the relevant part of the lease or is it down to me as the leaseholder to read through my lease to find whether this is a bone fide request. I have heard that some leaseholders just try it on in the hope the leaseholder will pay without questioning the demand.

 

[Jeffrey Shaw]

1. One always needs to start with what the lease says, esp. re covenants against 'alienation'.
2. There might be no covenant at all. If so, L cannot invent one.
3. Or there might be such a covenant. Typically, there are three types. Compare:
a. "not to sublet" [an absolute prohibition];
b. "not to sublet without L's consent" [a 'partly qualified' restriction]; and
c. "not to sublet without L's consent (such consent not to be unreasonably withheld or delayed" [a 'fully qualified' restriction].
4. Now look at s.19(1) of LTA 1927 at http://www.legislation.gov.uk/ukpga/Geo5/17-18/36/section/19. Here's the important bit, with my underlining:
In all leases...containing a covenant...against assigning [or] underletting of demised premises or any part thereof without licence or consent, such covenant...shall, notwithstanding any express provision to the contrary, be deemed to be subject:
(a) to a proviso to the effect that such licence or consent is not to be unreasonably withheld, but this proviso does not preclude the right of the landlord to require payment of a reasonable sum in respect of any legal or other expenses incurred in connection with such licence or consent; and
(b) (if the lease is for more than forty years, and is made in consideration wholly or partially of the erection, or the substantial improvement, addition or alteration of buildings, and the lessor is not a Government department or local or public authority, or a statutory or public utility company) to a proviso to the effect that in the case of any assignment [or] under-letting...more than seven years before the end of the term no consent or licence shall be required, if notice in writing of the transaction is given to the lessor within six months after the transaction is effected.
5. Right. So the effect is that:
a. type 3b is converted by law into type 3c; and
b. (in some cases, as parenthesised in s.19(1)(b)'s first three lines) types 3b and 3c are converted by law into a mere 'give Notice of underletting' covenant.

 

[Jeffrey Shaw]

I have recently written about a recent correspondence from my freeholder informing me of their intention to charge a sub-letting fee for the first time. Is there any requirement in Landlord & Tenant Law requiring them to justify this payment by quoting the relevant part of the lease or is it down to me as the leaseholder to read through my lease to find whether this is a bone fide request. I have heard that some ^^leaseholders^^ just try it on in the hope the leaseholder will pay without questioning the demand.

Yes. T [leaseholder] should know what the lease demands.
Some freeholders/landlords do 'try it on' without bothering to read the covenants in detail, hoping that T won't either.
Oh, and the word marked ^^ probably 'freeholders/landlords'!

 

[chris horne]

Hi Jeffrey,

The landlord has now come back and has stated:

we would draw your attention to the 3rd schedule which contains information of disposal of the flat.

There is nowhere within the schedule giving the Lessee the right to sublet and we are therefore of the opinion that the Freeholds consent is required.

This complies with the new requirements of Insurance Company's to keep the Freeholders advised at all times as to who is in occupation.

It appears that there is no covenant regarding sub-letting. Am I right in assuming that they have shot themselves in the foot and cannot legally charge me for sub-letting the property?

Chris

 

[Jeffrey Shaw]

Yes. T does not need a 'right' to sublet. L's 'opinion' counts for nothing. If there's no prohibition/restriction, T is free to sublet unhindered.
Not only can L not charge a fee to T; L has no grounds to object at all to the subletting. Too bad if L's insurer does not like it.