In a perfect world, landlords and tenants would enter into leases for exactly the length of term that each would favour, and tenants would occupy until lease expiry. In practice, landlords usually want to tie their tenants in for long terms to secure steady income streams, while tenants desire flexibility. The only means of keeping both parties (relatively) happy is to have flexible alienation provisions, allowing the tenant to pass on its bargain to a third party when it wants, subject to the landlord being satisfied that the replacement tenant is an adequate covenant.
Following the Landlord and Tenant Act 1988 and a series of subsequent court decisions, tenants who seek licence to assign or sublet their leases may now feel that they have at least some of the law on their side but may also quail at the sheer bulk and complexity of it. Landlords will not sleep easily either – for the perils of delaying or being too demanding (e.g. when attaching conditions to any consent) are substantial.
Against this background, Hogan Lovells and Falcon Chambers have devised the Protocol for Applications for Consent to Assign or Sublet, which goes live today:
This Protocol, which applies to commercial property situated in England and Wales has three purposes. First, to improve communication between landlord and tenant and establish a workable timetable. Second, to avoid arguments as to the information and documentation that should form part of any application, and as to the period of time within which the landlord should give its decision. Third, in case disputes do arise, parties are guided towards alternative dispute resolution, with recourse to the courts being an option of last resort.
We envisage this Protocol being disseminated by the legal and surveying professions as a ready reckoner for behaviour at the point of application. As it becomes embedded in practice, we would hope to see it being referred to in leases and other binding documents as a behavioural code to which arbitrators and courts will have regard when assessing compliance.
We also hope that this Protocol will serve as the first in a series of similar “best practice” documents designed to smooth landlord and tenant relations, to be placed on the above website.
The team who created the Protocol are Nicholas Cheffings and Mathew Ditchburn, partners in Hogan Lovells real estate disputes team, and Guy Fetherstonhaugh QC and Jonathan Karas QC from Falcon Chambers.