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Granting a licence for works: A warning to Landlords

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Granting a licence for works: A warning to Landlords

If you are the long-leaseholder of a flat, have you taken some time recently to read through your lease?

We appreciate that, even in the last few months where many have had unexpected time on their hands, reading a lease is not a particularly thrilling use of time - at least not in a world where Netflix exists! However, figures suggest a surge in home improvements over the last 12 months and, for those living in a flat, it is crucial for them to check their lease to find out what is and is not permitted.

Those that have read their leases will have seen a description of works that they are allowed to undertake in their flat, along with a description of the works that they can only undertake with the landlord’s permission (which cannot be unreasonably withheld) and a list of the works that are prohibited.

They may also have seen, but not taken much notice of, a covenant by the landlord in which they agree that they will, if requested and funded by a leaseholder, take action against any other leaseholder if they breach their lease.

So, what if the work you want to do in your flat falls into the ‘prohibited’ category? It is not uncommon for leaseholders faced with this situation to ask their landlord to grant them a licence to do the work anyway.  In layman’s terms, this operates as a sort of side-agreement between the landlord and the leaseholder, protecting the leaseholder from the landlord bringing an action for a breach of the lease.

But what about that clause that says that the landlord will, on the request of a leaseholder, take action in respect of the breach of lease of another leaseholder? Can a landlord grant a licence to one leaseholder to effectively breach their lease when they have already promised all other leaseholders that they will take action against any breach if requested to do so? 

This was the question that came up in the Supreme Court case of Duval v 11-13 Randolph Crescent Ltd [2020] UKSC 18.

In the above case, Dr Duval held a long lease in a block of flats in London for which 11-13 Randolph Crescent Ltd was the landlord. Each lease in the block had identical clauses.  In this case, these clauses held particular importance:

  • Clause 2.6 of each lease said that improvements could not be made to the flat without previous written consent;
  • Clause 2.7 of each lease listed a number of things that were prohibited, including the cutting of any wall within or enclosing the flat;
  • Clause 3.19 of each lease said that the leases for every other flat would have the same clauses and that the landlord would enforce those other covenants at the request of the leaseholder, subject to payment of, and security for, its costs.

The problem arose when Dr Duval’s neighbour, Mrs Winfield, decided that she wanted to remove a substantial part of a load-bearing wall in her flat. She asked the landlord to grant her a licence to do so and the landlord agreed to grant that licence. The works would be in breach of clause 2.7 of the lease.

Dr Duval objected to this work and she sought a declaration from the Court that the landlord did not have power to grant the licence because of the promise it had made in clause 3.19 of the lease.

The Supreme Court upheld the decision of the Court of Appeal and found in Dr Duval’s favour.  Effectively, the Court found that the landlord would be in breach of it covenant to Dr Duval if it licensed Mrs Winfield’s works. 

The message this sent to landlords is that, if they have covenanted with their leaseholders to allow any one of them to require the landlord to enforce leasehold covenants against another leaseholder, they should not permit by licence any leaseholder act which is in breach of a prohibition. This will not only apply to renovation work, it could also apply, for example, to granting a licence to a leaseholder allowing them to keep an animal at the flat when the lease specifically prohibits it.

It is worth noting though that the outcome of this case might have further repercussions for landlords than simply clarifying that, faced with the above situation, they should not (or cannot) grant a licence.

What about those often minor breaches that landlords might otherwise turn a blind-eye to? Previously, a landlord might have not concerned themselves with, say, a leaseholder that kept a cat despite the fact that the keeping of animals is an absolute prohibition under the lease. By doing nothing, a landlord could be waiving their right to enforce the covenant.

It might be argued that landlords who waive their right to enforce are in breach of clauses, such as that found at 3.19 in Dr Duval’s lease, can no longer fulfil their promise to the other leaseholders that they will enforce the covenant on request.

The question for every landlord now should be whether they can afford to ignore even fairly minor breaches of a lease if they have a duty owed to other leaseholders to act on those breaches. Our view is that it is going too far to suggest that every breach should be litigated.  But the risks involved should at least be considered.

Have a question about granting licences or enforcing covenants? Our team of experts can offer guidance and support, contact them today:

📞 02380 221344 / 01202 315005
📧 contact@duttongregory.co.uk