On receiving an application from your tenant seeking consent to charge the property, check what the lease says on this issue:
1. If the lease says nothing about it or expressly allows your tenant to charge without consent, the tenant is free to charge the property as a whole, or in parts, and the tenant does not need your consent.
2. Check whether your tenant is requesting consent to charge the whole or part of the property. The lease may allow charging of whole with your consent, but absolutely prohibit charging of part.
3. Does the lease contain a covenant by the tenant to pay your legal costs for dealing with an application for a licence to charge? If so, ensure that the tenant is aware of this from the outset and obtain a fee estimate from your solicitor so that your estimated costs can be covered by an undertaking requested from the tenant’s solicitor at the outset. This should protect you against having to pay any costs yourself, whether or not consent is actually granted.
4. If the tenant is allowed to charge with your consent, you will be under an implied duty not unreasonably to withhold consent (section 19(1), Landlord and Tenant Act 1927 (LTA 1927)).
5. Is the consent of any other party required? If the lease is an underlease, and you therefore have only a leasehold interest in the property yourself, consent may also be required from the superior landlord. If you have a mortgage on your property, whether it is freehold or leasehold, consent from the your lender may also be required.
If you would like to discuss this further, then please contact Lily Meyer of Morrisons Solicitors Commercial Property Team in Wimbledon on 020 8614 4590 or by e-mail on [email protected].