What is a “reasonable time” for a landlord to consider the tenant’s application to sub-let or assign?
09 / 01 / 2019
In uncertain financial times where tenants may want to exercise their option to assign or underlet their lease, what is the reasonable time by which a landlord must respond to the tenant’s application?
The starting point is the Landlord and Tenant Act 1988 (the “LTA 1988”) which imposes duties on landlords granting consent to assign, underlet, charge or part with possession of a property, which are as follows:
- to give consent within a reasonable time, unless it is reasonable not to do so;
- to give the tenant written notice of the decision; and
- to pass on the applications for consent to all appropriate people (e.g. any superior landlord).
What does a “reasonable time” mean?
In the case of Go West Limited -v- Spigarolo  EWCA Civ 17 the Court of Appeal considered what the cut-off point was at which the tenant should treat the landlord’s response to any proposed assignment/underletting as final. Time starts to run from the date when the tenant submits its application for consent. The reasonable period for the landlord to consider an application will generally be measured in weeks rather than months, but will depend on the specific facts. On the facts of this case the tenant’s original application was made on 13 March and the landlord initially requested further information before writing to the tenant to refuse consent on 30 May. This case highlighted that the tenant’s application is not a continuing one, but one application which must be determined by the landlord in a single decision. When the landlord produced a letter giving final refusal this brought the reasonable time allowed under the LTA 1988 to an end. It appears that the 7 weeks it took the landlord to formally respond to the tenant was not considered unreasonable and indeed the judgment implied that if the landlord had not refused consent at this time a further period might still have been available.
The reasonable time will depend on factors such as what information the landlord requests and how quickly and fully the tenant responds to requests for information. If a landlord considers the information provided by the tenant to be unsatisfactory then the landlord should write to the tenant seeking further information, stating that if the tenant fails to provide this additional information then the landlord will be forced to make a decision which may be influenced by the degree to which the tenant has co-operated.
New Alienation Protocol
The new Alienation Protocol is designed to reduce disputes between landlords and tenants and makes the following recommendations for dealing with applications to assign or underlet within a reasonable time:
- for the landlord to confirm receipt of the tenant’s application to assign/underlet within 5 working days of receiving the application, and state any additional information required;
- where the landlord is itself a tenant, and the terms of its lease require it to seek its own landlord’s consent to any such proposed transaction, the landlord should aim to serve on its own landlord copies of the application and supporting documents within 5 working days of receiving them from its tenant;
- the landlord should aim to communicate its decision within 21 days of receiving the tenant’s application; and
- if the landlord can’t communicate its decision to the tenant either within an express time limit requested by the tenant, or within a period of 21 days (whichever is shorter) the landlord should notify this to the tenant as soon as possible, and give reasons.
Improving the subletting and underletting process will be of benefit to both landlords and tenants, saving time and narrowing the scope for disputes.
The reasonable time is generally weeks, not months. The tenant should make sure the application for consent is as complete as possible and anticipates the landlord’s likely concerns. If you are a tenant, try to provide as much information as possible about your covenant strength and the proposed transaction in your initial response so that there is no reason for the landlord to delay a final response. Given that tenants are experiencing a difficult market, with some being forced to assign and underlet their leases, speeding up the approval process will be of benefit to both landlords and tenants alike.