Subletting of flats held on long leases

15 Aug 2018

Colman Coyle act for the landlord of a block of flats in this case which is currently before the Court of Appeal.

The lease of one of the flats contained a covenant “not to use the property otherwise than as a single private dwelling house in the occupation of the Lessee and his family”.

The Upper Tribunal of the Lands Chamber found for the landlord that this covenant had the effect of preventing subletting of the flat, either on an Assured Shorthold Tenancy or on short Airbnb-type lettings.

The leaseholder has appealed on the grounds that:

  • The Lease was originally granted in 1978, but a new lease was granted under the Leasehold Reform, Housing and Urban Development Act 1993 (sometimes called a lease extension); so therefore
  • The Unfair Terms in Consumer Contracts Regulations 1993 (“UTCCR”) should apply. The leaseholder argued that it should apply by virtue of Regulation 4(2)(a) UTCCR. Regulation 4(2)(a) provides that where a ‘mandatory statutory or regulatory provision’ indirectly gives rise to the obligation, the UTCCR will not apply. The landlord argues that is the case here; and, if the UTCCR applies to the Lease, then
  • The lease term against use of the flat was unfair pursuant to Regulations 5-6 of the UTCCR.

[Please note that the UTCCR has been replaced by Consumer Rights Act 2015, but transitional provisions apply]

We await the judgment.

This type of case reflects the tension between:

  • A tenants right to deal with property as they wish: many people buy properties as an investment, and if you have spent a fortune on a property you will presumably want the freedom to do what you want with it; and
  • A landlord (and other tenants) on the other hand has an interest in how a block of properties is managed: many landlords and indeed tenants are unhappy if the character of a block changes, or if they lose track and lose control of who is living in or visiting the building, and what they are doing in the building. Changing the occupants of a block from families to transitory or short-term letters, for example, is likely to change the character of the block.

If you or your property have been affected by these issues, get in touch with one of our expert lawyers. Call us now on +44(0)20 7354 3000 or email enquiries@colmancoyle.com.

This blog is an edited version of a training webinar given by Michael Large of Colman Coyle to LexisNexis (a leading supplier of training to lawyers) on 16 July 2018.

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