Change to Permission to sub-let letter

[AdrianFarrell]

Hi,

We're in the process of selling our flat to an investor. Although the lease doesn't permit sub-letting it is old and this provision is considered redundant, most of the directors for the estate sub-let, in fact, probably 2/3 of 50 properties do.

However, The wording of the permission to sub-let letter was changed without notice during the process of us selling and the buyer is now refusing to exchange until it is made more reasonable. The buyer agrees with the spirit of the letter to help protect the estate but feels its wording infringes his rights as it gives directors power of veto over his tenants.

Should there have been a proper consultation to this change with due notice? As of writing no communication has been made to the other 49 shareholders/leaseholders.

Would a change in the wording of the letter of approval effectively be a change to the lease itself and therefore require the approval of all shareholders/leaseholders?

Just to clarify, as shareholders we're effectively landlords too from a legal point of view, the change was made by one of the directors of the Right to Manage company, essentially a residential committee.

many thanks,
Adrian

[leaseholdanswers]

Well there are two things

1 The lease is clear no subletting. Doesn't matter how old the leases are. NO change of letter , or any letter nor consultation can vary the lease.

2 As an RTM there is an external freeholder who would be interested to learn that the RTM is not managing the leases in accordance with the terms of it.

In a case where a landlord, leaving aside 2 above, does not enforce the terms of the lease there is precedent for abandonment of a clause. However in this case
1 there is an external freeholder so they lack the capacity to do so should the FH insist
2 they have been granting consents on the basis that they would enforce the terms of the lease in the worst case scenario or at least manage the extent of their abandonment.

All of which leads to a scenario where neither party can claim abandonment and yet the LL cannot enforce the terms of their licence, as there is no contractual basis for it save that both parties agree to, but the LH is in breach if they sublet. The LL however can try to but will face having to justify their long standing procedure of ignoring the lease with conditions. It can then get really complicated with the terms of other leases and estoppel, so the problem is that the buyer has a choice
1 get into a complicated legal fight
2 accept the terms and see if a court will, as they can overturn unreasonable terms of consent to let, have jurisdiction in this case, and that leads back to 1.

Frankly there shouldn't be a lot of difference between you and the RTM on what makes a good tenant.

Some may burble about the OFT saying this might be an unfair term but that is nonsense.

There are cases along these lines however without seeing the lease and the licences, I can't comment sensibly and would suggest that you use a direct access barrister for advice.

[siva]

This sounds like a bit of a mess.

Does the freeholder know that 2/3 of leaseholders are in breach of their lease?

It is the duty of the directors of the RTM Company to report any breach of the lease the the landlord withing 3 months of becoming aware of it.

[AdrianFarrell]

I'm not 100% sure who freeholder is right now, but it's probably the Metropolitan Police, in which case, I'm pretty sure they're aware and it doesn't bother them in the slightest.

However, how come neither our, or our buyers conveyancer have any issue with the idea of a permission to sublet letter in order negate a lease that prohibits subletting?

[Gordon999]

I'm not 100% sure who freeholder is right now, but it's probably the Metropolitan Police, in which case, I'm pretty sure they're aware and it doesn't bother them in the slightest.

However, how come neither our, or our buyers conveyancer have any issue with the idea of a permission to sublet letter in order negate a lease that prohibits subletting?

The name of the freeholder will be stated on your annual ground rent bill.

I think the RTM needs to have power to veto undesirable tenants who cause problems for other residents living in the block. In our block, we had a flat sublet to local Council which had allowed its Social Services Dept to house an underage girl whose boyfriend engaged in selling drugs from the back door during the night. The problem was only removed after the local MP and Police became involved with making complaints to local Council.

Perhaps you should ask your RTM director to amend his letter by extra sentence to say

" The veto will only be applied if the sublet tenant is in breach of the lease ( e.g running a business from the flat or causing excessive noise at night or becomes a nuisance to other residents who are entitle to quiet enjoyment living in their flat)".

[leaseholdanswers]

However, how come neither our, or our buyers conveyancer have any issue with the idea of a permission to sublet letter in order negate a lease that prohibits subletting?

because they do conveyancing and don't deal in landlord and tenant.

In real life there are plenty of these daft unlawful and unsupportable arrangements that rumble on for years.

It becomes an issue however when the wheels come off, in this case
- the potential for your buyer to fall out over the renting tenant, or -if freehold was acquired by certain companies who see a field day for fees for breaches and litigation

As you can see its not a simple case of a lease allowing subletting subject to consent( which can make certain reasonable requirements and potentially veto a let) but two parties agreeing to an extra contractual arrangement.

The latter, the consent to let letter, I am sure fails I am sure,to make it clear that the neither party will seek to rely on the lease, but the agreement , and then any decent solicitor will see that the RTM cannot agree to that as, with an external FH, they can't.

So as you can see he takes it or leaves it as if is an issue there is lot to unravel which means time and costs. The principle is that if you have a contract, a lease, and want to change to terms, change it, don't rely on exchanges of correspondence. All thats gets rich is the lawyers.

Ultimately in a dispute he either gets to rely on the extra contractual agreement and the rights it grants, and he has no right to "unreasonably withholding consent" or he relies on the lease which says NO. Establishing anything else means litigation.

That's what the lawyers should be saying, either that or take your chances.

[siva]

I'm not 100% sure who freeholder is right now, but it's probably the Metropolitan Police, in which case, I'm pretty sure they're aware and it doesn't bother them in the slightest.

If you could get something from them in writing it would help your cause.

However, how come neither our, or our buyers conveyancer have any issue with the idea of a permission to sublet letter in order negate a lease that prohibits subletting?

Leaseholdanswers is most likely right, it is not unusual for solicitors to miss this sort of thing, however it's worth double checking that you have understood the lease. What does the covenant actually say in regard to sub-letting?

[leaseholdanswers]

I'd think about asking ( as long as the leases don't require all to be the same wording) to be varied to allow subletting subject to consent, and offer to pay for that likely £500 to £1000, which they can use for a model for other flats in the block. With a NO sublet cause they can ask/tell owners to prepare to enter into a DoV next time they seek consent.

That will give them the illusion of control and the secret trap that a LH can then apply to the court for the protection of the 27 and 85 Acts, "reasonable terms and time limits", makes your flat more sellable, and keeps the bored old b*gg*rs busy with new rules to lord over you