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Commercial Lease Law

Commercial Lease Assignment UK — Landlord Consent and Procedure

Assignment of a commercial lease transfers the lease from the existing tenant to a new tenant. Most commercial leases contain a qualified covenant against assignment — the landlord's prior written consent is required, and cannot be unreasonably withheld or delayed. LTA 1927 s.19(1): reasonableness is implied into any consent requirement. LTA 1988: landlord must respond within a reasonable time (case law: ~28 days); give written reasons if refusing; bear burden of proving reasonableness; failure entitles tenant to damages. Qualification conditions (s.19(1A) LTA 1927 as amended by s.22 LTA 1995): pre-agreed objective conditions in the lease (financial standing, RICS covenant assessment) — if not met, landlord can refuse without reasonableness test. Conditions landlord can impose: AGA (L&T(C)A 1995 s.16); financial references; deed of covenant from assignee; guarantor. Reasonable refusals: inferior covenant strength; use outside permitted use; current material breach. Unreasonable refusals: renegotiating terms; collateral benefit; personal antipathy without objective basis (International Drilling Fluids v Louisville Investments [1986]). Scotland: LTA 1927 s.19 does not apply; s.4 Law Reform (Miscellaneous Provisions) (Scotland) Act 1994; privity of contract continues on assignation (L&T(C)A 1995 does not apply in Scotland).

10 min readUpdated 7 June 2026Last reviewed: 17 May 2026commercial-lease-assignmentlandlord-consent-assignmentlta-1927lta-1988

LTA 1927 Section 19 and the LTA 1988 Consent Procedure

Under s.19(1) Landlord and Tenant Act 1927, a qualified covenant against assignment (requiring landlord's consent) carries an implied statutory proviso that consent cannot be unreasonably withheld or delayed — even if the lease does not expressly state this. The Landlord and Tenant Act 1988 imposes a statutory procedure on landlords: respond within a reasonable time (~28 days from receipt of all information required); give consent or refuse with specific written reasons; specify any conditions in writing. The burden of proving reasonableness lies on the landlord. An absolute prohibition on assignment is valid and enforceable — no reasonableness test applies. Qualification conditions (s.19(1A) LTA 1927, inserted by s.22 LTA 1995): parties may agree in the lease that specified objective pre-conditions (financial standing, RICS covenant assessment, minimum turnover) must be met before the landlord's obligation to consent is triggered — if not met, the landlord can refuse without being unreasonable. Scotland: s.4 Law Reform (Miscellaneous Provisions) (Scotland) Act 1994 implies a reasonableness test into Scottish commercial lease alienation covenants; LTA 1927 and LTA 1988 do not apply.

What Landlords Can Require and Reasonable/Unreasonable Refusals

Conditions a landlord can impose: AGA (L&T(C)A 1995 s.16 — outgoing tenant guarantees assignee's performance until further assignment; anti-avoidance s.16(4)); financial references and RICS covenant strength assessment; deed of covenant from assignee; creditworthy guarantor; licence to assign executed before completion. Reasonable grounds for refusal: materially inferior covenant strength; proposed use outside permitted use; history of breach with landlord; current material breach. Unreasonable grounds: wishing to renegotiate lease terms; collateral advantage; personal antipathy without objective basis. Leading case: International Drilling Fluids v Louisville Investments [1986] EWCA — the landlord's refusal must protect a legitimate interest connected to the subject matter of the lease, not confer a collateral benefit. Scotland: L&T(C)A 1995 does not apply in Scotland — original tenants in Scottish commercial leases are not automatically released on assignation and may retain privity of contract liability.

Frequently asked questions

Can a commercial landlord refuse consent to assignment?+

In a lease with a qualified covenant, the landlord can only refuse on reasonable grounds — the burden of proving reasonableness lies on the landlord. Under the LTA 1988, the landlord must respond within a reasonable time and give specific written reasons. An unreasonable refusal entitles the tenant to damages.

What conditions can a commercial landlord impose on assignment?+

Reasonable conditions include: an Authorised Guarantee Agreement (AGA) from the outgoing tenant; financial references and a RICS covenant assessment; a deed of covenant from the assignee; and a creditworthy guarantor. Conditions must be objectively reasonable and connected to the landlord's legitimate interests in the property.

What is the Landlord and Tenant Act 1988 and how does it apply?+

The LTA 1988 requires a landlord who receives a written application for consent to assignment to respond within a reasonable time, give consent or refuse with specific written reasons, and specify conditions in writing. Failure to comply entitles the tenant to a damages claim. The burden of proving reasonableness rests with the landlord.

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