Supreme Court justices have ruled by a three to two majority that a freeholder was entitled to withhold consent for a leaseholder to apply for planning permission that might reduce the value of a West End property.

Sequent Nominees Ltd (formerly Rotrust Nominees Ltd) v Hautford Ltd [2019] UKSC 47 concerned a six-storey terraced building in Brewer Street, Soho, London. A 1986 lease includes the fully qualified covenant that the tenant may not apply for planning permission without the landlord’s consent, which must not be ‘unreasonably withheld’.

Between 2013 and 2015, the sub-tenant, an ironmonger business, converted the four floors into self-contained flats and sought the former landlord’s consent to apply for the necessary planning permission. This was refused on the ground that, if the majority of the building became residential, the tenant would have the chance to compulsorily acquire the freehold under the Leasehold Reform Act 1967. An increased risk of such enfranchisement would devalue the landlord’s property.