It is long known that freeholders can modify or discharge covenants that restrict the use of their premises under s.84 of the Law and Property Act 1925 (LPA).  However, a recent case demonstrated that tenants under certain long leases also have that valuable commercial tool at their disposal.

The LPA allows this in prescribed circumstances such as where restrictions are obsolete, where the person with the benefit will not be injured by the change or where they have agreed to this.

However, s.84(12) LPA extends those rights to tenants under a fixed term of 40 years or more where 25 years have expired.

In the case of Shaviram Normandy Ltd-v- Basingstoke and Dean Borough Council [2019] UKUT 256 (LC), Shaviram Normandy Ltd (C) was the tenant of a building let by Basingstoke and Dean Borough Council (D) on a long head lease.  Its use was restricted to offices.   

On an application to D for consent to convert the building into 114 residential flats D, while wearing its planning authority hat, allowed the change of use.  However, while wearing its landowner hat, D refused consent to vary the lease.  C therefore applied to the Upper Tribunal Lands Chamber under s.84(12) of the Act.

The Upper Tribunal held that the covenant restricting the property's use to offices conferred no practical benefit of substantial value or advantage on D and decided to modify it to allow the residential use.

Thus, assuming a long lease satisfies the LPA criteria and at least one of the statutory grounds under section 84 are present then tenants, property developers and investors may be able to use s.84(12) to enhance the commercial value of leasehold land against the wishes of the landlord.

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