The Law Commission

PART X

SPECIFIC ISSUES 1: CONSENT REQUIREMENTS

Introduction

10.1     In the following five Parts of this report, we deal with a number of issues that must be addressed for the scheme we propose to be able to work in practice. These relate to ways in which the relationship between the landlord and the occupier may alter during the life of the agreement. These parts discuss four principal issues:

(1) joint occupation;

(2) lodgers and sub-occupation;

(3) transfer of rights of occupation; and

(4) succession to rights of occupation and the effect of the death of the occupier.

10.2     In this context, there can be a tension between the right of the landlord to control who lives in the premises; and the right of the occupier to use the premises – while in occupation of them – as he or she wishes. One of the policy choices that must be made is the extent to which the landlord should be able to consent, or required to consent, to such events occurring. Our recommendations are based on the current law, but adapted and modified to fit the scheme we now propose.
10.3     As the issue of consent arises in a number of different contexts, discussed in subsequent Parts, we have decided to consider it as a separate issue at the outset to avoid constant repetition.

Consent: the available options

10.4     Where an occupier asks the landlord if he or she can do something not directly provided for in the agreement, there are three potential outcomes.

(1) The landlord has the absolute right to say no to the request. If the landlord decides to accede to it, that is a matter for the landlord in the exercise of his or her discretion. In these cases, the occupier cannot force the landlord to agree to what has been proposed.

(2) The landlord needs to give consent, but this can be withheld on the grounds that it is reasonable to do so. This enables the landlord to retain some control over the premises, but requires him to consider any request seriously.

(3) The occupier has an untrammelled right to do what he or she wants, without the need to obtain the consent of the landlord.

10.5     Each of these outcomes is already found in the law. They will continue to be important in the discussion of the specific issues considered in later Parts of this report.

Terms in the agreement relating to consent

10.6     In accordance with our overall approach, the requirements relating to consent will be set out in the agreement. Where options 1 and 3 are concerned, the issue will be straightforward.

(1) If the landlord has a veto (Option 1), the agreement will make that clear. Indeed, the landlord can simply ignore the request. There will be no circumstances in which the request will be deemed to have been granted.

(2) If the occupier has the untrammelled right to do something (Option 3), it will not even be necessary to make a request.^[1] The only circumstance in which we recommend that the occupier have this right is in the compulsory-minimum term giving a type I occupier the right to take in a lodger.^[2]

10.7     Option 2 requires the occupier to seek consent, but that consent may not be unreasonably withheld. We recommend that, in such cases, the following apply.

(1) Any request for consent must be made to the landlord in writing. If this is not done, the occupier will have no rights in relation to the landlord's failure or refusal to give consent, his or her reasons for refusing it, or the terms on which it is given.

(2) Failure by the landlord to respond (either by granting or refusing consent or making a reasonable request for further information^[3]) to a properly made request for consent within a period of two months should be regarded as an unreasonable refusal of consent, and the requisite consent should therefore be deemed to have been given.^[4] The two month period should only begin to run from the date on which all information reasonably required by the landlord to be given has been provided. The landlord should be required to define what information he requires within 14 days of the request for consent being made. If the occupier fails to supply sufficient or adequate information, then any further request for additional information must be made by the landlord within 14 days from the date of the supply of the insufficient or inadequate information. Where there is a dispute as to whether and when all such information has been provided, the county court should have jurisdiction to determine the issue.

(3) Where the landlord refuses a properly made request for consent he or she should, if asked, give reasons for refusal. If the landlord fails to give reasons within two months from the date on which the request was made, he or she shall be deemed to have given consent. Any challenge to the adequacy of reasons or whether they are evidence of reasonableness shall be resolved by application to the county court. The reasons shall be deemed adequate and reasonable until a court rules otherwise.

10.8     Any transaction carried out by the occupier, which

(1) is subject to the landlord's veto and to which the landlord has not given consent, or

(2) is subject to the landlord's consent and consent has been reasonably withheld,

is not binding on the landlord. The agreement should note that the making of any unauthorised transaction is itself a breach of the agreement which could result in possession proceedings being taken against the occupier.

The effect on the landlord of an unauthorised occupant entering the premises

10.9     A landlord should not be deemed to have accepted an unauthorised occupant as an authorised occupier at any time before the landlord had actual knowledge that he or she was unauthorised, or ought reasonably to have discovered this. From that moment, the landlord has two months within which he or she may receive payments from the unauthorised occupant without this implicitly creating a binding occupation agreement.
10.10     During this period, the landlord may

(1) take possession proceedings against the unauthorised occupant; or

(2) grant the unauthorised occupant a type II agreement;^[5] or

(3) grant the unauthorised occupant a full type I agreement.^[6]

10.11     If at the end of this period, the landlord has taken none of these steps, he/she will be deemed to have granted either

(1) a type I agreement in the case of a social landlord; or

(2) a type II agreement in the case of a private landlord.^[7]

10.12     Where a social landlord grants a type II agreement it should be treated as a probationary agreement.^[8]

Structuring decisions relating to the reasonableness of withholding consent

10.13     At present, the law on what constitutes a reasonable withholding of consent is found in case law that has been developed almost exclusively from cases arising in the commercial lettings market. We recommend that the question of the reasonableness of withholding of consent in the housing context must be seen separately.
10.14     We recommend here that reasonableness should be the subject of a number of structured questions, to guide the parties and the court, particularly in relation to those issues which could result in the landlord losing some control over who lives in the premises. They should also apply to the reasonableness of any conditions imposed on the giving of consent. This will be very important where a condition requiring an occupier to accept that the transaction has used up a succession right is in question.^[9] The structuring questions should apply whenever a term in the agreement, whether compulsory-minimum or default, requires consent not to be withheld unreasonably in relation to joint occupation, lodgers or sub-occupation agreements, or transfer.^[10]

(1) In deciding whether consent has been withheld unreasonably or offered subject to an unreasonable condition, the court should be required to balance the interests of the current occupier and the proposed new joint occupier, lodger or sub-occupier or transferee against the interests of the landlord and the wider community.

(2) As regards occupiers, the court should be required to consider first the likely effect of the refusal or imposition of a condition on the home, family and private lives of the contractual occupier(s) and the newcomer, and then of anyone else known to occupy the property as their home.

(3) Consideration should also be given to any financial interest of the occupier. This will not normally be relevant for occupiers of social landlords. However, it may be relevant for those with longer fixed term type II agreements from private landlords where either a premium has been charged, or the occupier was expecting to generate an income from lodgers or sub-occupiers, or the occupier is seeking to use a transfer or sub-occupation agreement to ameliorate the effect of being locked in to a fixed term.

(4) In considering the landlord's interests, the fundamental issue should be: to what extent are those interests prejudiced by the granting of the consent, or by not imposing the disputed condition? Where a court is minded to overturn the landlord's refusal or imposition of a condition, it should also take into account the effect on the other groups whose interests would be affected by the court reversing the landlord's decision.^[11]

10.15     In the housing context, any adverse assessment of financial risk to the landlord should be adequate in most cases to justify withholding of consent.
10.16     In addition, as social landlords must use their properties to relieve housing need, it will be important to consider the extent to which reversing a decision to refuse consent will result in a loss of their ability to ensure that the property is used by those satisfying their housing needs' criteria. The court should be required to consider any evidence as to how soon, if at all, a person, to whom the occupier wants to extend his/her right of occupation, would have been allocated an equivalent property if he or she had applied for a vacancy through the waiting list. In other words, the priority that would attach to the person the occupier seeks to bring into the agreement should be tested against the priority of others seeking that sort of property, in that area, from that landlord.

Note 1    An additional term may include a stipulation that the occupier should notify the landlord of certain steps, if the parties so agree. Such a term would of course be subject to the UTCCR tests of fairness and transparency.    [Back]

Note 2    See Part XII below.    [Back]

Note 3    For example, the name and address of any person whom the occupier wants to be joined into the agreement; or any reference relating to that person.    [Back]

Note 4    See CP 168, 2.38, 2.15.     [Back]

Note 5    This will be one of the circumstances in which a social landlord may grant a type II agreement on a temporary basis.    [Back]

Note 6    See CP 168, 2.34 to 2.36    [Back]

Note 7    See CP 168, 2.37.    [Back]

Note 8    On probationary agreements, see paras 5.33 – 5.35 above.    [Back]

Note 9    This is discussed at para 11.19 below.    [Back]

Note 10    Although in both types I and II the default term will be a landlord’s veto, the landlord may choose to use a consent term instead.    [Back]

Note 11    Depending on the facts, these would include: people on any waiting list for the landlord’s properties, the landlord’s other occupiers, other neighbours who are not renting from the landlord, the local community, and the general public.    [Back]