It is well known that the Lands Tribunal may modify or remove restrictive covenants affecting freehold land but it is less well known that the same statutory grounds for any such application can apply to leasehold interests also.
Any applicable leasehold interest has to arise from a lease originally granted for more than a 40 year term and of which more than 25 years have already passed.
A recent case relied on this approach to modify (not replace) the tenant's permitted use from office and ancillary residential to use as a private members club. This was on the basis that this use was reasonable, that the current permitted use was obsolete, and that the proposed use caused no injury to the Landlord.
The fact that the tenant had planning consent and a premises licence supported its position that the alternative use was reasonable. Further the rent achievable under the new use would be greater and, therefore, the reversionary interest would also increase in value.
Although the obsolete argument was not considered acceptable, the Tribunal did find the reasonable alternative use and no injury arguments to be successful and widened the restrictive covenant in the lease to allow for use as a private members club.
This case makes it clear that landlords don't always have the last word ...!
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