Restrictive clauses in leases and title deeds can be deleted or modified with the right legal advice. In a case on point, the Upper Tribunal (UT) opened the way for a high-class private members’ club to open in one of London’s iconic garden squares.
The long leaseholder of a listed townhouse in the square obtained planning consent to change its use to that of a club. However, its lease, which dated back to the 1970s, included a clause which stated that the property could only be used as offices, with some residential accommodation on its fourth floor.
After the landlord refused to waive that restriction, the leaseholder applied to the UT to amend it. The landlord argued, amongst other things, that the leaseholder’s plans would lead to an excessive proliferation of nightspots in a small area and impact on the profitability of a neighbouring establishment.
In amending the restriction, however, the UT found that the leaseholder’s proposal would positively benefit the landlord financially. As a result of the proposed changes, the property’s rental value would be increased by its conversion into a club. Any reduction in the neighbouring establishment’s profits would have little if any impact on the landlord’s rent roll, which came to about £40 million across its portfolio.
Given the existing character of the area, the proposed use of the property as a high-class private members’ club was reasonable and retaining it as predominantly office space would be of no practical benefit to the landlord. The amendment enabled the leaseholder to implement the planning permission.