Landlord’s Consent to Assign or Sublet: How Reasonable Is “Reasonable”?

Alienation provisions are frequently a key focus for the lawyers acting in commercial lease transactions. A landlord will always want to protect its investment by monitoring occupancy, preserving a good tenant-mix and at the same time satisfying itself in relation to the financial covenant of the tenant. On the other hand, a tenant will look for flexibility to sell or assign its interest in the lease or sub-let the premises during the term of the relevant lease.

As a result, commercial leases will generally prohibit assignment or subletting of commercial premises without the Landlord’s consent, satisfying the Landlord’s instinct to protect its asset. The counterpoint to that, and the balance in favour of the Tenant is that the Landlord’s consent cannot be unreasonably withheld or delayed.

Although this phrasing is well established in legal drafting, its practical application continues to generate disputes – particularly in the context of sales, corporate restructurings and retail transactions. Understanding the limits on a landlord’s discretion in this regard is critical for both landlords and tenants operating in Ireland’s commercial property market.

The Statutory Framework

Where a commercial lease provides that a tenant may not assign or sublet without consent, Irish law implies certain protections for the tenant. The landlord must give consent within a reasonable time of the tenant’s application, and it may not unreasonably withhold or delay that consent. The statutory obligation on the Landlord not to unreasonably withhold consent is set out in section 66 of the Landlord and Tenant (Amendment) Act 1980. Importantly, the onus typically rests on the landlord to demonstrate that any refusal of consent or delay in providing consent was justified.

While lease drafting remains central, statutory and common law principles combined mean that a landlord’s discretion is far from unfettered.

What Counts as “Reasonable” Grounds for Refusal?

Case law confirms that a landlord is entitled to have regard to its legitimate commercial interests in deciding whether to grant consent. Typical grounds that may be considered reasonable commercial interests include:

• Concerns about the proposed assignee’s financial standing;
• The proposed use by the assignee conflicting with permitted use under the Lease or the tenant mix in a multi‑unit development. In a retail shopping centre scenario for example, the landlord will have to have regard to any exclusivity provisions benefiting any other tenants within the development;
• A materially inferior guarantor or security arrangement; and
• Impact on the Landlord’s VAT position as set out in the lease.

However, a landlord may not refuse consent for reasons that are extraneous to the landlord and tenant relationship. For example, seeking to extract a commercial advantage unconnected to the assignment – such as a rent increase, lease re‑gearing, or settlement of unrelated disputes – will generally fall outside the bounds of what is considered reasonable.

Relevant Case Law

Irish courts have repeatedly emphasised that a landlord’s discretion to refuse consent is confined to legitimate landlord-and-tenant considerations and cannot be used to pursue collateral commercial objectives. The following decisions illustrate how the “reasonableness” test is applied in practice, and the factors the Courts will treat as permissible (or impermissible) grounds for refusal.

Perfect Pies Limited (in receivership) & Pearse Farrell v Chupn Limited [2015] 11 JIC 0607 (High Court/Commercial Court)

This case is often cited for the modern Irish approach to “unreasonably withheld” consent and the assessment of reasonableness by reference to proper landlord/tenant considerations (and not ulterior/extraneous motives). In this case, the judge found that the landlord’s refusal was unreasonable because it was driven by a desire to regain possession, not legitimate landlord-and-tenant concerns. The judge also found the refusal reasons given by the landlord at the outset, i.e. breach of repair covenants and sharing of occupation without consent, were spurious, and that therefore the landlord couldn’t later rely on alleged concerns about the proposed assignee’s financial covenant.

Cambervale Ltd v Westside Shopping Centre [2024] IEHC 61

In this case The High Court accepted that the landlord’s refusal of consent – namely that the proposed assignee intended to use the unit as a community centre – was a legitimate good estate management concern. Evidence showed this user would create inactive frontage in a small shopping centre where active retail presence was commercially important.

The Court also reaffirmed that the tenant must show that no reasonable landlord would have refused consent in the same circumstances. The tenant failed to meet this burden.

Evidential Standards and Process

One of the most common pitfalls for landlords is inadequate engagement with the consent process. Landlords should demonstrate that they actively considered the application, requested reasonable information, and reached a decision based on relevant factors.

Best practice includes:

• Prompt acknowledgment of the application;
• Clearly identifying required information (financials, business profile, references);
• Recording reasons for any refusal or conditional consent; and
• Communicating decisions clearly and without undue delay.

Silence, drift, or informal refusals communicated without explanation are likely to expose a landlord to challenge.

Delayed or Withheld Consent: How Disputes Arise

Where consent is delayed or refused, disputes typically arise in one of two ways. First, a tenant (or incoming assignee) may proceed with the transaction and seek to defend any subsequent enforcement action by arguing that consent was unreasonably withheld. Alternatively, a tenant may apply to court seeking declaratory relief and, in appropriate cases, damages for loss suffered due to delay.

In transactional contexts – particularly where assignment is tied to a broader sale – delays can have disproportionate commercial consequences. For this reason, disputes often settle with landlords granting consent subject to conditions, such as authorised guarantee agreements (AGAs) or enhanced security.

Practical Takeaways

For landlords, the lesson is clear: discretion must be exercised carefully, transparently and promptly. Consent processes should be structured and well‑documented. For tenants, early engagement and the provision of comprehensive information can significantly reduce the risk of delay or refusal.

Ultimately, while the phrase “consent not to be unreasonably withheld” leaves room for judgment, Irish law places clear and meaningful limits on how that judgment may be exercised. Ensuring those limits are respected is key to avoiding costly disputes and protecting commercial outcomes.

How we can help

If you have any queries or concerns, or would like to discuss the above in further detail, please feel free to contact Niamh Carragher in our Commercial Real Estate Department (ncarragher@bhsm.ie / +353 (0)1 440 8300).

This article is for general information purposes. Legal advice must be obtained for individual circumstances. Whilst every effort has been made to ensure the accuracy of this article, no liability is accepted by the author for any inaccuracies.