Mortgage lenders subject to implied condition not to unreasonably withhold consent to let
When is it reasonable for a mortgage lender to exercise its power to refuse consent for a proposed letting of the mortgaged property? This point was addressed in the case of Commercial First Business Ltd v Atkins  EWHC 4388 (Ch) (13 July 2012).
In that case the High Court adapted the test set out in International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd  EWCA Civ 3 (20 November 1985) relating to consent to assignment of a lease. The court held that when judging whether a lender had acted reasonably in withholding its consent, the onus is on the borrower to prove that the lender has acted unreasonably. However, the lender should not refuse its consent to a proposed letting on grounds which have nothing whatever to do with the relationship of borrower and lender in relation to the mortgaged security and the proposed letting.
The Court also held that this qualification would apply in the case of a mortgage of a residential property granted on a buy-to-let basis.
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