Judge refuses to declare holiday chalet lease term entitling councils to premiums for consenting to assignment was void

The claim in Palmer & Ors v Council of the City of Plymouth & Anor [2026] EWHC 1262 (Ch) was brought by 89 claimants who hold leases on plots of land on the cliffs at Whitsand Bay and which are used for holiday huts and chalets.

The freehold of the land – which is within the Mount Edgcumbe estate on the Rame Peninsula in Cornwall (south of Torpoint, and close to Plymouth) – was sold to the two councils in 1971.

Cornwall Council and Plymouth City Council have since then let plots from time to time for the erection of such huts or chalets, to be used, in effect, as holiday homes.

There are currently 71 plots, and the 89 claimants were the lessees of 56 of them.

Paul Matthews, sitting as a High Court judge, noted that the present leases of the plots of land were not the first such leases to be granted.

“In the first years of this century, earlier leases, also of 21 years, were granted in relation to those plots. In this judgment these leases are referred to as ‘Old Leases’, to distinguish them from those granted in 2022, which are referred to as ‘New Leases’.”

The case arose from a dispute after the two councils introduced terms in the New Leases requiring leaseholders to make payments when seeking consent to assign.

Under these arrangements, a leaseholder must pay 75% of the higher of either the sale price or market value of the hut or chalet on a first assignment and 20% of the higher of the sale price or market value on any subsequent assignment.

Ahead of introduction of the new terms, it was claimed the changes would help preserve the future of the park by reducing its reliance on council subsidies and that it reflected the market value that councils are under an obligation to achieve.

It was also suggested that whilst the proposal would see a big increase, the conditions of the lease were being enhanced to enable holiday lettings for the first time.

The claimants launched a legal challenge seeking a declaration that the new terms were void. They also called for a declaration that the defendants were not entitled to make grants of consent for assignments of the leases subject to a condition requiring the payment of a premium.

The judge considered three main issues. The first concerned the relationship between section 144 of the Law of Property Act 1925 and section 19 of the Landlord and Tenant Act 1927. Specifically, whether the two provisions were inconsistent, and, if so, did section 19 impliedly repeal the earlier section 144 to the extent of the inconsistency.

Section 144 of the 1925 Act restricts landlords’ ability to charge tenants for granting consent.

Section 19 of the 1927 Act introduces protections for tenants, including restrictions on landlords' ability to withhold consent to assignments.

The court also considered whether the leases were "residential leases" for the purposes of section 19 and whether the premium provisions amounted to an unreasonable withholding of consent.

The second issue concerned submissions from the claimants that the new leases were not residential leases within section 19(1E).

The third issue concerned whether the premium provisions otherwise constituted an unreasonable refusal of consent to alienation.

The judge ultimately dismissed the claim for the declarations, finding: "I am satisfied first of all that section 144 applied in principle to the New Leases, but has been disapplied from them by the provision in clause 3.9.4 [of the New Leases]. So the provision that would be implied in the New Leases by virtue of section 144 is not so implied.

“Secondly, I hold that section 19 of the 1927 Act also applies in principle to the premium provisions of the New Leases. Thirdly, I hold that the New Leases are ‘residential leases’ as defined by section 19(1E) of the 1927 Act. It follows that the defendants cannot rely on section 19(1A) to show that withholding consent to assignment except on compliance with the premium provisions is not unreasonable.

"On the other hand, that does not conclude the matter as to whether, if in the future they gave consent to an assignment conditionally on payment of a premium in accordance with clause 3.9.4, that would be an unreasonable withholding of consent within section 19(1). But I cannot decide that question in relation to any of the New Leases at this stage. The circumstances in which such consent would be sought have not arisen, indeed may never arise, and I have no evidence about them."

He accordingly dismissed the claim for both declarations.

Adam Carey