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There has been a lot of talk about the Landlord and Tenant Covenants Act 1995 (LTCA 1995) following the decisions in Good Harvest v. Centaur and K/S Victoria v. House of Fraser. However, there have been no significant determinations in respect of the issues arising from those cases and in particular in respect of the important issue of repeat guarantees.

In summary, it is not uncommon for tenants to want the ability to assign intra-group. This is usually between entities of limited covenant strength. The original tenant is normally guaranteed by a parent of substance. There should be no issue with this pre-assignment.

However, upon intra-group assignment a major problem arises if the guarantor of the original tenant is to guarantee the assignee intra-group tenant. Why? The effect of section 25 of the LTCA 1995 is to render void any provision that seeks to avoid the purpose of the LTCA 1995 – namely, the release of parties from on-going liability upon assignment.