Business leases often restrict the ability of tenants to mortgage or charge their leased premises.
Your lease may contain a clause saying that you cannot mortgage or charge the premises, except with the landlord’s consent. You might assume that there is some obligation on the landlord to be reasonable, and not to refuse consent for no good reason. But that is not the case.
Ideally, you should request to have any restriction on your right to mortgage or charge the premises deleted from the lease. At the very least, you need to make sure that it is spelt out in the lease that the landlord cannot withhold his consent unreasonably.
If you had a flat, a clause in the lease saying that you couldn’t mortgage it would be ridiculous. Everyone mortgages their flats to get the finance to buy the flat.
With business leases, the need is not quite so pressing. You normally do not ‘buy’ a business lease and it is not worth much, if anything, in loan finance terms.
However, if you are raising finance for your business from a bank, while the bank may not treat the value of the lease as being particularly important in their calculations, they may still have a requirement that all the business’s assets must be charged to the bank as security. Then you face a potential hold-up if you have to persuade the landlord to give its consent.
The solution is simply to make absolutely sure when you take the lease that there are either no restrictions on mortgaging or charging the lease, or that they are specified to be subject to the landlord’s consent which can only be withheld in reasonable circumstances. It’s hard to see what would be reasonable excuse for withholding consent, so it’s best to try to have the clause struck out altogether.