Cross-Lease Changes: When Can Your Neighbour Say No?

28 Apr 2026

As lawyers with expertise in property law and dispute resolution, we often see cross-lease neighbours seeking our advice due to disputes arising over shared land and property rights.

A recent Court of Appeal ruling however is likely to materially impact the legal rights and obligations of cross-lease owners.

What is a Cross-Lease?

A cross-lease is a shared property arrangement where multiple owners hold individual leases for homes on the same piece of land, but share ownership of the underlying freehold land.

Cross-leases commonly provide that no structural alternations can be made, or new structures erected, without the prior consent of the other owners (lessors), provided that the consent is not unreasonably withheld (we will refer to this as the ‘alterations covenant’).

The old legal test

Under the longstanding test of a case called Smallfield v Brown, consent was only unreasonably withheld where (a) the benefit to the party seeking the alteration was substantial; and (b) the proposed alteration would produce only trifling detriment to the cross-lessor.

The new legal test

The Court of Appeal has now overturned this test. In summary, the Court said that it cannot be right that the intention of the alterations covenant is to preserve structures in the same overall configuration as at the beginning of the cross lease, as a cross lease typically provides a term of 999 years.

The Court outlined a number of steps they expect a reasonable lessor to normally take, including having regard to the interests of each lessee; seeking to maintain good relations between all lessees; expect lessees to engage constructively, among other things.

The Court will, for example, consider the degree of physical intrusion into the privacy of the other lessees, the impact on future development of another lessee’s flat (by reducing the site coverage), any impact on market value, among other factors.

The fact that a lessor believes they will suffer harm or loss by the alterations is relevant, but it will be but one factor only. It will not be conclusive of the matter.

Conclusion

This recent ruling suggests that cross-lease owners can be assured that they have greater flexibility to maximise the use of the property provided they do not do so in a way that significantly affect their neighbours. Property developers may also benefit from the ruling, as it paves the way for greater flexibility around development of existing cross-leases.

Martelli McKegg has extensive experience assisting clients with managing their cross-lease disputes, including assisting them to convert their cross-lease title into freehold title. Contact our office today to discuss your rights and remedies.