Refused by city of london to sublet property

I have a property where the city of london is the freeholder. I am a lleaseholder. I now need to get an Additional Licence under HMO rules in Southwark to be able to rent my property. I am being refused permission to rent by city of london because they say it is their policy not to allow HMO sublet. Is that an acceptable and reasonable grounds for refusal?

From my understanding, they need to give me a reasoable cause for refusal.

Also by their refusal, my understanding is that they are saying that no leaseholder can sublet to 2 - 3 people from more than one household. (Which is in effect HMO Selective license)

Anyone with thoughts on this?

What does your lease say about subletting, (including any restrictive covenants)?

It says no. But that was 30 years ago and apparently there is a law passed in the early 2000s that amended this to say that leaseho;ders landlords could only withold permission if there was a very good reason. Unfortunately I cannot remember the exact act.