Key points for tenants when undertaking alterations

Alterations - key actions and considerations for commercial tenants

We set out key actions and considerations for tenants who are seeking to undertake alterations to their leasehold property.

When leasing a property, tenants may need to make alterations to suit their business needs. Most commercial leases will set out specific provisions regarding alterations and it is important to review your lease to understand the extent to which alterations may be permitted and whether the landlord's consent will be required.

Reviewing the lease terms

If you are planning to undertake alterations and are unsure what is permitted under your lease, it is critical to review your lease to understand what is permitted, with or without landlord's consent, and what is prohibited.

• Permitted alterations without consent.

The lease may permit alterations without requiring the consent of the landlord. This is often minor, non-structural alterations such as demountable partitioning or installing fixtures which do not affect the property's structure or value. 

A tenant may still be required to notify the landlord of the alterations and provide details (such as plans or specifications) even where the landlord's consent to the works is not required.

• Permitted alterations requiring landlord's consent. 

Where the landlord's consent to alterations is required this should be documented in writing, usually by way of a formal Licence for Alterations. If the landlord's consent is required this should be obtained and documented before the works are undertaken, this can take some time and should be factored into the project timeline. 

Most commercial leases will provide that landlords cannot unreasonably withhold their consent. Whether the landlord has reasonable grounds to refuse to grant consent will depend on the particular facts and circumstances of each application for consent.

• Prohibited alterations. 

The lease may prohibit some or all types of alterations to the property. Structural and external alterations which impact the value of the property may be expressly prohibited. Undertaking any alterations in such circumstances would be a breach of the lease. 

A commercial agreement may be reached between the landlord and the tenant to allow alterations where they are expressly prohibited under the lease however, the landlord will be under no obligation to permit such alterations. In such circumstances it is key to seek legal advice and properly document the variation to the lease terms and consent to the specific alterations.

Obtaining landlord's consent

Where the landlord's consent is required, this should be obtained before any work is undertaken.

You may be required to submit detailed plans and specifications of the proposed changes to the landlord for approval.  Your solicitor can support you in ascertaining the documentation which needs to be provided to the landlord under the lease terms. Your surveyor can assist you in collating the documentation and preparing any specifications or plans which may be required.

Licence for Alterations

It is very important to document the landlord's consent in writing before starting any work.

The Licence for Alterations will document the landlord's consent to the works and set out the terms under which the consent is granted. Any plans or specifications submitted to the landlord in the course of obtaining their consent may be appended to the Licence for Alterations.

The Licence for Alterations may also include obligations on the tenant to ensure that the alterations are carried out to a professional standard, in compliance with planning and building regulations and include indemnities to protect the landlord from any liabilities arising from the alterations.

The Licence for Alterations should address any obligations on the tenant to restore the property to its original condition at the end of the lease, or any express agreement between the parties for the alterations to remain at the end of the lease term.

Compliance with Building Regulations and Planning

In addition to the lease terms, tenants must ensure that any alterations they undertake comply with relevant building regulations, planning permissions and health and safety laws. Failure to do so can result in a fine or enforcement action, even if the landlord has granted consent.

Your legal advisors can support you in reviewing your lease to determine whether alterations can be carried out and whether the landlord's consent will be required. If the landlord's consent is required your legal advisors can assist with formally documenting the consent through a Licence for Alterations. 

For more information, please contact Natasha Skinner in our Commercial Property team on 0117 314 5343.