Property alterations – what tenants need to know

17 October 2017

When a business enters a lease of commercial property it does not always know how it will want to use the property in the long term and it may need to make future alterations to make it more suitable for its business needs.

Property alterations – what tenants need to know

Alterations in commercial lease terms were described in the case of Bickmore v Dimmer [1903] 1 Ch 158. An "alteration" has been held to be limited to such alterations as affect the form or structure of a property.  Lease terms usually set out what is permissible and what is not permissible.  However, lease terms vary considerably as to what a tenant is or is not allowed to do, and as to whether or not a landlord’s consent is required. It is common for structural alterations to be prohibited, whilst non-structural alterations are often allowed.   Usually a landlord cannot delay or withhold consent unreasonably in circumstances where a tenant is seeking to make non-structural alterations.

It is worth noting that what constitutes an alteration is not always clear.  For example, the erection of a sign or advertisement to a building that can be removed without damage to the property cannot take place without the need for consent may not be an alteration.  However, careful thought needs to be given before anything is done that might change the appearance of a building and a canny landlord may not permit any changes in appearance.  Furthermore, a lease usually contains a clause setting out that tenants’ signage needs to be approved.  In addition, it is common to see words in a lease stating that a tenant is not allowed to "cut or maim" the walls or other parts of the property.

Leases usually prevent tenants from making changes without getting consent from their landlord.  Were tenants simply allowed to carry out alterations and not obtain landlord’s permission or indeed statutory consents where necessary a landlord may not be able to sell the property at a later date if the “as-built” property does not match the drawings for which planning permission and building control have been obtained.

If you are a tenant and you are considering carrying out alterations to your premises you should consider your lease in detail.  Seek guidance from a solicitor and if you have to make a formal request to your landlord to alter the property do so in advance of starting any works and then proceed to agree a licence that documents the changes you are making.   Your landlord will want to know if structural changes are proposed so their advisers can consider whether you have applied for and will obtain all necessary consents including head landlord consent, if required.

Documentation about the changes should be clear, mention any statutory consents that have been obtained and be as concise as possible to ensure nothing is left open to interpretation.

Any alterations made without first obtaining the landlord’s consent, where required, can lead to considerable disharmony and costs too in the event that the works come to the attention of the landlord at a later date.

If you are considering entering into a lease or making alterations to leasehold premises, you should take advice as to the nature and extent of the alteration provisions so that you are fully aware of the tenant obligations.  David Wilson is a partner of Worthingtons Solicitors.  Worthingtons property team can help you from drafting requests to reviewing licences and are specialised commercial lease experts.

Huw Worthington is a Partner of Worthingtons Solicitors and is experienced in all areas of property law and can be contacted on 02891811538

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