Alterations, user and planning Flashcards
What are examples of an alterations?
Alterations are changes to the premises, such as reconfiguring the internal walls, opening up new windows, adding a mezzanine floor, etc.
If a lease is silent on alterations what is the position?
If the lease is silent on alterations, the tenant is free to carry out alterations. Only restriction is the doctrine of “waste” which means the tenant cannot carry out alterations which reduce the value of the premises.
What is an absolute covenant against alterations?
It means that alterations are not permitted. If the tenant wants to make an alteration covered by an absolute covenant, they can ask the landlord, but the landlord has no obligation even to consider such request.
What is a qualified covenant?
This means that alterations are only permitted with the landlord’s consent but the landlord does not have to give consent.
What is a fully qualified covenant?
It is similar to a qualified covenant but in this case, the landlord must act reasonably in deciding to withhold consent.
If a lease contains a qualified covenant against alterations, what does the LTA 1927 do?
If the lease contains a qualified covenant against alterations, LTA 1927 converts it to a fully qualified covenant insofar as the tenant’s proposed alterations are improvements from the point of view of the tenant.
Where will landlord consent to alterations be documented and what does the document contain?
If the landlord consents to alterations under a qualified covenant the consent will usually be documented in a licence for alterations.
In addition to setting out the works consented to and any time limit for carrying them out, it will contain various tenant’s covenants:
- Carry out the works in compliance with the landlord’s requirements
- Obtain all necessary consents which could include planning permission and building regulations approval
- Pay the landlord’s costs in dealing with the tenant’s application for a licence for alterations (surveyor’s and solicitors costs)
- Reinstate the premises at the end of the lease term.
What is the tenant’s statutory right to carry out improvements?
Even if the lease contains an absolute covenant against alterations, the tenant may circumvent this:
Under LTA 1927, the tenant serves notice on the landlord of its intention to carry out improvements.
If the landlord objects, the tenant can apply for the court’s permission providing the improvements:
*Add to the letting value of the property;
*Are reasonable and suitable to the character of the property; and
*Will not diminish the value of any other property belonging to the landlord.
If the landlord does not object within 3 months, the tenant can go ahead and make the improvements.
The landlord may offer to carry out the works itself and increase the rent, but the tenant does not have to agree to this. However, the tenant can then not ask for the court for permission.
If the lease is silent on user, what is the position?
If the lease were to be silent on user, then the tenant is free to use the premises for anything they like.
Does statute convert a qualified user covenant into a fully qualified user clause?
No.
What clause will the lease contain relating to alterations and changes of use?
The lease will usually contain a clause requiring the tenant complies with relevant laws (this will also be restated in the licence for alteration or licence to change use).
What does the Code of Leasing Business Premises state in relation to good practice?
- The lease should only restrict alterations and change of use insofar as necessary to protect the value of the premises and any adjoining or neighbouring premises of the landlord.
- The Code (subject to certain exceptions) requires a landlord to at least give the tenant a fully qualified covenant for internal non-structural alterations in a lease of part, and the tenant the ability to carry out internal non-structural alterations without consent in a lease of whole.
- If the landlord will require any alterations to be reinstated at the end of the lease, this should be made clear in the heads of terms. Otherwise, the lease may only require this if it is reasonable.
