Property Law 7 - Alterations/user

Question 1

Commercial Leases, Alterations - what is the position if Alterations are not mentioned in the lease?

Answer 1

The tenant is free to carry out alterations.

The only restriction imposed by law is the doctrine of “waste” which means that the tenant cannot carry out alterations which reduce the value of the premises.

Question 2

Commercial Leases, Alterations - What if there is an absolute covenant against alterations?

Answer 2

If the tenant wants to make an alteration covered by an absolute covenant, they can ask the landlord, but the landlord has no obligation to consider request.

Question 3

Commercial Leases, Alterations - What if there is an qualified covenant against alterations?

Answer 3

A qualified covenant against alterations means that they are only permitted with landlord’s consent. The landlord does not have to give consent.

Question 4

Commercial Leases, Alterations - What if there is a fully qualified covenant against alterations?

Answer 4

Alterations are only permitted with the landlord’s consent BUT the landlord must act reasonably in deciding to withhold consent.

Question 5

Commercial Leases, Improvements - What if there is an qualified covenant against alterations but the alterations the tenant wants to make are improvements?

Answer 5

s19(2) LTA1927 converts it to a fully qualified covenant

Question 6

Commercial Leases, Improvements - What if there is an absolute covenant against alterations but the alterations the tenant wants to make are improvements?

Answer 6

Doesn’t matter, the law can’t help with absolute covenants

Question 7

Commercial Leases, Improvements - There is an qualified covenant against alterations but the alterations the tenant wants to make are improvements. Are those improvements from the point of view of the tenant or the landlord?

Answer 7

The Tenant

Question 8

Commercial Leases, Alterations - If the Landlord consents to the alterations under a qualified covenant that consent will be documented in a licence for alterations. What’s included?

Answer 8

• The works consented to
• Time limit for carrying out those works
• Carry out the works in compliance with the landlord’s requirements, typically with good quality materials and a high standard of workmanship
• obtain all necessary consents, which could include planning permissions and building regulations approval
• reinstate the premises at the end of the lease term.
• pay the landlord’s costs in dealing with the tenant’s application for a licence for alterations (these will usually be the surveyor’s and solicitor’s costs)

Question 9

Commercial Leases, Improvements - How would the tenant carry out improvement even if there’s an absolute covenant against alterations?

Answer 9

• Under s3, LTA1927, the tenant serves notice on the landlord of its intention to carry out improvements.
• If the landlord does not object within three months, the tenant may go ahead and carry out the improvements.
• If the landlord objects, the tenant can apply for the court permission to carry out 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 the court for permission.

Question 10

Commercial Leases, Improvements - What would the court consider if there’s an absolute covenant against alterations and the tenant has applied to the court to make improvements?

Answer 10

The court will give permission if 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.

Question 11

Commercial Leases, User - User refers to what the lease allows the tenant to use the premises for. What is the position if User is not mentioned in the lease?

Answer 11

The tenant is free to use the premises for anything they like.

Question 12

Commercial Leases, User, change of User - what conditions may a lease put on change in User?

Answer 12

• the lease may prohibit changes of user (an absolute covenant),
• allow changes of user with consent (qualified covenant) or
• allow changes of user with consent not to be unreasonably withheld (fully qualified covenant)

Question 13

Does statute convert a qualified user clause to a fully qualified user clause?

Answer 13

No

Question 14

Can the Landlord charge more rent if there’s a change in User?

Answer 14

No - unless the change of use also requires structural alterations

Question 15

Will an FRI lease normally require a tenant to comply with relevant laws such as planning?

Answer 15

Yes

Question 16

Which change gets converted from qualified to fully qualified: User or Improvements?

Answer 16

Only improvements

Question 17

If a landlord consents to improvements, what document will be created?

Answer 17

Licence for alterations