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Tenant Alteration Advice

Whether and the extent which a tenant is able to make alterations to a property will often be covered in the heads of terms.

What are tenant alterations?

Tenant alterations are any changes the tenant wishes to make to a property, whether they be internal or external. Examples include installing new countertops and decorating in the tenant’s brand style.

Tenant alterations can only be made to the property as defined in the lease. If the property does not contain the outside structure then alterations cannot be made without some other form of agreement being entered into.

When does a tenant usually carry out alterations?

When a tenant moves into a property they will usually want to carry out some form of alterations, often referred to as a fit-out.

Other alterations may be required periodically or where the tenant has a particular requirement, for example they have rebranded and need to change the décor.

Can a tenant carry out alterations?

If a lease does not mention alterations then the tenant will be able to carry out any it chooses. This is a relatively rare occurrence except for very long leases and a lease of commercial property will usually restrict the alterations that a tenant can make to a property.

The usual scenario is that the tenant can make internal non-structural alterations with the consent of the landlord, but will be unable to make external or structural alterations.

If the lease does state that alterations can only be carried out with the consent of the landlord, legislation adds a proviso that such consent cannot be unreasonably withheld in the case of improvements. This legislative proviso cannot be excluded.

If the lease covenant is absolute in that the tenant cannot carry out any alterations then the legislation does not imply the landlord has to act reasonably.

Can a landlord impose conditions when granting consent?

As a condition of giving consent, a landlord may require:

  • Payment of a reasonable sum for any damage to or diminution in the value of the property, or the value of any neighbouring property of the landlord.
  • Payment of legal or other expenses properly incurred in connection with the consent.
  • A requirement that the tenant undertakes to reinstate the property at the end of the term.

These are all relatively common conditions and most leases will contain these.

It is also becoming increasingly common to find clauses in leases stating that no alterations should have an adverse effect on rating of the energy performance certificate of the property; or that the tenant should consider the environmental impact of the proposed alterations and strive to use sustainable materials or methods.

How are alterations documented?

If consent of the landlord is required, then these are usually documented in a licence for alterations. This provides the consent that the tenant requires to carry out the alterations. It also will set out any conditions on the consent and crucially will attach a detailed specification of the alterations.

If no consent is required for alterations, it is still common to see a clause in a lease that will require the tenant to provide as built plans to the landlord after completion of any alterations.

What happens at the end of the lease?

When the lease ends, howsoever that may be, the lease will usually state the tenant must remove any alterations. This may be subject to a proviso that if the landlord informs them not to remove specified alterations they will not do so.

If you need any advice on tenant alterations, please contact a member of our commercial property law team in confidence here or on 02920 829 100 for a free initial call to see how they can help.

To speak to one of our experts today, please contact us on 02920 829 100 or by using our Contact Us form for a free initial chat to see how we can help.

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