Alteration, user and planning

Alterations

physical changes to premises (e.g. walls, windows, mezzanine)

If lease silent on alterations

tenant free to alter subject to doctrine of waste

Doctrine of waste

tenant must not reduce value of premises

Purpose of landlord control

preserve value and future lettability of premises

FRI lease (alterations control)

regulates type, consent and reinstatement of alterations

Types of alterations

external vs internal, structural vs non-structural

Reinstatement

obligation to return premises to original state at end of term

Absolute covenant (alterations)

alterations prohibited completely

Qualified covenant (alterations)

allowed only with landlord’s consent

Fully qualified covenant (alterations)

consent required and cannot be unreasonably withheld

Mixed covenants

lease may combine absolute, qualified and fully qualified restrictions

Improvements

alterations that benefit tenant

s19(2) LTA 1927 effect

qualified covenant becomes fully qualified for improvements

Practical effect

landlord must act reasonably when tenant proposes improvements

Licence for alterations

document recording landlord’s consent to alterations

Licence terms (works)

must comply with landlord’s standards and specifications

Licence terms (costs)

tenant pays landlord’s legal and surveyor costs

Licence terms (consents)

tenant must obtain planning/building approvals

Licence terms (reinstatement)

tenant must reinstate at lease end

User (definition)

permitted use of premises under lease

If lease silent on user

tenant can use for any purpose

User clause purpose

restrict and control use of premises

Types of user clause

specific use, general use, or planning use class reference

Tenant preference (user)

wider use for flexibility and assignability

Landlord preference (user)

narrower use to control premises

Risk of narrow user

may reduce marketability and rent on review

Change of use (covenants)

may be absolute, qualified or fully qualified

Statutory position (user)

no upgrade from qualified to fully qualified covenant

s19(3) LTA 1927

landlord cannot charge premium for consent unless structural works involved

Planning law (alterations)

may require planning permission and building regs approval

Planning law (change of use)

required if outside permitted use class

Lease compliance clause

tenant must comply with all laws

Practical requirement

tenant must obtain all necessary consents to avoid breach and enforcement

Code (alterations principle)

restrictions only to protect value of premises

Code (internal alterations)

usually fully qualified or permitted without consent depending on lease type

Code (reinstatement)

must be clear in heads of terms or only required if reasonable

Key distinction (exam)

alterations covenants more tenant-friendly than user covenants

Overall principle

lease controls both physical changes and permitted use of property