Licences for Alterations in Leases of Commercial Property
Most commercial leases will require that a Tenant obtains consent from the Landlord before making any alterations to the property. It is a process also known as an application for a ‘Licence for Alterations’. The purpose of the licence is to record all works that alter the property and to protect the landlord’s interests and those of other Tenants.
Whether consent is required or not will be determined by the scope of the works and what the lease says. Generally, Landlords place a restriction on the extent of alteration or other changes and improvements that the Tenant can make during the term of the lease, without the Landlord’s consent.
Why do Tenants need a licence to alter?
If you are a Tenant, it is important to establish whether a licence for alteration is required prior to commencement of any works, otherwise:
- You will almost certainly be in breach of lease terms and will expose yourself to the possibility of enforcement action being taken against you
- You may experience difficulties in disposing of your property by way of assignment, for example if you have made unregulated changes to the detriment of your property
- It may be difficult and more costly to seek to apply for consent retrospectively, once the works have been finalised
The Tenant is responsible for providing the proposed scope of works to the Landlord. This will typically require the preparation of drawings and specifications. The licence will include a covenant by the Tenant that all works will comply with relevant statutes, planning consent, building regulations and good working practices.
Once the works have been approved by the Landlord, all necessary information will be set out in the licence. Any change by the Tenant will require either an addendum to, or a new licence.
Depending on the terms of the lease, it is usual to have a reinstatement clause in the licence, which requires the Tenant to reinstate the property to how it was prior to occupation. All works would be at the Tenant’s own cost.
The Tenant’s proposed scope of works may be complex and the Landlord may appoint his own professional team to review and approve the designs, calculations and specifications put forward by the Tenant. The costs of such advice would normally be chargeable to the Tenant, under the lease.
It is in the interest of both the Tenant and the Landlord to ensure the accuracy of the ‘As Built’ drawings and specifications to avoid any dispute at the expiry of the lease.
The licence is normally prepared by the Landlord’s solicitor and issued to the Tenant’s professional team for approval.
Licences for Landlords and Tenants
The specialist commercial property solicitors at Bray & Bray deal with licences for both Landlords and Tenants and can give you advice about everything that needs to be included. We will help you to ensure that changes and alterations are legal, whilst being to the benefit of both the Landlord and the Tenant.