During the negotiation of a lease, it is important to take legal advice on the alteration provisions and ensure that they are clarified in the Heads of Terms. To carry out any alterations, a tenant will likely need the consent of the landlord. The consent may be obtained in the form of a document called a Licence for Alterations.
There are several ways in which a tenant’s alterations are dealt with in a lease.
■ Alterations permitted without consent: a lease may have no restrictions on alterations within the lease, meaning the tenant is free to make alterations to the property without the requirement of obtaining the landlord’s consent. This is non-standard and uncom- mon as it limits the landlord’s control over how their property could be altered.
■ No alterations: a lease may have an absolute prohibi- tion on the tenant making any alterations, meaning that the tenant is not able to undertake any changes to the property at all. Despite an absolute prohibition, a landlord could still grant permission via a Licence to Alter at a later stage, but this would be at the landlord’s absolute discretion.
■ Internal alterations only: the most common way the alterations clause in a lease is addressed is through permission for internal only alterations with landlord’s consent, and a prohibition on external and/or structural alterations. This is known as a qualified prohibition and the landlord’s consent to these alterations would be recorded in a Licence for Alterations. When a landlord’s consent is required , the landlord cannot unreasonably refuse to give consent.
■ Demountable partitioning: typically a clause in a lease which requires the landlord’s consent for internal alterations will capture all internal alterations which a tenant may wish to make. To address this position a tenant may negotiate a provision in the lease which would allow them to make certain non-structural alterations such as the installation of demountable partitioning without the landlord’s consent. From a commercial sense this removes the need for consent for fairly common works which do not impact the structure of a property.
It is essential for a tenant to plan ahead and know of any alterations they may wish to make prior to completing the lease. This way they will be able to start their works as soon as the lease completes rather than having to revisit this at a later date.