Commercial Leases and Alterations – a lay person’s guide

Tim Chiverton, Consultant and Commercial Property Specialist at Spire Solicitors LLP, discusses Commercial Leases and Alterations. 

Tim Chiverton
                 Tim Chiverton
  1. I have a commercial lease of business premises. Can I make alterations to the building?

Always read the lease.  Some leases prohibit alterations completely.  Some impose no restrictions at all.  It is common for a lease to prohibit certain alterations (for example structural alterations) but permit others (such as internal alterations) subject to certain conditions.

  1. What if the lease says I can make alterations with the landlord’s consent which is not to be unreasonably withheld?

Usually you will submit an application to the landlord for consent to the relevant alterations with specifications, drawings and other supporting information if appropriate.  Assuming the landlord is prepared to consent, it will normally issue consent pursuant to a licence for alterations.

  1. What if the lease permits alterations with the landlord’s consent but there is no stipulation that the landlord must not unreasonably withhold consent?

Statute implies an obligation on the part of the landlord not to unreasonably withhold consent in the case of alterations which amount to improvements.  Whether or not an alteration amounts to an improvement is to be assessed from the perspective of the tenant.

  1. What if the landlord delays granting consent to alterations?

Unless the lease specifically imposes an obligation on the landlord not to unreasonably delay consent, there is no specific obligation on the landlord in respect of timing other than by reference to its obligation not to unreasonably withhold consent.  In reality, it is established at common law that the landlord must deal with applications for consent expeditiously where consent is not to be unreasonably withheld and it is a question of fact in the circumstances whether a landlord has acted unreasonably.

  1. What if the lease prohibits alterations completely?

Statute gives a tenant certain rights to carry out improvements even if the lease prohibits them.  There is a procedure pursuant to section 3 of the Landlord and Tenant Act 1927 pursuant to which the tenant serves on the landlord notice of its intention to carry out improvements.  If the landlord objects then the tenant can apply to the Court for authority to carry the improvements out.  If the landlord does not object within 3 months then the tenant may carry them out.  In reality there is scant authority on the procedures relating to section 3 and it is rarely used in practice.