During the lease term, a commercial tenant may want to make changes to the property to ensure that it continues to meet their business needs. Landlords, however, will be keen to ensure their asset is not affected negatively by such works.
- The tenant’s duty to obtain consent
Unless there is an express restriction within the lease, a tenant will be free to make the desired alterations without first obtaining its landlord’s consent. Hopefully, the tenant will have already considered the terms of the lease to ascertain whether they require consent.
The term in the lease dealing with alterations is likely to be either:
- Absolute, meaning that no alterations are permitted whatsoever; or
- Qualified, landlord’s consent is required to make any alterations; or
- Hybrid, being absolute in respect of some alterations (i.e. structural) and qualified for other alterations (i.e. non-structural).
- The landlord’s duty to consider the request
Where the covenant is qualified, the lease may specify that consent to an alteration cannot be unreasonably withheld or delayed. If the alteration is also an improvement, these words may be implied by statute (s19(2) Landlord and Tenant Act 1927) even if not expressly stated.
- Consider the specific circumstances of the tenant’s request
When considering whether to give consent in the case of a qualified covenant, the landlord’s decision must be guided by an objective “reasonable person” standard. If consent is going to be refused, it must be shown that a reasonable prudent landlord would have refused for the same reason.
Some examples for refusing consent might be:
- Uncertainty to whether the proposed alteration may change the structure of the whole building.
- The proposed alteration may adversely affect the landlord’s adjoining business.
- Don’t wait with decision-making
Where the covenant requires that consent is not to be unreasonably delayed, the landlord must give its response within a reasonable period. Although there is no statutory definition of ‘reasonable period’, this will be days or weeks, not months. Landlords should, therefore, make haste when considering applications so as not to unreasonably delay applications.
- Consider your options if consent is going to be refused
If consent is refused and the tenant undertakes the works regardless, their actions may give rise to a breach of the lease. The landlord may seek to terminate the lease by forfeiture or seek an injunction to prevent further works and remove any unauthorised alterations and/or pursue the tenant in a claim for damages.
- Keep in-mind that the tenant has options if consent is refused
Where a tenant considers the landlord has been unreasonable in its refusal, or the landlord has failed to provide consent within a reasonable period (if required by the lease), the tenant may:
- Seek a declaration from the court that the landlord has acted unreasonably and that no further action is required. This is by far the safest option available to a tenant and could be used to rebut a forfeiture; or
- Undertake the works without consent. The effect of unreasonably withholding consent is to release the tenant from its obligation to obtain consent.
If you are a Tenant wanting to make alterations or if you are a Landlord who has received an application for alterations and you want to know your obligations under an existing lease please contact our specialist team here at Onyx Solicitors, on 0121 268 3208 or email us at email@example.com with your query.