Alterations, User and Planning Flashcards
What are alterations?
Changes to premises, such as reconfiguring internal walls, opening windows, adding mezzanine floor, etc
What happens if lease is silent on alterations?
Tenant is free to carry out alterations, subject to doctrine of waste
What is the doctrine of waste?
Tenant cannot carry out alterations which reduce value of the premises
What are the different types of covenants a landlord can have in providing permission for alterations?
1) Absolute covenant
2) Qualified covenant
3) Fully qualified covenant
What is an absolute covenant against alterations?
Alterations are not permitted – landlord has no obligation to even consider a request (although they can allow it if they wish)
What is a qualified covenant against alterations?
Alterations are only permitted with landlord’s consent. The landlord does not need to give consent.
What is a fully qualified covenant?
The landlord must act reasonably in deciding to withhold consent
Can a lease have a mixture of absolute, qualified and fully qualified covenants?
Yes, for different types of building work.
Give an example of an absolute covenant term for alterations
The tenant shall not make any alterations to the premises under any circumstances
Give an example of a qualified covenant term for alterations
The tenant shall not make any alterations to the premises without the prior written consent of the landlord
Give an example of a fully qualified covenant term for alterations
The tenant shall not make any alterations to the premises without the prior written consent of the landlord, such consent not to be unreasonably withheld or delayed
What happens if the tenant’s proposed alterations are improvements from the point of view of the tenant in a qualified covenant?
S19(2) converts the proposal to a fully qualified covenant
What happens if landlord consents to alterations under a qualified covenant?
The consent will be documented in a license for alterations
What will a license for alterations cover?
1) Landlord’s requirements
2) Pay the landlord’s costs
3) Obtain all necessary consents
4) Reinstate the premises at end of lease term?
Can a tenant make improvements if there is an absolute lease restriction against alterations?
Yes, sometimes, this can override the lease restriction
What is the process in a tenant making improvements in light of an absolute lease restriction?
1) Tenant must serve notice on landlord about proposed improvements
2) If landlord object, tenant can apply to court for permission
3) If landlord does not object within three months, the tenant can proceed
4) Landlord can offer to do works instead, but tenant does not have to agree
When will court grant permission if there are improvements in light of an absolute covenant?
1) Increase in property’s letting value
2) Reasonable and suitable for property
3) Do not reduce value of other landlord-owned properties
Can a landlord charge a lump sum or increase rent for alterations?
Yes, it can, unless tenant exercises statutory right.
Would a condition of improvements be a lump sum / increasing rent? Why?
Yes, to reflect the new value of the property
What does user mean in a lease?
Refers to what the lease allows tenant to use the premises for
What happens if a lease is silent on user?
The tenant is free to use the premises for anything they like
What is the effect against landlord if they narrow down use of the property?
Limits appeal on premises and could limit market rent on rent review
When could landlord charge a lump sum or increase the rent for giving consent for change of use?
If the change of use also requires structural alterations
What does the Code for Leasing Business Premises set out for good practice on alterations and change of use?
- Lease should only restrict as necessary to protect value and adjoining or neighbouring premises of landlord
- Code requires landlord to at least give tenant fully qualified covenant for internal non-structural alterations
- If landlord requires alterations to be reinstated at end of lease, this should be made clear in heads of terms. Otherwise, lease may only require this if reasonable.
