Alterations covenants in commercial leases and how to enforce them

Consequences of Making Alterations without Landlord’s Consent

Making alterations to business premises without landlord’s consent

Sometimes it is acceptable for tenants to make alterations without obtaining the landlord’s prior approval. This would be the case if the lease expressly permits certain alterations (e.g. the erection of partitioning or specified minor alterations) without the need for the landlord’s consent.

It would also be acceptable for a tenant to make alterations without the landlord’s consent if the landlord has unreasonably withheld consent to the alterations. The tenant would need to be confident in its contention that the landlord has unreasonably withheld consent (and would need professional advice on this point). If consent is unreasonably withheld it is treated by the courts as given so the tenant may proceed with the alterations.

However, in most cases the tenant should not be making alterations without having first received the landlord’s consent in writing. Here we look at what the landlord can do about unauthorised alterations.

Unauthorised alterations to which the landlord does not object

Sometimes a landlord becomes aware that alterations have been carried out without its approval, but does not object to the alterations. In such a case the landlord should ensure that the following issues are considered:

• If the landlord is happy with the alterations a retrospective Licence to Alter can be entered into. It is best for both parties if the alterations are acknowledged and documented rather than ignored.

• Does a superior landlord or any other third party need to give consent as well as the landlord? If so, they need to be approached.

• Was planning permission, listed building consent, conservation area consent or Building Regulations approval required? Was it obtained? Might the local planning authority take enforcement action? These issues should be resolved before a retrospective licence is concluded.

Unauthorised alterations to which the landlord objects

If the landlord is unhappy with the tenant’s works it will need to take legal advice on its options. One of the following solutions (or a combination of them) may be available:

• The landlord may send a letter to the tenant drawing their attention to the breach of the alterations covenant in the lease and requiring the tenant to remove the unauthorised works.

• Informal resolution. The landlord and tenant may be able to agree on a revised scheme of works that is acceptable to both parties.

• If it would have been reasonable to refuse consent to the alterations, the landlord may be able to obtain a court order requiring the premises to be reinstated to their previous condition.

• The landlord may be able to seek compensation for losses arising out of the unauthorised works.

• Forfeiture of the lease.