During the term of their lease, a commercial tenant in England & Wales may wish to make changes to the premises to ensure, for example, that it continues to meet their business needs. Landlords, on the other hand, will be keen to ensure their asset is not impacted negatively by such works.
1. The tenant's duty to obtain consent
Unless there is an express restriction within the tenancy document, 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, meaning alterations cannot take place without first obtaining the landlord's consent; or
- Hybrid, being absolute in respect of some alterations (i.e. structural) and qualified for other alterations (i.e. non-structural).
2. The landlord's duty to consider the request
Where the covenant is qualified, the lease may stipulate 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 (section 19(2) Landlord and Tenant Act 1927) even if not expressly stated.
3. 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 as to whether the proposed alteration may affect the structure of the whole building.
- The proposed alteration would adversely affect the landlord's adjoining business.
4. Don't hang around 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. Whilst 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 be seen to unreasonably delay.
5. 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.
6. 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 commercial landlord considering a request for consent from your tenant or a tenant wanting to make alterations or you have any concerns or queries relating to these issues, please do not hesitate to get in touch with our Real Estate Disputes team or your usual Brodies' contact.
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