What is a Licence for Alterations?
In a commercial lease, there is usually a clause which restricts the tenant from making any changes to the property.
This means that the tenant will need to obtain consent from the Landlord and Licence for Alternations will be required. This is a legal document which details the conditions and requirements of the required works and contains the consent from the Landlord.
Why is it needed?
Most commercial leases restrict a tenant's ability to make changes to the property. It protects both the tenant and the landlord.
In respect of the tenant, it ensures that they are complying with the terms of the lease and avoid enforcement action in the future.
In respect of the landlord, it provides a clear and detailed understanding of what works are taking place and can be given the opportunity to review the specification of works and check whether the works will have a negative impact on the market value of the property.
What kinds of alterations can be agreed?
Examples include:
- Removing or building internal walls.
- Installing air conditioning or ventilation systems.
- Changing electrical or plumbing systems.
- Fitting shopfronts or signage.
- Structural changes to the building.
What is usually included in a Licence for Alterations?
A Licence for Alterations often includes but is not limited to the following :
- A detailed description of the approved works including the plans and specification.
- Requirements to obtain planning permission or building regulations approval where necessary.
- Conditions about how and when the work is carried out.
- Requirements for insurance where necessary
- Provisions requiring the tenant to repair any damage caused.
- Whether the tenant must remove the alterations and reinstate the property at the end of the lease.
What is the process for a Licence for Alterations?
The process for obtaining a licence for alterations can differ depending on the works required.
The first point of call is for the tenant’s solicitor to check the lease firstly and find out exactly what (if any) works are permitted. If the works are not permitted or require consent, the next step would be to contact the landlord.
The tenant will request the landlord’s permission to carry out the works and provide details of all the proposed works to the landlord and will usually be required to provide a full specification of the works including plans.
The landlord will usually appoint solicitors and they will consider the terms of the lease and the landlord will usually appoint a surveyor who will assess the impact of the alterations on the property.
The landlord will decide whether they will grant consent and confirm what conditions and terms are to be imposed which could include the following:
- The use of qualified contractors to undertake the required works
- The requirement to have insurance in place and an obligation to repair any damage caused.
- The requirement to comply with any planning permission and building regulations.
- Restrictions on working hours.
If agreed, the landlord’s solicitors will prepare the Licence for Alterations based upon the conditions and it will be sent to the Tenant’s solicitors for review. The tenant’s solicitors will then review the terms and negotiate any terms which are not agreed.
When the Licence for Alterations is agreed, it will be signed by both parties and dated.
At this point, the tenant can proceed with the works in accordance with the terms of the Licence.
Who usually pays for the Licence for Alterations?
The tenant will usually pay for the Landlord’s legal costs and surveyor costs.
How Jordans Solicitors can help
It is essential that you obtain legal advice whether you are the Landlord or the Tenant. We can provide expert advice on the drafting and review of the Licences for Alterations and negotiate on the terms of the Licence to ensure that the terms are appropriate in your circumstances and your interests are protected.
If you require advice on Licences to Alterations, please contact the Commercial Property Team on 0330 300 1103.