Licence to alter: making alterations to a business lease, the reasonableness test, reinstatement and approvals

What is a licence to alter?

Whether a tenant needs the landlord’s written consent to alter the premises depends on the wording of the lease. Where the lease requires consent, it is usually called a licence to alter. Section 19 of the 1927 Act limits a landlord’s refusal only for covenants against improvements, and the lease itself decides what needs consent, so check the clause before starting any work.

The Landlord and Tenant Act 1927 applies a reasonableness rule only to a covenant against the making of improvements without licence or consent (section 19(2)). Other alterations depend on what the lease says.

When can a landlord refuse consent to an improvement?

Under section 19(2) of the 1927 Act, the covenant against improvements is subject to a proviso that the licence or consent “is not to be unreasonably withheld”. The Act therefore bars an unreasonable refusal of consent to an improvement.

The proviso does not stop the landlord asking for a reasonable sum for damage to, or diminution in value of, the premises or any neighbouring premises belonging to the landlord, and for legal or other expenses properly incurred (section 19(2)). For an improvement that does not add to the letting value of the holding, the landlord may also require, as a condition of consent and where that requirement would be reasonable, an undertaking to reinstate the premises to their condition before the improvement (section 19(2)).

Does the landlord have to answer within a set time?

The duty in section 1 of the Landlord and Tenant Act 1988 to answer a written application within a reasonable time, with written notice of the decision and any reasons for refusal, applies where the covenant is against assigning, underletting, charging or parting with possession and consent is not to be unreasonably withheld (section 1(1)). It does not cover consent to alterations, so check what your lease says about how the landlord must respond.

What happens to the alterations at the end of the lease?

The landlord may require an undertaking to reinstate as a condition of consent only for an improvement that does not add to the letting value of the holding, and only where that requirement would be reasonable (section 19(2)). The lease may separately require the tenant to reinstate at the end of the term, so check both the consent and the lease wording before the work starts.

Claims for the state of the premises at the end of the lease are a separate matter. Our guide on dilapidations explains how those claims are put and answered.

Do building regulations and planning apply as well?

Yes, separately from the lease. GOV.UK says that you may need building regulations approval for many projects, for example replacing windows and doors, installing or replacing a heating system, or changing electrics near a bath or shower. It warns that the person doing the work could be prosecuted and fined if they do not comply.

For planning, GOV.UK says that interior alterations are excluded from development, with an exception for mezzanine floors that add more than 200 square metres of floorspace to retail premises. Building operations that do not materially affect the external appearance of a building are also excluded.