Leases of business premises may absolutely refuse consent for tenants to carry our certain categories of alterations – for example, structural and external alterations. They may allow other alterations – for example, internal non-structural alterations – subject to the landlords’ consent being given to them which cannot be unreasonably withheld. The question which naturally follows from this is: when is it reasonable for a landlord to refuse consent to alterations requested by the tenant?
The courts have held that the legitimate purpose of requiring consent from the landlords is to give the landlord protection from alterations that could damage his property interests. In general terms, that means something which could reduce the value of the building or the lettability of premises in it.
What a landlord is not entitled to do is to refuse consent for a reason which has nothing to do with his property interests.
On the other hand, the landlord doesn’t have to be even-handed: he doesn’t have to weigh up the damage to his property interests against the benefits to the tenant of doing the works. He can make his decision reasonably based on his own property interests. It’s all about the property.
One situation which overrides everything is when the tenant has a disability and wishes to make alterations to the premises to avoid the disadvantage for him in comparison with persons who are not disabled. To the extent necessary, the tenant must be given permission to carry out the alterations.
In fact, the tenant may be under an express duty under the Equality Act 2010 to make reasonable adjustments to the premises to avoid disadvantage to disabled persons. In that situation, the tenant must be allowed to make the alteration, and the landlord cannot withhold consent unreasonably, although he can impose reasonable conditions on what is done and how it’s done.
The type of conditions which are regarded as reasonable for a landlord to impose include the following: that the tenant must obtain any necessary planning permission or other consent, such as building regulation approval; the work must be carried out in accordance with plans and specifications approved by the landlord; the landlord must be permitted a reasonable opportunity to inspect the work, whether during and after it is completed; if the consent of another person is required it must be obtained; and all the tenant must repay to the landlord the costs reasonably incurred by the landlord in connection with the giving of consent.
If you do get a licence for alterations, you need to be a little careful about the wording if you have a rent review in the future. The rule is that if works are carried out pursuant to an obligation to the landlord, they can be taken into account in the rent review. In other words, if your works improve the property and make it worthy of a higher rent, that would benefit the landlord at the rent review. This does not happen if you are only doing works you request to do, without being obliged to the landlord to do them. Sometimes the licence for alterations is drafted by the landlord’s solicitors in such a way as to make it an obligation to the landlord, not just a permission for you to do the works. You need to watch out for that and ask your solicitors to confirm the licence has not been drafted that way.