If you are taking premises in a building which contains a variety of businesses and tenants, the landlords will normally retain and repair the structure and exterior of the building. Individual tenants will own the interior of their particular premises – probably the plaster on the walls, the floorboards, and the ceiling surface as far as the joists or concrete above.
You may want to carry out some alterations to your premises. Before doing so, you will need to refer to the clauses in your lease which contain your – the tenants’ – covenants relating to alterations.
Depending on how these provisions have been negotiated at the start of the lease, the restrictions may range from liberal to tough.
Even with the most liberal restrictions, one thing is for certain. You can’t carry out any alterations which might be structural or external because those parts belong to the landlord, not to you. Your lease is only over the interior of your premises. So, if you need to carry out structural or external alterations, that will have to be a matter of special negotiation at the time with the landlords.
Returning to the most liberal type of alterations restrictions, they may say that you can carry out some alterations without needing any consent from the landlords at all. The lease may say that you can put in internal non-structural partitions without consent. The only condition might be that you must comply with all legal and regulatory approvals, such as building regulations and CDM regulations.
Tough requirements would say that you can’t carry out any alterations unless you first get the landlord’s written consent. This is stricter than you might think, because this doesn’t just apply to what you might traditionally think of as building works, but also the ripping out or changing of cupboards would be caught, because they are “landlord’s fixtures”.
Nevertheless, you may think, this isn’t too bad, because you just ask the landlord for consent and, being a reasonable chap, he will give it. But landlords don’t necessarily have to be reasonable in this situation. Landlords can change. The prince of darkness may be looking to increase his property portfolio.
However, you do have some protection from the law. The Landlord and Tenant Act 1927 says that if the lease has conditions requiring the landlord’s consent for alterations, then it’s implied by law that the landlord is not entitled to withhold that consent unreasonably – in respect of alterations which are improvements. So, what are improvements? Fortunately for you, this is judged from the tenant’s point of view, not the landlords’. If something you want to do will help your business, that’s usually going to be an improvement. (The landlords can still withhold consent if they have reasonable grounds – e.g. your works would damage the building, or affect the operation of the building, or affect it in an adverse way.)
So, you will eventually get a “licence for alterations” for improvements. But you will have to pay for that. That can be quite costly in legal fees.
From your point of view, the best arrangement to negotiate is that when it comes to alterations which do not affect the structure or exterior of the building, you should be entitled to do them without needing special consent, subject only to complying with all legal requirements, as you would naturally expect to do anyway.