In general the Landlord will want to control any alterations which would be detrimental to the value of the commercial property or make it difficult to re-let.
What terms might you find in a lease about alterations?
It is usual that alterations to the structure or exterior will be prohibited whilst non-structural alterations to the interior will be permitted with the Landlord’s consent so long as certain conditions are met.
The conditions which a Landlord of commercial property may impose include the approval of plans, specifications and materials prior to commencement of work.
The Landlord may also insist that all approved alterations are removed before the end of the lease. This may be considered unreasonable by the tenant if the alterations are not specific to its own use and will generally improve the property for re-letting.
The tenant should therefore consider the alterations clause carefully so as to ensure that it will allow the changes which it requires to adapt the premises to its intended use without undue restriction. For instance no consent should be require for items such as demountable partitioning which can be easily removed with little risk of damage to the building.
In some cases there could also be a statutory obligation to make alterations to a commercial property. For instance the Equality Act may require modifications to the access or toilet facilities. It is important that the lease makes it clear who will pay for these alterations.
The lease may also make the Tenant liable for any alterations which are required to comply with fire safety or buildings regulations.
Ordinarily the rent review provisions of a commercial lease will make it clear that any increase in rent value resulting from the tenant’s alterations will be disregarded from the assessment of open market rent. This means that the tenant will not be penalised by paying for the alterations and then facing an increased rent based on the improved premises. This should be checked carefully
The tenant should take care to notify the buildings insurers before any alterations are commenced. This is to ensure that the terms of the policy are not breached. If damage is incurred as a result of the alterations and the policy does not pay out the tenant may be left responsible for the full cost of re-instatement.
Contact the Commercial Property team at Ironmonger Curtis on 0845 222 2635.