License for Alterations – Everything You Need to Know
It’s not unusual for tenants to want to make a few structural changes to a property on lease. Under the terms of the lease, they can only do it after obtaining permission from the landlord.
Generally, it’s a simple process in which the tenant has to apply for a license for alterations.
That being said, the lease terms along with the scope of alterations determine whether or not the landlord’s consent is required. In most cases, the landlord allows the tenant to make improvements to the property during the lease term without receiving permission. They, however, may pose certain restrictions.
When is a License for Alterations Required?
Typically, under most leases, the tenants require a license for alterations before making the following changes to the landlord’s property.
- Altering and modifying the structure of the property
- Installing a new heating system or an alternative service
- Demolishing or cutting through the external wall of the property
- Changing the windows
- Installing a new front entrance door to the flat/apartment
- Upgrading the property’s layout by removing any solid or partition wall
- Adding new sanitary facilities
While these are the most common alterations that require the landlord’s consent, the accurate requirements will only depend on the exact wordings of the lease.
More often than not, landlords allow the tenants to make internal, non-structural changes to the property. It’s important to note that the landlord can only reject a tenant’s request for making alterations with a reasonable objection.
That being said, it happens only rarely that the lease doesn’t make it compulsory for the tenant to receive the landlord’s consent before making any changes to the property without facing a penalty.
The Requirement for Consent
Most leases contain one of the following provisions or a combination of all related to property alterations.
- Absolute Covenant
This agreement features an absolute prohibition for alterations. In this case, the tenant will be able to make the desired improvements to the property only when the landlord decides to waive the agreement.
- Qualified Covenant
As per this clause, the tenant can’t make alterations until they receive consent from the landlord.
- Fully Qualified Covenant
Fully qualified covenant implies that the tenant may be able to make alterations only with the landlord’s consent, which according to the clause, shouldn’t be unreasonably withheld.
In case the lease doesn’t mention anything on alterations, the tenant may be free to make changes to the property as they desire.
The Landlord and Tenant Act 1927 and 1954 makes it clear that the landlord can’t withhold the permission to make alterations unjustifiably. Moreover, in certain circumstances, the changes necessary to follow the terms of the statute can’t be withheld.
Frequently, the alterations made by tenants, both with and without the permission of the landlord, become a source of disputes, claims, and financial concerns for the two parties.
Compliance with a License for Alterations for Tenants
Compliance with a license for alterations is important for tenants for many reasons. They should establish whether or not there’s a need to receive the landlord’s permission before starting any improvement project.
If they fail to do so, it may lead to the following consequences:
- Breach of lease terms and the possibility of an enforcement action being taken against the tenant
- Challenges in selling the property if unregulated changes have been made to the property’s demise
- Seeking the landlord’s consent in retrospective may prove costly and difficult once the alterations have been finalized. This gives the landlord a great advantage in terms of negotiating power
Importance of a License for Alterations advantage for Landlords
For landlords, a license for alterations is important because it records all the alterations the tenant makes to the property. In many cases, a reinstatement clause is included in the lease. It obligates the tenant to return the property in the same condition as was prior to the commencement of the lease.
This requires the tenant to remove even the minor fittings they installed throughout the term. Although the cost of these alterations falls on the tenant’s shoulders, the landlord should have a clear understanding of the things the tenant is supposed to remove.
The primary responsibility of the tenant is to prepare a scope of alterations required in the property and present it to the landlord. This includes working on the drawings of the design, structure, and building services and specifications.
It is also crucial to provide an undertaking ensuring that all alterations will be carried out as per the statutes, building regulations, bye-laws, and good working practices. Whilst this is the responsibility of the tenant, they will also need to obtain reasonable evidence for the landlord indicating that these consents have actually been obtained and are on record. This includes both pre-contract consents such as building control approval, as well as final, signed-off approvals after the statutory bodies or an approved inspector has inspected the work.
Once the landlord accepts the scope of work, all details will be recorded in the license for alterations. In case of any subsequent changes, necessary modifications or replacements will occur in the granted license.
The license for alterations is of prime importance in terms of financial matters and so, both the tenant and landlord need to make sure that it is accurate to avoid any dispute at the time of expiry of the lease.
The landlord’s solicitor typically prepares the license for alterations and issue it to the tenant’s team for approval. Please note that the tenant will cover the cost of preparing the license by the landlord’s professional advisers.
When it comes to granting the permission for alterations, the legislation imposes certain responsibilities on the landlord. For one, they can’t refuse a request without a reasonable objection. These responsibilities include:
- To give consent unless there’s a reasonable explanation to refuse
- To present the decision in writing highlighting whether or not they’re granting consent and if any reasonable conditions come with it
- Provide justified reasons for withholding consent
- To follow the aforementioned duties within a reasonable time period
It’s noteworthy that if the landlord decides to withhold a request, the legislation holds them accountable for providing proof for justification.
The Alterations Protocol – Protocol for Applications for Consent to Carry Out Alterations
According to the alterations protocol:
- The tenant’s request for alterations should be detailed enough for the landlord to get a clear picture. They should submit all supporting documents and drawings with the application while referring to the relevant sections of the lease. Moreover, the tenant has to provide an undertaking for the landlord’s costs. The landlord can’t use any disagreement over this matter as a reason to delay responding to the application.
- The landlord should confirm the receipt within five working days. It’s also the right time to tell the tenant if the application lacks sufficient details.
- The landlord should respond to the application within a reasonable period of time. They should make it clear that they accept, withhold, or refuse the application. The landlord also needs to provide details related to the costs at this point.
- It’s better to use Alternative Dispute Resolution to resolve any possible disputes instead of taking help from the court.
Hopefully, the new alterations protocol will smoothen out the process of application submission by the tenant to make changes to the leasehold property. It specifically applies where the lease restricts the tenant to alter the property.
Complying with the alterations protocol will help both tenants and landlords prevent unnecessary and expensive disputes. It will also help them quickly identify and resolve issues through alternative dispute resolution. The purpose of the alterations protocol is to improve the communication channel between tenants and landlords.
That being said, it’s always best for both tenants and landlords to have some kind of expert support for matters related to a license for alterations. Get in touch with Arun Associates TODAY and speak to an expert to make sure that you stay on top of all license for alterations matters.