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When you have a commercial lease for your business premises, you must abide by the terms of your lease agreement. Your lease agreement will detail your obligations which can be positive covenants, what you have to do, and restrictive covenants, what you cannot do. One of the subjects your lease will cover are alterations to your business premises. For example, you may alter your commercial premises to ensure they are more suitable for your business use. If so, your landlord will likely restrict modifying your commercial premises to protect their property investment. You must understand these so that you do not breach your lease. This article will explain alterations to commercial premises under a commercial lease.
Lease Agreement
A lease agreement is a legally binding contract between you and your commercial landlord. It details the terms of your commercial lease in return for rent payments. A lease agreement will describe the terms and conditions of using your commercial premises, such as:
- the rent amount;
- the lease term, which is the period you can occupy the property for;
- whether the lease offers security of tenure;
- your repair obligations; and
- any specific requirements for notices within the lease.
Your commercial lease agreement will also detail rules concerning alterations to your business premises.
Alterations
Your commercial lease is the first place you should look to find out what you can and cannot alter in your commercial premises. It should have an alterations clause that will detail this. The control your commercial landlord wishes to have over your commercial premises and the type of commercial property you occupy affect what alterations they permit.
Your commercial lease may prohibit all types of alterations, which is likely for short-term leases. Alternatively, it may allow specific alterations with your landlord’s consent and even enable modifications without permission. However, your commercial lease likely prohibits structural alterations that will affect the building’s environmental rating.
Permission for Alterations
It is common for commercial leases to allow you, as the commercial tenant, to make non-structural alterations with your landlord’s permission. Your lease may detail how you apply for approval, including the need for plans and specifications of the alterations you request. The typical alterations clause states that non-structural alterations are permissible with the landlord’s consent.
A normal consent requirement in a lease will specify that when you request your landlord to make alterations, they must not unreasonably withhold or delay their response. Instead, their response should be prompt. It should also be reasonable in terms of:
- the information they request from you;
- requirements of any alterations; and
- any restrictions on the alterations you request.
Where your landlord permits alterations, they might do so through a licence that can detail any conditions they have. Your lease may state that you pay the landlord’s costs for this. The licence may say that you have to:
- obtain permission from the property insurer as well as let them know once the work begins; and
- reinstate the alterations at the end of your lease term.
Other Considerations
Regardless of how your commercial lease does or does not restrict you, you should consider other potential restrictions when you lease. These may also affect what you can and cannot do regarding alterations. For example, you should consider the following:
- if the alterations change the use of the commercial premises and, if so, whether the new use is permissible;
- how planning and construction laws may affect your alteration plans;
- any planning permission needed;
- any environmental restrictions;
- whether you have the right to access a neighbouring property or common parts of the building should your alterations require you to;
- if the alterations will affect the other party; and
- any impact alterations may have on your rent review.
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Key Takeaways
You should check what your lease allows if you wish to alter your commercial premises under a commercial lease. If it does not detail alterations, you are generally entitled to proceed but must ensure this does not breach another lease term. Your commercial lease may prohibit all alterations or at least structural ones. If you wish to make non-structural alterations, your commercial lease may require that you gain permission from your landlord. There may be a particular way you should apply for this, and usually, this will require that your landlord not unreasonably withhold or delay their response. They will likely respond with a licence for alterations that details any conditions. Suppose you do have permission to carry out modifications to your business premises. In that case, you should consider other factors, such as planning permission and any effect on other properties.
If you need help understanding what you can alter on commercial premises under a commercial lease in the UK, our experienced leasing lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
A commercial lease is where you lease property from a commercial landlord for use at your business premises and, in return, pay their rent.
Your commercial lease will detail whether or not you can alter your commercial premises and whether and when you need permission from your landlord. Generally, where a lease does not state anything about alterations, you can adjust your premises as long as it does not breach other lease terms.
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