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Alterations and improvements of leasehold property

1201906928_5a62b601f9Issues such as alterations and improvements on a leasehold property should be expressly provided for in the lease. This is because the tenant’s ability to do so is usually unclear and depends on the centuries old principle of ‘waste’.

Needless to say, a landlord will want to exercise control over what can be altered and what cannot be. This is because some alterations may increase the value of the property, while some may pull it down, and a landlord would not wish this. This is especially true of short-term commercial leases, where physical changes may render the property unfit to re-let. Provisions for alterations are not strict for long-term leases, but the landlord may still be wary of drastic makeovers that are likely to affect the value of the property on reversion. There is also the safety aspect to be kept in mind. Alterations should naturally not interfere with, or remove the structural walls or make such changes that may cause the entire building to collapse.

In the case of short-term lease, the landlord is more likely to impose an absolute covenant, thereby prohibiting from making any structural changes. Prospective tenants should examine these covenants carefully and make sure that the property in its current structure is adequate for their needs throughout the term of the lease. The landlord can always be approached for permission requesting to make changes to the structure of the house, but it is his prerogative to accept or refuse permission. The tenant is at the complete mercy of the landlord in this regard. Of course, reasonable adjustments so as to meet the needs of people with special needs can always be allowed. In fact, it is legally permissible under the Equality Act of 2010, where it is mentioned that implied consent for such reasonable adjustment is allowed.

With regards to other alterations, qualified covenants would have to be provided. This allows alterations without permission from the landlord. Under S 19(2), the Landlord and Tenants Act of 1927 a tenant is allowed to make those changes that a landlord cannot unreasonably withhold his consent. This provision cannot be excluded and will apply to covenants where alteration is made to the extent that the alteration becomes an improvement. The case of Lambert v FW Woolworth and Co Ltd. has made it clear that an alteration amounts to improvement or not depends on the tenant and should be seen from his point of view. If the work results in the increase in the value or the usefulness of the property to the tenant then this cannot be considered as an alteration, even though it reduces the value of the property for the landlord. Thus, he cannot withhold his consent unreasonably irrespective of the fact that the alteration amounts to improvement or not. But in connection with other alterations, he can be as unreasonable as he wants.

This decision has been of use to tenants, but they would still prefer a qualified covenant where it is made clear on the face of it that the landlord cannot withhold consents unreasonably to an alteration whether or not it amounts to an improvement. Thus, landlords must think carefully before agreeing to concede to any kind of qualified covenant.

Photo courtesy: Angelo Amboldi



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