Alterations—a practical lease negotiation guide

The following Property practice note provides comprehensive and up to date legal information covering:

  • Alterations—a practical lease negotiation guide
  • Landlord’s alterations objectives
  • Tenant’s alterations objectives
  • Lease
  • Tenant's initial licence for alterations
  • Alterations at Heads of Terms
  • Common structure of an alterations clause
  • Prohibited alterations
  • Works permitted with landlord’s consent and LTA 1927, s 19(2)
  • Works permitted without landlord’s consent
  • More...

Alterations—a practical lease negotiation guide

This Practice Note discusses considerations for landlords and tenants when negotiating alteration provisions in a rack rent commercial lease that is a new lease for the purposes of section 1 of the Landlord and Tenant (Covenants) Act 1995 (LT(C)A 1995). It identifies key concerns for each party (both at heads of terms and during lease negotiation), suggests possible amendments and considers how the alterations clause interacts with other lease provisions.

Landlord’s alterations objectives

For a landlord, controlling alterations is important to protect the value of its investment. The landlord should ensure that:

  1. it retains appropriate controls on the types of alterations carried out, the standard of workmanship and practical issues arising from the works (so as to minimise the risk of nuisance/disturbance claims from neighbours and other tenants in the building)t

  2. the tenant is required to reinstate any alterations that reduce the landlord’s ability to re-let the premises on determination of the lease,

  3. any alterations that adversely affect the rental value of the property are disregarded on an open market rent review, and

  4. it maintains a record of all works carried out and all necessary consents to such works.

The landlord needs to strike a balance between maintaining control over the building on the one hand and ensuring, on the other, that alterations provisions are not so restrictive that:

  1. a

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