Solicitor Ed Williams, in our Commercial Property & Planning team, explains what a Licence for Alterations in Commercial Property is.
A Licence for Alterations is a written agreement in which a landlord gives the tenant permission to carry out works or make changes to the tenant’s demised premises. Almost all commercial leases include restrictions preventing tenants from making alterations, ranging from absolute prohibitions to allowing certain types of changes subject to the landlord’s prior written consent. In such cases tenants must apply to the landlord for consent, usually providing detailed plans, drawings, and technical information about the proposed works.
A Licence for Alterations is entered into alongside the lease and formally records the landlord’s consent to the specific works and outline the tenant’s obligations in carrying out the works.
When are Licences for Alterations used?
Licences for Alterations can be entered into at the start of a lease to cover fit-out works or during the lease term when the tenant wishes to carry out new alterations.
Sometimes a landlord may provide consent via a simple letter, or may not document it at all. However, this can be risky. Without a formal licence, there may be uncertainty about what works were agreed, who is responsible for costs, and whether the tenant is required to reinstate the premises at the end of the lease.
What types of alterations require a licence?
Most leases prevent tenants from carrying out structural works or alterations that change the internal layout or external appearance without prior written consent. This ensures landlords maintain control over their investment and that the property can be re-let with minimal disruption. With that said, it is always advisable to instruct a solicitor to review the lease to confirm what alterations are permitted by the lease, when consent is required, and if a Licence for Alterations is necessary.
Key terms to consider
When negotiating a Licence for Alterations, the following issues are particularly important:
- Proposed works – be clear on the scope and necessity of the works, including plans, specifications, and intended outcomes.
- Timescales – will the tenant be under an obligation to start and/or complete the works within a certain timeframe.
- Consent requirements – ensure all necessary approvals are obtained, including planning permission and building control consents.
- Yield-up obligations – determine whether the tenant will be required to remove the alterations at the end of the lease.
- Record of works – keep a clear record of what has been carried out.
- Impact on rent review – clarify whether the works will be considered when calculating rent reviews, if applicable.
Conclusion
A well-drafted Licence for Alterations provides clarity and certainty for both landlords and tenants. It ensures that the property is properly managed, the works are clearly documented, and both parties understand their rights and responsibilities. For these reasons, both landlords and tenants should always seek professional legal advice before entering into such an arrangement.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
