EM Law are experts in advising clients on licences for alterations. Our lead construction lawyer is Anna Rabin who has extensive experience in advising clients on a wide range of construction law matters.
What are licences for alterations?
A licence for alterations is a licence from the landlord to the tenant giving consent to carry out works or alterations at the property. Alterations can be required for a variety of reasons, including altering the structure to fit the tenant’s commercial needs, installing new service installations or opening the layout of the property by removing walls.
Construction (Design and Management) Regulations 2015
Licences for alterations will be subject to the Construction (Design and Management) Regulations 2015. These regulations apply (broadly) to all construction projects and impose obligations on the person who is a “client” in relation to the works. In the context of a lease, the landlord may be a client, even though the works are carried out on behalf of the tenant and not primarily for the benefit of the landlord. In a licence for alterations, there should be a term that compels the tenant to confirm in writing that they are to be treated as the client for the purpose of the Regulations.
Major works v minor works
Licences for alterations will differ slightly depending on whether major or minor works are to be undertaken. If major works are to be undertaken, planning permission will usually be required. Plans or specifications for the works should also be drawn up. These should either be bound in with the licence or, if they are bulky, bound up as a separate bundle which is referred to in the licence and authenticated with the signatures of the relevant parties. If the works are substantial, the landlord may require that the tenant provides security for carrying them out and/or collateral warranties from the tenant’s professional team.
The licence as a deed of variation
A simple licence for alterations or to carry out works, which is made in accordance with the terms of the lease, will not usually contain any variations to the lease. However, some landlords’ licences will include provisions that vary the lease. Often, the variations contained in a licence will be self-evident. In some cases, however, the variations may not be so obvious. A common example is where the landlord agrees that, in contravention of the strict terms of the lease, the tenant may do something not permitted by the terms of the lease. In some circumstances, this can be held to constitute a variation.
It may also be possible to vary the lease by conduct. For example, there may be a variation if the lease states that the tenant is to insure the building, but in practice the landlord insures it and the tenant pays the money directly to the landlord. You should therefore be wary of this when considering a licence for alterations.
The detail of the licence will depend upon the type of works being carried out and the nature of the property. However, there are key terms which should be considered in all licences for alterations. These terms include:
• How are the works defined?
• Is there a time by which the tenant must have started and completed the works?
• What requirements must the tenant comply with before works can start? For example, are any other licences or permissions needed?
• Must the works be carried out in a particular way, using particular materials?
• Will the works have any impact on rent review? Usually the lease provisions cover this and state that any improvements by the tenant should be disregarded in this respect. However, this question should always be considered.
For any questions you may have concerning licences for alterations contact Anna Rabin.
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