Tenant’s alterations – plan ahead or lose time (and money)!

Scrooge, knowing his nephew’s impetuous nature, sighed.  ‘I congratulate you on your plans, but have you done everything you need before you can start work?’  Puzzled, Nephew shook his head.  Scrooge picked up his pen and wrote:

1. Lease:

• The lease prohibits you from carrying out any structural or external alterations.  You must obtain Grinch’s consent to internal and non-structural works (he cannot unreasonably withhold consent).
• Grinch’s approval is needed for changes to the shop front and fascia.
• His approval is required for wiring or air conditioning passing through parts of the building outside your shop.
• If you need planning permission you need Grinch’s consent before you make any application and, once you get permission, before you implement it.

2. Applying for consent:

• Ask Grinch for approval in the way set out in the lease.  Grinch will not comment until he has an undertaking for his costs from your lawyers who will want the money to back up the undertaking before they give it.
• As Grinch can refuse to consent to any work that is structural, external or involves other parts of the building, give him as much information about those works as soon as possible – with details of how they may affect the building.
• Provide full specifications and plans of all your proposed works.
• Arrange for your surveyor to talk to Grinch to answer any questions he has.  Grinch is entitled to take a reasonable time to consider your proposals.

3. Third party consents:

• Any awning over the shop front will hang over the pavement.  The local authority may require an overhang licence.
• If there is scaffolding for any works, the owner of the land it stands on must agree and provide a scaffolding licence.
• If you need a crane to lift air-conditioning or other equipment on to the roof (should Grinch consent), a crane oversail licence may be necessary.

4. Licence for Alterations:
If Grinch approves the work, a formal licence for alterations will be issued by his lawyers. Don’t think it is simply an approval – it may contain pitfalls for unwary tenants.

• Reinstatement.  The licence will include an obligation to reinstate the property at the end of the lease.  You don’t want to replace the ovens and shelves which are in the bakers shop now.  Consider a reinstatement schedule, setting out the way in which the property will be left.
• Limited working hours.   The licence may limit the hours during which work can be carried out.  If your contractors have agreed to work late and over weekends, change any limitations if there are no planning or other restrictions.
• Standard of works and materials.  Is it appropriate for the works to be carried out with ‘best’ quality materials?  Try to set an objective standard for works and materials.
• Landlord’s inspections and costs.  How often does the landlord want to inspect the work and expect you to pay for each inspection?
• Rent review.  Ensure that the licence states that the particular authorised works are to be disregarded on rent review.
• Insurance. The landlord’s insurers must approve the work and you must let them know when you start and end the works.
• Contractors. – A licence will often set the way in which the contractors work. Send a copy to the contractors and ask them to confirm they will comply or let you know of any required changes.

Nephew read the list. ‘Uncle Scrooge, I better plan opening for the May Bank Holiday at the earliest.  Please lend me money to pay rent and costs!’  ‘Bah humbug!’ retorted Scrooge.

Our real estate team is expert in landlord and tenant matters, including advising on, negotiating and settling documentation relating to alterations and necessary consents.  If you require any assistance in relation to alterations or other matters relating to commercial premises, please contact Samantha East or Alex Hutchings.