When businesses lease commercial premises, they often need to make alterations to ensure the space is fit for purpose and suits the business’ operational needs. Whether it’s installing specialist equipment, redesigning the layout to improve efficiency, or upgrading outdated facilities, these changes can be essential to daily business activities.
However, tenants do not usually have the automatic right pursuant to the terms of their lease to make alterations to a commercial property. In most cases, they must obtain the landlord’s formal written consent typically known as a licence to alter, also referred to as a licence for works or a licence for alteration.
In this guide, we’ll walk you through what a licence to alter is, when it’s required, what it should include, the process of obtaining consent, and how Goughs Solicitors can support you every step of the way.
What is a licence to alter?
A licence to alter, also called a licence for alteration, is a formal legal document between a landlord and tenant (and sometimes a guarantor, if a guarantor is a party to the lease) that grants the tenant permission to carry out specific works or alterations to a leased commercial property subject to certain conditions being satisfied. The document ensures that the landlord’s interests are protected by setting out clear terms and conditions for the undertaking of the work, the reinstatement of the Property at the end of the lease period, reducing the risk of property damage, legal disputes, or unauthorised changes that could affect the building’s structure, buildings insurance and capital value.
When is a licence to alter needed?
A licence to alter , or licence for works, is required when a tenant wants to make structural or substantial changes to a commercial property. These might include adding or removing internal walls and mezzanine levels, installing new air conditioning systems, solar equipment, reconfiguring the layout, or upgrading electrical or plumbing infrastructure and even installing electric vehicle charging equipment.
In some cases, leases do not permit any alterations whatsoever (even internal non structural alterations). Even if the lease does not explicitly state that a licence is needed, landlords often still require formal approval before any work begins. Most leases contain clauses that restrict alterations without the landlord’s written consent, so obtaining a licence to alter ensures both compliance and clarity.
What should a licence to alter include?
Every licence to alter will vary depending on the nature of the work, the type of property involved, the terms of the lease, and the landlord’s individual requirements. However, most licences will generally include the following key components:
Landlord’s permission: This section sets out the landlord’s formal consent for the specific alterations detailed within the document. Without this permission, carrying out the works could constitute a breach of lease.
Nature of alterations: The licence will describe the scope of the work permitted. This might include technical specifications, materials, or architectural plans to ensure both parties have a shared understanding of what is being done.
Time frame: The licence often includes a deadline by which the tenant must complete the alterations. This helps avoid long-term disruption and allows the landlord to plan any inspections or follow-up works as well as ensure that any insurance risks are kept to a minimum.
Inspection: landlords may reserve the right to inspect the works during or after completion, either personally or via a building surveyor. This ensures compliance with the agreed plans and terms.
Approvals: The tenant may be required to provide the landlord with planning permission, building regulations approval, or any other statutory approvals before beginning work and when the works are complete.
Compliance: The document typically includes clauses requiring the tenant to comply with all relevant laws, such as health and safety, energy performance regulations, planning, and building regulations.
Insurance: Tenants are usually obligated to have adequate insurance in place to cover the alteration works. Proof of this insurance must typically be provided to the landlord and is required to be in place during the duration of the works. Once the works are complete, the landlord’s insurance policy for the property should cover the new works.
End of the lease: The licence will often specify what happens to the alterations once the lease ends. In many cases, tenants are required to reinstate the property to its original condition, unless otherwise agreed. Do not overlook this requirement to reinstate, it can be extremely time consuming and costly.
The process of obtaining a licence to alter
Applying for a licence to alter should be done as early as possible, particularly if the works are significant or time-sensitive. The specific process may vary depending on the terms of the lease and the landlord’s preferences, but it generally follows these key stages:
Identify the work you want carried out
Before anything else, the tenant should have a clear idea of the proposed work. The more complex or intrusive the alterations (especially if the works are structurally or external), the more detailed the proposal must be. Supporting documents such as architectural drawings, planning permissions, and building regulation approvals can help strengthen the application.
Prepare the application and send it to the landlord
The tenant or their solicitor must prepare a formal application for the licence. The level of detail required often depends on the terms of the lease, but the more information provided upfront, the quicker and smoother the process tends to be.
Landlord reviews the application
The landlord will typically assess the proposal with the help of professionals such as building surveyors, structural engineers, or legal advisors. They will consider whether the works are appropriate for the property, whether they comply with the law, and what impact they may have on the building’s integrity and value. If the landlord has mortgaged the property, consent from its lender will also be required and this can carry additional time delays, costs and information requests.
The landlord informs you of their decision
Once the review is complete, the landlord will either approve the licence, approve it with conditions, or reject the request. Importantly, most leases stipulate that landlords cannot unreasonably withhold nor delay consent. If a tenant believes consent has been unfairly refused or delayed, legal advice should be sought.
How Goughs Solicitors can help
At Goughs, our commercial property solicitors have extensive experience advising both landlords and tenants on licences to alter. Whether you’re leasing, purchasing, selling, or making changes to a commercial space, we’ll guide you through every legal requirement and ensure your interests are protected.
