Are you a landlord concerned about the numerous changes your tenant would like to make to your property and looking to protect yourself and your property?

If yes, read on…

Licences to alter are designed to protect your (the landlords) interest in a tenanted property so that damaging alterations which could diminish the property’s value are not carried out.

Common applications for licences to alter tend to be for changes such as adding sanitation facilities, structural alterations, new heating installations, new flooring, cutting through and moving external or internal walls and changing windows, etc. The exact terms of the lease will determine what sort of alterations the tenant can do and whether they need a landlord’s permission before implemented.

Getting the procedure right and obtaining quality advice from a surveyor are important – the last thing you want after renovations have been completed is a call from an upstairs tenant saying their bath is about to fall through the floor!

When a tenant applies for a licence to carry to out alterations, the formal consent you give as a landlord is called a licence to alter. However, the process is a bit more complicated than just signing off a document for your tenant…

Landlords – when your tenant decides they want to carry out alterations, they will start by providing you with a brief description of the proposed changes. This will come through your managing agent if you have one. These proposed alterations should be referred to your surveyor. If they are significant enough to need formal consent, the surveyor will obtain an undertaking for fees.

The tenant will then need to do all the preparation work to submit designs and specifications. Your surveyor and, if necessary, a structural engineer, will check the information provided and personally visit the property. Your surveyor will report to you on the proposal and assess the likely impact on the property. The surveyor will also inform you of the terms and conditions recommended for inclusion in the approval / licence for alterations. The consent will be drawn up by your solicitor, who will liaise with the surveyor. Once you have approved the consent, it will be sent to the tenant to sign. The works can then be completed.

These costs are usually charged to the tenant, as long as this is provided for in the lease.

It will depend on the terms of the lease, but internal decorative work usually doesn’t need consent. This is where your surveyor’s advice is important.

If your tenant does alterations in breach of the lease (i.e. without your consent), you can seek damages, reinstatement or compensation for the diminished property value.

It depends on the terms of the lease. You will find that there are usually three common provisions relating to licences to alter found in leases:

• Absolute covenants – these completely prohibit alterations. The only way the tenant can carry out alterations is if you waive the clause.
• Qualified covenants – alterations are prohibited unless you give consent.
• Fully qualified covenants – alterations can be carried out only with your consent (but you cannot unreasonably withhold consent).

If there is an absolute or qualified covenant in the lease, you do not have to give consent. If there is a fully qualified covenant, you do not have to give consent but cannot unreasonably withhold it either.

Further, if the alterations are required so that the property meets statutory requirements, you cannot refuse consent.

Having qualified tradespeople look over the tenant’s proposed plans (which should be prepared by professionals in the first place) is a way of ensuring you will be safe to sign off on the licence to alter.

The nature of the proposed alterations will affect the type of consultants you need. For example:

• If structural alterations are proposed, you will need an engineer to check the tenant’s engineer’s calculations to ensure other tenants won’t be affected and that the property will remain structurally sound.
• If the tenant’s home is within a block of flats, there needs to be schedules of condition prepared for the flats below and above before and after the work is done, to record any damage. This avoids lengthy disputes later down the line.
• If the tenant wishes to install hardwood floors (where there is currently carpet), sound testing will need to be done to establish if different flooring may create a noise nuisance for other tenants (and a headache for you as a landlord!).
• If the proposed works involve wet areas, such as installing an en-suite, the licence to alter must account for waterproofing, plumbing for the rest of the building, ventilation and ensuing plumbing noises won’t be a nuisance.

Your surveyor will be responsible for regularly monitoring the site and inspecting the work done. When the work is complete, your surveyor should carry out a final inspection and compile a completion report. This report will only be issued when all the conditions of the licence to alter have been discharged – this way, you won’t be left in the lurch if the alterations start to go wrong or haven’t been completed properly. Your solicitor will discharge the licence once you and the surveyor are satisfied that all of the conditions have been met.

Landlords have statutory powers to require tenants to reinstate the property to its prior state or to require them to pay compensation for the reduction in value of the property in certain circumstances.

A good surveyor will ensure that the tenant keeps to the terms of the licence to alter accurately and will not sign off a completion report where the tenant has not kept to the terms and conditions.

Leases often include a reinstatement clause whereby the tenant has to restore the property to its original state at the end of the term at their own cost. This is also a very handy clause if your taste in décor differs from your tenants!

If you require a licence to alter or want advice on other tenancy matters, please contact our office on 020 3588 3500 to speak to one of our solicitors.

Do you have any thoughts on this piece or experiences involving licences to alter? If so, please feel free to share your thoughts in the comments below.