Landlord’s Consent to Tenant Alterations – make sure you won’t be in breach
Lauren Walker, an associate in the Real Estate team looks at a recent decision regarding the implications of a landlord consenting to alterations where there is an absolute prohibition in the lease against alterations.
Where a lease is granted by a landlord to a tenant, there are usually provisions governing the rights of the tenant to carry out works to that property. The extent to which works are permitted will depend on the nature of the property and the length of the lease. Works may be prohibited, permitted in part or in whole or permitted with the consent of the landlord, perhaps with such consent not to be unreasonably withheld or delayed.
A tenant will need to check the terms of their lease carefully before carrying out any works to ensure that they will not be in breach of their obligations under the lease and approach the landlord where necessary.
However, the recent case of Duval v 11-13 Randolph Crescent Ltd has also indicated that a landlord must be careful when consenting to works where the lease specifically prohibits the carrying out such works. In this case, the Supreme Court has unanimously upheld that a landlord that licensed a tenant to carry out works to their property notwithstanding that there was an absolute prohibition against such works, was in breach of its obligations to enforce the lease covenants at the request of another tenant.
In this case, the property was a flat in a building and the lease of the flat prevented the tenant from making any alteration or improvement to the property without the consent of the landlord. The lease went on to confirm that there was an absolute prohibition on carrying out any works which required the cutting into of any roofs, walls, ceilings or service media. The lease also contained an obligation to enforce the tenant covenants in the lease of the other tenants in the building.
Tenant A requested permission to carry out works to their flat which included the removal of a substantial part of a load bearing wall at basement level. A neighbouring flat owner, Tenant B, objected to these works, however the landlord decided to grant a licence to carry out the works to Tenant A, provided that Tenant A obtained sufficient insurance in relation to the works.
Tenant B issued proceedings against the landlord for breach of the lease claiming that the landlord did not possess the power to permit Tenant A to act in breach of their lease and that by doing so the landlord was in breach of their own obligations to enforce the tenant covenants against all tenants in the building. The court agreed with Tenant B.
Tenant B was entitled to require the landlord to enforce the absolute prohibition on carrying out works which affected the structure of the building and the landlord did not have a right to unilaterally vary or modify the absolute prohibition in the lease without having first consulted and obtained the agreement of the other flat tenants. The landlord therefore put themselves in breach of their own obligations under the flat lease.
Whilst this case applied to a block of residential flats, it would follow that a similar position would be taken in relation to a commercial lease, for example, with the lease of a floor of an office building or a retail unit in a shopping centre where there are multiple tenants. It is therefore important for a landlord to consider carefully the provisions of a lease relating to both the carrying out of alterations and the landlord’s obligations so that they do not find themselves in breach of the lease.
If you have any questions relating to the carrying out of works at a property and/or the terms of a lease, please do get in touch with the Real Estate team who would be happy to assist.