Protocol for Applications for Consent to Carry Out Alterations (the Alterations Protocol)

1. Preliminary

1.1 This Protocol applies where a tenant wishes to carry out alterations to its premises, but a provision in its lease (“the alterations clause”) imposes restrictions upon alterations.

1.2 The aim of this Protocol is to ensure that tenants and landlords exchange sufficient information in a timely manner to minimise the scope for disputes between them; and to enable any such disputes to be readily resolved.

1.3 It is not the function of this Protocol to provide advice to the parties. However, some guidance is set out in the accompanying Guidance Note .

2. The application for consent

2.1 An application for consent to carry out alterations must be sufficiently detailed for the landlord to understand the scope of that for which consent is sought.

2.2 The content of each application will depend upon the terms of the lease and the nature of the works to be carried out. However, when making an application for the landlord’s consent for alterations the tenant should ensure that its application describes the works (where appropriate by reference to detailed plans, drawings and specifications) and makes reference to the relevant provisions of the lease and any statute so that it is possible to identify:

2.2.1 whether the proposed alterations fall within the demised premises;
2.2.2 whether the proposed alterations are structural or non-structural;
2.2.3 the works for which the landlord’s consent is needed;
2.2.4 any works for which the landlord’s consent is not needed;
2.2.5 those works which are (i) absolutely prohibited under the terms of the lease so that the landlord has an unfettered right to withhold consent and (ii) those works from which the landlord may withhold consent only where it is reasonable.

2.3 The tenant should aim to provide such information in a single package so that the landlord is able to consider all materials supporting the application as a whole.

2.4 The application should be served on the landlord by the tenant in accordance with the terms of the lease. If the tenant is aware that the landlord has retained agents or lawyers, it should also send a copy of the application to them.

2.5 A tenant should consider whether its application should contain an undertaking to pay the landlord’s reasonable costs of considering the application. If so, it may set this out within its application (see Section 4 below).

2.6 The tenant may be entitled to rely upon the provisions of Part I of the Landlord and Tenant Act 1927. If so, the tenant must serve on its landlord notice of its intention to make the improvement within that Act. There is no prescribed form of notification but the notice must have with it a specification and plan of what is proposed showing the part of the premises affected. 

2.7 The tenant should consider what requirements its lease and any relevant statute impose concerning the form of and address for its application.

3. The landlord’s response to the application

3.1 Within 5 working days of receiving the tenant's application, the landlord should confirm receipt to the tenant. If the landlord either (a) believes that the tenant's application does not include enough information for a decision; or (b) requires time to ascertain what further information it might require in order to deal properly and reasonably with the application, the landlord should so notify the tenant at the same time.

3.2 Where the landlord is itself a tenant, and the terms of its own lease require it to seek its own landlord’s consent to any proposed alterations, the landlord should consider whether it has  obligations to its tenant to pass applications onto its own landlord. In any event, the landlord should aim to serve on its own landlord copies of the application and supporting documents reasonably promptly. This should be done even if the landlord has not yet consented to the application (although it should not be taken to imply that such consent will be given).

3.3 If the landlord is entitled to its reasonable and proper legal and other costs in connection with the application and grant of consent, then it should set out its position on such costs (see Section 4 below).

3.4 A landlord is under no statutory obligation to respond to the tenant’s application within a reasonable time, although the terms of the lease may require it to do so. Even if on the proper construction of the lease there is no such obligation, it will be good practice for the landlord to respond reasonably promptly. If it unreasonably delays its response, this might amount to “withholding” consent unreasonably. The conduct of the landlord may also be relevant when the costs of any subsequent dispute resolution procedure come to be apportioned.

3.5 The landlord’s response to the tenant should be sufficiently detailed to enable the tenant to understand the position of the landlord. It should in particular state whether the landlord:

3.5.1 consents, and  if so whether any conditions are attached to such consent;
3.5.2 withholds its consent because it does not have sufficient information, and if so what further information it requires;
3.5.3 refuses its consent, and if so the reasons for such refusal.

3.6 Where the landlord has reasonably requested further information from the tenant in support of the tenant's application, the tenant should provide that further information as soon as is reasonably possible and in any event before the information already provided in support of the application becomes out of date. The landlord should aim to request and the tenant should aim to provide any further information as a single package.

3.7 A landlord whose consent is requested for alterations is not obliged by statute to give reasons for refusal in writing. However, in any proceedings to establish whether consent was unreasonably withheld, the landlord will be confined to those reasons that it can prove that it held at the time that it withheld consent. The landlord should therefore express its reasons in writing (at least in outline), because that will set out its position for the record and enable the tenant either to deal with the landlord’s objections, so far as it is able, or to reconsider its approach altogether. Again, the conduct of the landlord in failing to set out its position clearly in writing may be relevant when the costs of any subsequent dispute resolution procedure may come to be apportioned.

3.8 If the case is one to which Part I of the Landlord and Tenant Act 1927 applies, the landlord has three months in which to serve a notice of objection.

4. Costs of applications

4.1   A landlord will often be entitled to its reasonable and proper legal and other costs in connection with the application and the grant of consent. The lease itself will usually make express provision for this; even if it does not, then depending on the circumstances, the landlord will usually behave reasonably if it refuses to consider the application for consent unless and until the tenant has agreed to safeguard its position in costs.

4.2  When making its application for consent, the tenant should therefore offer to provide an enforceable undertaking (for instance, from a solicitor) to meet such costs or, in the absence of such an undertaking, should agree to make a payment on account in an appropriate amount.

4.3  In agreeing the amount of the undertaking or payment on account, the parties should take into account, as appropriate, the complexity of the proposed works, the value of the property in question; any requirement to seek the consent of any other party (such as a lender or superior landlord); any need for external professional advice; any conditions requiring compliance; and any extraordinary feature of the proposed transaction.

4.4  If the tenant does not wish to give an open-ended undertaking, it should offer an undertaking to pay costs up to a specified and appropriate amount.

4.5  If the landlord considers the undertaking offered by the tenant to be insufficient (e.g. because it is insufficiently secured or the fixed amount offered is inadequate) and it is not willing to complete its consideration of the application unless and until a sufficient undertaking is given, the landlord should give its reasons to the tenant.

4.6  If subsequently the landlord considers that its costs will exceed the tenant’s undertaking or payment on account, it should promptly notify the tenant, with reasons, of any further sum required.

4.7  The landlord should not delay its consideration of the tenant’s application on the basis only that the parties are seeking to agree an increased amount to which the tenant’s undertaking for, or payment on account of, costs should be limited. The landlord should process the application by doing work up to the limit of the tenant’s undertaking or payment on account.

5. Dispute Resolution

5.1   If the tenant believes that its landlord has unreasonably withheld or delayed its consent, the parties should consider whether some form of alternative dispute resolution procedure would be more suitable than litigation and, if so, endeavour to agree which form to adopt. Both the landlord and tenant may be required by the Court in subsequent proceedings to provide evidence that alternative means of resolving their dispute were considered.

5.2   The options for resolving disputes without litigation include: Arbitration by a suitably qualified and experienced lawyer agreed upon by the parties or appointed in default of agreement from the Property Panel of the Chartered Institute of Arbitrators by the President of that Institute; Expert determination by an independent third party (for example, a barrister, solicitor or surveyor experienced in the relevant field); or Mediation - a form of facilitated negotiation assisted by an independent neutral party.
 
5.3    If the parties cannot reach agreement after complying with this Protocol then the final step will be for the dispute to be referred to Court.

6. Matters following the grant of consent

It will be good practice for the parties to ensure both that the grant of landlord’s consent and the detail of the alterations consented to by the landlord are properly recorded (where possible, with photographs), (a) to assist on the question whether the alterations are to be disregarded upon any review of the rent payable under the lease (ordinarily, they would be but this may need recording); (b) in view of any obligation to reinstate the premises at the end of the lease (which again may need recording); and (c) to help in determining to what compensation the tenant might be entitled at the end of the lease.  Even where consent is not required, a record may be desirable in case of later dispute (as is often the case with internal demountable partitions, for example).

Written by:
Guy Fetherstonhaugh QC
Jonathan Karas QC
Nicholas Cheffings
Mathew Ditchburn

Date:
March 2016

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