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Tenants’ Improvements – Landlords Beware

Many landlords seek to prevent tenants from altering the property by including provisions in the lease which prohibit alterations without their consent. However, landlords may not have as much protection as they might think. Alterations that are “improvements” are subject to special rules that override what is said in the lease.

“Improvements” are works which add value or increase the usefulness of the property. Notably, that is determined from the view point of the tenant.

Landlord and Tenant Act 1927

The key rights for the tenant under the Landlord and Tenant Act 1927 are:

  • If the landlord’s consent is required for improvements, that consent cannot be unreasonably withheld. It can be difficult to assess when consent may be reasonably withheld as consent cannot be refused for financial loss alone;
  • The tenant may be able to oblige the landlord to let it carry out the improvement works even if there is an absolute prohibition in the lease; and
  • If the improvements increase the value of the property, the tenant may be able to claim statutory compensation at the end of the term for improvements that it has carried out.

For further advice on this issue please contact our Commercial Property team.

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