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England

Commercial Lease Law

Commercial Lease User Clause UK — Permitted Use, Restrictions, and Landlord's Rights

The user clause in a commercial lease defines the permitted use of the demised premises and controls how the tenant can use the property. Unlike assignment and subletting covenants, a qualified user restriction does not carry an implied statutory reasonableness requirement — s.19(3) Landlord and Tenant Act 1927 allows the landlord to require a sum of money as a condition of consent to a change of use, but there is no statutory obligation to act reasonably when refusing (unlike s.19(1) for assignment). The Landlord and Tenant Act 1988 statutory consent procedure does not apply to user clause consents. User clause types: absolute covenant (landlord can refuse any reason; no reasonableness test); qualified covenant (consent required; s.19(3) applies; no implied reasonableness); fully qualified covenant (expressly adds 'not to be unreasonably withheld' — more protective for tenant). Rent review: narrow user clause (e.g. 'offices only') depresses the open market rent by limiting hypothetical tenants and comparables; wider Class E clause maximises rent review outcome; consider including a rent review assumption of a wider notional permitted use. Use Classes: post-2020 Class E (Commercial, Business and Service) merges former A1, A2, A3 (part), B1 — leases drafted pre-2020 in old class terms may be unnecessarily narrow; update on lease renewal. Keep-open covenants: enforceable in contract but specific performance not ordinarily available in English law (Co-operative Insurance Society v Argyll Stores [1998] HL — court will not compel a tenant to continue trading; damages only). Scotland: Highland and Universal Properties v Safeway [2000] — specific implement of keep-open may be available under Scots law.

10 min readUpdated 7 June 2026Last reviewed: 17 May 2026commercial-lease-user-clausepermitted-use-commercialkeep-open-covenantuse-class-e-commercial

Absolute vs Qualified User Covenants and Section 19(3) LTA 1927

Absolute user covenant: tenant may only use for specified purpose; landlord can refuse change of use for any reason; no implied reasonableness. Qualified user covenant: tenant requires consent; s.19(3) LTA 1927 — the landlord may require a reasonable sum as a condition of consent; but unlike s.19(1) (assignment) and s.19(2) (alterations), there is no implied statutory reasonableness requirement for user consent under a bare qualified covenant. LTA 1988 does not apply: unlike assignment/subletting, there is no statutory time limit or reasons requirement on landlords dealing with consent applications for change of use. Fully qualified covenant ('consent not to be unreasonably withheld'): express reasonableness obligation; more tenant-protective; uncommon in commercial leases. Scotland: Law Reform (Miscellaneous Provisions)(Scotland) Act 1994 does not apply a reasonableness requirement to Scottish commercial lease user covenants.

Rent Review, Use Classes, and Keep-Open Covenants

Rent review: narrow user clause depresses the hypothetical willing tenant pool and headline rent; a rent review clause can include an assumption of wider notional permitted use to protect the landlord on review. Use Classes (post-2020): Class E (Commercial, Business and Service) amalgamates former A1 (retail), A2 (financial/professional services), A3 (restaurants — partially), B1a (offices) — leases drafted pre-2020 referencing old use classes may be unintentionally narrow; review and update on lease renewal. Keep-open covenants: Co-operative Insurance Society v Argyll Stores (Holdings) Ltd [1998] HL — specific performance of a keep-open obligation not ordinarily available in English law; landlord's remedy is damages (difficult to quantify — turnover rent loss; footfall effect on adjoining tenants; rent review comparables). Scotland: Highland and Universal Properties Ltd v Safeway Properties Ltd [2000] Court of Session — specific implement may be available under Scots law; Scots law position more favourable to landlords. Turnover rent: supplements keep-open covenant; landlord receives a share of tenant's gross turnover — creating mutual incentive for tenant to trade.

Frequently asked questions

Can a commercial landlord refuse a change of use?+

Yes. Under a qualified user covenant, s.19(3) LTA 1927 allows the landlord to require a reasonable sum as a condition of consent, but there is no implied statutory obligation to act reasonably when refusing (unlike assignment/subletting). If the lease expressly adds 'not to be unreasonably withheld', that express qualification applies. An absolute user covenant gives the landlord an unconstrained right to refuse.

How does the user clause affect the rent review?+

A narrow user clause limits the pool of hypothetical willing tenants on a rent review and depresses the headline rent. A wider Class E clause maximises comparables and rent review outcome. Where the operational user clause is narrow, include a rent review assumption of a wider notional permitted use to protect the landlord.

What is a keep-open covenant and can it be enforced?+

A keep-open covenant obliges the tenant to continue trading from the premises. English courts will not ordinarily order specific performance (Co-operative Insurance v Argyll Stores [1998] HL) — the landlord's remedy is damages. In Scotland, specific implement may be available (Highland and Universal Properties v Safeway [2000]).

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