Types of Alterations Covenant
Absolute covenant: landlord has complete discretion to refuse � no statutory override. Qualified covenant: consent required; s.19(2) LTA 1927 applies to 'improvements' � consent cannot be unreasonably withheld. Fully qualified covenant: consent not unreasonably withheld � RICS recommended standard. What is an 'improvement': works that improve the premises from tenant's perspective (Woolworth v Lambert [1937]) � even if they reduce landlord's reversion value. Decorative/cosmetic works typically not 'improvements' � s.19(2) may not apply.
Section 19(2) LTA 1927
Qualified covenant against improvements: landlord cannot unreasonably withhold consent. Landlord may impose reasonable conditions: payment of landlord's legal/surveying costs; compensation for diminution in value of premises or adjoining property; reinstatement obligation at lease end. Reinstatement as condition: landlord can require removal of alterations at lease end � important to record in the licence. Lambert v FW Woolworth [1938]: reasonableness depends on nature of works, impact on premises, and landlord's legitimate interests. Respond within reasonable time � unreasonable delay may be treated as refusal.
Licence to Alter Contents
Formal deed of consent: identify works precisely by reference to approved drawings and specifications annexed; conditions (architect supervision; structural engineer sign-off; building regulations; planning permission; insurance during works); reinstatement � specify clearly whether tenant must reinstate and what to remove; right to inspect progress; final approval of completed works. Execute as deed by both parties. Note on landlord's registered title at HM Land Registry. SDLT: licence itself not SDLT-able; but premium payments for consent require SDLT analysis.
LTA 1927 ss.1-3 � Tenant Compensation for Improvements
LTA 1927 s.3: tenant serves formal notice of intention to make improvements; landlord has 3 months to object or consent; failure to object within 3 months deems authorisation. LTA 1927 s.1: compensation at lease end for authorised improvements that added to letting value; claim must be made in prescribed form and time. Cap: lesser of net addition to letting value or reasonable cost of works. Notice procedure essential: failure to follow s.3 procedure loses s.1 right even if landlord consented via licence to alter. Many modern leases exclude s.1-s.3 regime expressly.
Reinstatement and Scotland
Reinstatement in dilapidations: failure to reinstate per licence is part of terminal dilapidations claim; s.18(1) LTA 1927 diminution and supersession caps apply. Pre-let agreement: landlords planning redevelopment may waive reinstatement in advance. Scotland: no equivalent to LTA 1927 ss.1-3 (compensation for improvements) or s.19(2). Courts apply reasonableness to qualified consent provisions under Scots law. Scottish tenants must negotiate improvement compensation rights expressly in the lease.