Commercial tenant fit-out is one of the most legally and practically complex areas of commercial property management. The landlord must navigate the lease covenant on alterations, the statutory CDM 2015 framework, the building safety obligations under the Building Safety Act 2022 (for higher-risk buildings), planning requirements, party wall matters, and the long-term reinstatement exposure created by the works. Getting the approval process right — with a properly drafted licence for alterations, a comprehensive fit-out guide, and appropriate reinstatement provisions — is far less costly than disputing dilapidations at lease end over an unauthorised or poorly documented fit-out.
Category A vs Category B Fit-Out and the Landlord's Position
Commercial fit-out is conventionally divided into two categories. Category A (Cat A) is the landlord's base build: raised floor, suspended ceiling, perimeter trunking, HVAC distribution, WC cores, primary electrical supply to the floor — the finished shell that a tenant takes on. Category B (Cat B) is the tenant's fit-out: partition walls, meeting rooms, reception, kitchen, server room, branded finishes, furniture, audiovisual equipment, bespoke lighting — the occupational layer. A shell-and-core letting (where the landlord delivers only the structural shell) means the tenant carries out even more extensive works. The landlord's lease covenant on alterations will determine what the tenant can do: a total prohibition on alterations (absolute covenant) is rare in practice for commercial leases; a qualified covenant (requiring landlord's consent, which cannot be unreasonably withheld under s.19(2) LTA 1927) is standard. Non-structural internal alterations are often permitted absolutely or with a simple notification requirement. Structural alterations — opening walls, installing mezzanines, cutting floors — typically require express landlord consent and, almost always, a formal licence for alterations. The landlord's primary concern throughout is: (i) structural integrity; (ii) planning compliance; (iii) CDM obligations; (iv) reinstatement at lease end; and (v) the building's EPC/sustainability credentials.
- Category A (base build): landlord's responsibility — raised floor, suspended ceiling, HVAC distribution, core WCs, primary electrical supply; standard for offices and retail units
- Category B (tenant fit-out): tenant's responsibility — partitions, meeting rooms, reception, kitchen, bespoke finishes, furniture; requires landlord's consent under the alterations covenant
- Shell-and-core: landlord delivers only the structural shell; tenant carries out significantly more extensive works including Cat A elements; common in large pre-let office buildings
- s.19(2) LTA 1927: a qualified covenant against alterations carries an implied requirement that consent cannot be unreasonably withheld — but unlike s.19(1) (assignment), there is no LTA 1988-style statutory procedure for alterations (beyond the general law on reasonableness)
- Absolute prohibition on structural alterations: valid and enforceable — the landlord is not obliged to consent and no reasonableness test applies to a true absolute covenant against structural alterations
Licence for Alterations — Key Terms and Landlord Protections
A licence for alterations (also called a licence to alter) is the document by which the landlord grants consent to the tenant to carry out specified works. It must be executed before the works commence — retrospective consent does not cure an unauthorised alteration and the tenant may remain in breach. Key provisions in a well-drafted licence: (i) schedule of works — a detailed specification and drawings (architect's or structural engineer's drawings) appended to the licence; works not shown on the drawings are outside the consent; (ii) conditions of consent — the tenant must obtain all statutory consents (planning permission, building regulations approval, CDM notifications) before starting; (iii) contractor approval — the landlord may require approval of the principal contractor and (under CDM 2015) the Principal Contractor and Principal Designer; (iv) access for inspection — landlord's right to inspect at any stage to verify compliance with the licence; (v) reinstatement obligation — whether or not the tenant must reinstate at lease end (see below); (vi) structural engineer's sign-off — for structural works, the tenant must obtain and provide to the landlord a structural engineer's certificate on completion; (vii) building safety — for higher-risk buildings (HRBs) under the Building Safety Act 2022, the landlord must ensure works comply with the accountable person's obligations and the safety case. The licence must be under deed (not merely a letter) for it to be effective as a deed covenant.
- Executed before works start: a licence for alterations signed after works begin does not cure the breach — the tenant has already acted in breach of covenant; retrospective consent carries no protection for works already carried out
- Appended drawings: the licence must append the approved drawings — works outside those drawings are outside the consent; insist on full architect's drawings and specifications before executing
- Statutory consents: tenant must provide evidence of planning permission (if required), building regulations approval, and any CDM F10 notification before starting; condition precedent
- Contractor approval: landlord may require approval of the tenant's principal contractor and review of their RAMS (Risk Assessment and Method Statement) and public liability insurance
- Structural sign-off: for any structural works (opening walls, new cores, mezzanines), require a structural engineer's certificate on completion and add it to the building's property information pack
CDM 2015 — The Landlord's Role as Client
The Construction (Design and Management) Regulations 2015 (CDM 2015) apply to all construction projects, including tenant fit-out works. The CDM Regulations impose duties on the 'client' — the person for whom the construction project is carried out. In a tenant fit-out, the client is typically the tenant (as they are commissioning and paying for the works). However, where the landlord is commissioning any element of the works (for example, carrying out shell works or common area alterations simultaneously), the landlord will also have CDM client duties. For projects with more than one contractor, the client must appoint a Principal Designer (PD) and Principal Contractor (PC). The Principal Designer has a pre-construction duty to plan, manage, monitor and coordinate health and safety during the pre-construction phase; the Principal Contractor manages construction-phase safety. The landlord should: (i) ensure the tenant's licence for alterations confirms the tenant is the CDM client and is responsible for appointing the PD and PC; (ii) require the tenant to provide a copy of the CDM F10 project notification to the Health and Safety Executive (HSE) before works start; (iii) require the tenant to provide a Health and Safety File for the works on completion (this document records O&M information and is essential for future works on the building); (iv) for HRBs under the Building Safety Act 2022, ensure the fit-out works comply with the building's safety case and are notified to the Building Safety Regulator where required.
- CDM client: for tenant fit-out, the tenant is typically the CDM client — responsible for appointing Principal Designer and Principal Contractor; confirm in the licence for alterations
- F10 notification: where the project will last more than 30 working days with more than 20 workers simultaneously, or more than 500 person days, the client must notify HSE via F10 notification; require the tenant to provide a copy
- Health and Safety File: the tenant must provide a Health and Safety File (O&M information, as-built drawings, test certificates) to the landlord on completion — essential for future works and building safety obligations
- Building Safety Act 2022 (HRBs): for higher-risk buildings (18m+ or 7+ storeys with 2+ residential units), major fit-out works may require notification to the Building Safety Regulator; the accountable person must consider safety case implications
- Landlord CDM duties: where the landlord is commissioning any works concurrently with the tenant fit-out, the landlord has its own CDM client duties — including duty to make suitable arrangements for managing the project and to ensure sufficient time and resources are available
Reinstatement at Lease End — Protecting the Landlord's Position
The most important long-term protection the landlord can build into the licence for alterations is the reinstatement obligation. At lease end, the landlord can require the tenant to remove alterations and reinstate the premises to their original condition — but only if the licence for alterations expressly provides for this. Without an express reinstatement obligation in the licence, the tenant has no obligation to remove alterations (subject to what the lease itself says). In practice: (i) the licence should specify which elements of the fit-out must be reinstated and which the landlord is content to retain — negotiated at licence stage, not at lease end; (ii) if the landlord wants to retain the Cat A shell (and only require removal of Cat B finishes), the licence should say so; (iii) if specific installations (server rooms, raised floors, mezzanines) must always be reinstated, list them in the licence; (iv) the tenant should be required to submit a reinstatement specification in the last year of the term (or within a specified period before expiry) and obtain the landlord's approval before commencing reinstatement works. At dilapidations, failure to reinstate in accordance with the licence is a breach of the lease covenant — in addition to the general dilapidations claim under the repairing covenant, the landlord can claim the cost of removal and reinstatement of the non-compliant alteration.
- Express reinstatement obligation: without an express provision in the licence, the tenant has no obligation to reinstate — the landlord's only remedy at lease end is the general dilapidations claim under the repairing covenant
- Specify what must go and what can stay: the licence should clearly identify which alterations must be reinstated and which the landlord is content to inherit — negotiate at licence stage, not at lease end
- Reinstatement programme: require the tenant to submit a reinstatement programme in the final year of the term and obtain the landlord's written approval before carrying out reinstatement works
- Dilapidations interaction: failure to reinstate per the licence is an additional head of dilapidations claim — separately quantified from the general repairing covenant schedule; the s.18 LTA 1927 cap on dilapidations may not apply to reinstatement of alterations
- Fit-out guide: a landlord's fit-out guide (appended to the lease or made a condition of any licence) sets out standards for Cat B works including what must be reinstated and what materials are acceptable — reduces licence negotiation friction
Frequently asked questions
Does a commercial tenant need the landlord's permission to fit out?+
It depends on the lease's alterations covenant. Internal non-structural alterations are often permitted absolutely or with notice. Structural alterations almost always require express landlord consent and a formal licence for alterations. A lease with an absolute prohibition on alterations can be enforced — there is no statutory reasonableness requirement on the landlord for structural works.
What is a licence for alterations and what should it include?+
A licence for alterations is the deed by which the landlord consents to specified tenant works. It should: identify the works by reference to appended drawings; require statutory consents before works start; specify contractor approval requirements; include CDM obligations; give the landlord inspection rights; and, critically, specify which elements must be reinstated at lease end. It must be a deed, not a letter.
Who is the CDM client for a commercial tenant fit-out?+
In a tenant fit-out, the tenant is typically the CDM client — the person commissioning and paying for the construction works. The tenant is responsible for appointing the Principal Designer and Principal Contractor, providing the F10 HSE notification where required, and providing a Health and Safety File on completion. The landlord's licence for alterations should confirm this and require delivery of the H&S File to the landlord.
Can a landlord require a commercial tenant to reinstate fit-out works at lease end?+
Yes — but only if the licence for alterations expressly requires it. Without an express reinstatement obligation, the tenant has no duty to remove alterations beyond what the general repairing and yielding up covenant provides. Landlords should specify in the licence which elements must go (mezzanines, server rooms, bespoke finishes) and which can be retained.
What is the difference between Category A and Category B fit-out?+
Category A (Cat A) is the landlord's base build: raised floor, suspended ceiling, HVAC distribution, core WCs, and primary electrical supply. Category B (Cat B) is the tenant's occupational fit-out: partitions, meeting rooms, kitchen, reception, bespoke lighting, and furniture. Cat B works require landlord consent under the alterations covenant; Cat A works are the landlord's responsibility to deliver.