What Is a Licence to Alter?

What a licence to alter is

A licence to alter, also called a licence for alterations, is a formal consent granted by a landlord to a tenant. It permits works that the lease restricts or prohibits. It is a deed in its own right, executed by the parties and normally noted against the registered title.

The licence does not vary the lease. It sits alongside it. The repairing covenant, the yield-up clause, and the reinstatement obligation continue to operate, and the licence adds a further set of obligations specific to the approved works. At lease expiry all of these documents are read together.

Where the immediate landlord holds a lease from a superior landlord, consent may be needed from both. This is common in central London office buildings held on long headleases. Each consent takes time and carries its own professional fees.

When a licence to alter is required

The lease determines the answer. Most commercial leases divide alterations into three categories, and the category decides whether consent is needed and whether the landlord may refuse it.

• Absolutely prohibited — typically structural alterations and works affecting the exterior. The landlord may refuse without giving reasons.
• Permitted with consent, not to be unreasonably withheld — typically non-structural internal alterations. The landlord must act reasonably and within a reasonable time.
• Permitted without consent — often limited to demountable partitioning and internal decoration, if the lease allows it at all.

Tenants regularly underestimate the second category. Works that feel routine during a fit-out fall inside it. New partitioning, supplementary cooling, alterations to the sprinkler layout, additional kitchenette areas, changes to lighting and small power, and structured cabling all normally require consent, and none of them are structural.

The practical test is not whether the works look significant. The test is whether the lease restricts them. That question is answered by reading the alterations clause and the definition of the demise before the fit-out is designed, not after the contractor is on site.

What a chartered building surveyor does on a licence to alter

The legal drafting and the technical assessment are separate pieces of work. A solicitor prepares the deed, negotiates the legal terms, and handles registration. A chartered building surveyor assesses the works and the liability they create. The survey obligations are carried out by Clayton Ayling, a chartered building surveyor regulated by RICS.

The surveying work covers matters the legal drafting does not reach: whether the proposed loading is acceptable, whether the alterations affect fire compartmentation or means of escape, whether the works interfere with landlord plant or the sprinkler and alarm systems, and whether the specification is deliverable within the demise. It also covers the point most tenants miss, which is what removing the works will cost at the end of the term.

What a licence to alter contains

The structure varies between landlords, but the substance is consistent. A licence to alter template used by a commercial landlord will normally cover the following.

• The parties, including any superior landlord and any guarantor.
• A description of the permitted works, with the approved drawings and specification attached as a schedule.
• The conditions attached to the consent — working hours, access, insurance, protection of common parts, and the standard of workmanship.
• Statutory compliance obligations, including Building Regulations approval, planning consent where relevant, and duties under the Construction (Design and Management) Regulations.
• The reinstatement obligation, and whether it operates automatically or only on notice from the landlord.
• The obligation to pay the professional fees of the landlord, and any premium.
• Provisions confirming the works do not count towards rent review, where that has been negotiated.

The attached drawings matter as much as the wording. They are the record of what was approved. Where the works as built differ from the approved drawings, the tenant carries the difference as an unauthorised alteration, and the protection the licence was intended to provide falls away.

Licence to alter cost

The tenant normally pays the professional fees of both parties. That is standard in commercial leases and is rarely negotiable. The cost splits into three parts.

• Legal fees — for both the tenant solicitor and the landlord solicitor, and for any superior landlord.
• Surveying fees — for review of the drawings and specification, technical conditions, and the condition record.
• A premium — a payment to the landlord for the consent itself. Not always required, and more common where the works affect value or where the lease permits it.

On a straightforward office fit-out with a single landlord, combined professional costs commonly fall between £2,000 and £6,000. A superior landlord consent, a listed building, or works affecting structure or services will exceed that. Where a premium is payable it is negotiated separately and can be the largest single item.

These figures are small against the reinstatement liability the licence creates. Stripping out a fitted office floor and returning it to a base-build condition is priced by area and specification, and on a full floor it commonly reaches six figures. Spending on advice at the licence stage is proportionate to that exposure, not to the licence fee. The lease-end position is set out in the guide to dilapidation costs.

The reinstatement obligation

This is the clause that determines the financial consequence of the licence. It takes one of three broad forms, and the difference between them is substantial.

1. Automatic reinstatement — the tenant must remove the works and reinstate before the end of the term, whether or not the landlord wants the premises returned to that condition.
2. Reinstatement on notice — the tenant must reinstate only if the landlord serves notice within a defined period before expiry. This is the position most tenants should seek.
3. No reinstatement — the works may remain. Uncommon, but achievable where the alterations improve the letting position of the floor.

Reinstatement on notice is materially better for the tenant than automatic reinstatement. It transfers the decision to the landlord and creates the opportunity for a negotiated settlement, and it allows a supersession argument to be run where the landlord intends to refurbish the floor in any event. The principle is explained in the guide to supersession.

The notice period also matters. A licence requiring the landlord to give six months notice gives the tenant time to price and programme the works. A licence allowing notice at any point before expiry does not. At lease end the licence is read against the lease and the terminal schedule of dilapidations, and the recoverable sum remains capped by section 18 of the Landlord and Tenant Act 1927.

Licence to alter on leasehold property

The same principle applies to residential leasehold flats, though the emphasis differs. A long leaseholder proposing to remove a wall, alter the bathroom or kitchen position, replace floor finishes, or move services will normally need consent from the freeholder or the management company.

The technical questions are narrower but the consequences are immediate. Removing or altering a wall raises structural and fire compartmentation issues. Replacing carpet with hard flooring raises acoustic transmission to the flat below, and many leases prohibit it outright. Moving a bathroom or kitchen raises drainage falls and waterproofing across a demise the leaseholder does not own beneath the floor screed.

Where the building is held on a share of freehold, consent still needs to be granted properly by the freehold company rather than agreed informally between neighbours. An informal agreement does not bind a future freeholder or a future purchaser, and it will be raised on sale. Structural work to a party wall may also require notice under the Party Wall etc. Act 1996, which is a separate statutory process — see the guide to the Party Wall Act.

The process and how long it takes

A licence to alter for a commercial fit-out normally takes between four and ten weeks. Where a superior landlord is involved, it takes longer. The sequence is predictable.

For the tenant preparing an application, the sequence breaks down further.

1. Read the alterations clause in the lease and establish which of the proposed works require consent.
2. Prepare the drawings and specification to a standard the landlord can assess, rather than an outline layout.
3. Submit the formal application, together with an undertaking for the professional fees of the landlord.
4. Record the condition of the premises before the works begin, so the starting position is evidenced.
5. Respond to the technical queries raised by the surveyor acting for the landlord.
6. Negotiate the reinstatement clause and the notice provisions.
7. Complete the licence, then begin the works. Not before.

The fourth step is the one most commonly skipped, and it is the one that costs money later. Once the fit-out begins the original condition is no longer visible, and the tenant loses the evidence needed to resist an inflated claim at expiry. Recording the condition takes a day and protects the position for the life of the lease.

The most frequent programme failure is starting the works before the licence completes. Contractors are booked, the fit-out programme is fixed, and the consent is treated as an administrative formality that will follow. It is not. Works started without consent breach the lease and cannot be retrospectively protected by a licence granted afterwards.