Licence to Alter Template

The standard structure

A commercial licence to alter follows a predictable order. Recognising the structure makes it easier to find the provisions that matter.

1. Date and parties — landlord, tenant, any superior landlord, and any guarantor.
2. Recitals — identifying the lease, the demised premises, and the application for consent.
3. Definitions — including the defined term for the permitted works, usually tied to the attached drawings.
4. The grant of consent — the operative clause permitting the works.
5. Tenant covenants — the conditions attached to the consent.
6. Reinstatement — the obligation at the end of the term and how it is triggered.
7. Costs — the obligation to meet the professional fees of the landlord.
8. General provisions — rent review disregards, guarantor confirmation, and registration.
9. Schedules — the approved drawings and specification.

What each part does

The provisions carry very different weight. The following are the ones that determine the outcome.

• Definition of the permitted works — this ties the consent to the attached drawings. A loose definition creates argument later about what was actually approved.
• Grant of consent — confirms the works do not breach the alterations covenant. Where a superior landlord is involved, that consent must be given in the same document or in a parallel deed.
• Conditions — working hours, access routes, protection of common parts, insurance, and compliance with the Construction (Design and Management) Regulations. These govern delivery rather than long-term liability.
• Statutory compliance — Building Regulations approval, planning consent where relevant, and provision of the health and safety file on completion.
• Reinstatement — the commercially significant clause. See below.
• Costs — the undertaking for the professional fees of the landlord. Ask for an estimate before giving it.
• Rent review disregard — where agreed, confirms the works are not taken into account on review. Worth securing, and frequently omitted.

The reinstatement clause takes one of three forms. Automatic reinstatement requires the tenant to remove the works before the end of the term regardless of what the landlord wants. Reinstatement on notice requires removal only if the landlord serves notice within a defined period, and is the position a tenant should seek. A licence with no reinstatement obligation allows the works to remain, which is uncommon but achievable where the alterations improve the letting position.

Where reinstatement operates on notice, the length of that notice period matters. Six months allows the works to be priced and programmed. A right to serve notice at any point before expiry does not. The consequences at lease end are set out in office fit-out reinstatement.

The schedules and why they decide the argument

The schedules attach the approved drawings and specification. They are the record of what the landlord consented to, and at lease expiry they are the document against which the premises are measured.

Anything built differently from the attached drawings falls outside the consent. It is then treated as an unauthorised alteration, which means the tenant loses the protection of the licence for that element and faces a breach of the alterations covenant as well as a reinstatement claim.

• Attach the drawings the works will actually be built to, not an outline layout prepared for the application.
• Where the design changes during the fit-out, agree a variation to the licence rather than proceeding and explaining later.
• Include the specification, not only the plans. Finishes and services are where later disputes concentrate.
• Keep a complete copy with the lease documents. The licence must be traceable years later, often by people who were not involved in agreeing it.

Alongside the schedules, record the condition of the premises before the works begin. The licence records what was added. A schedule of condition records what was there beforehand. A reinstatement argument at lease end depends on both.

What to check before signing

Whether the document arrives as a landlord precedent or a downloaded template, the same checks apply.

1. Does the definition of the permitted works match the drawings that will be built to?
2. Is reinstatement automatic, or does it operate only on notice from the landlord?
3. If on notice, how long is the notice period, and when may it be served?
4. Is a superior landlord consent required, and is it included?
5. Are the works disregarded on rent review?
6. Has a fee estimate been given before the costs undertaking is signed?
7. Do the conditions include anything that the fit-out programme cannot deliver — working hours, access restrictions, or protection requirements?
8. Has the condition of the premises been recorded before the works start?

The limits of a template

A template gives the structure of the document. It does not assess the works, and the assessment is where the risk sits.

A licence in perfect legal order can still commit a tenant to removing a fit-out that never needed to come out, or permit works that interfere with fire compartmentation, sprinkler coverage, or landlord plant. Those are technical questions about a specific building. They are answered by inspecting the premises, reading the lease against the drawings, and pricing the reinstatement obligation before it is agreed rather than after. That work is carried out by Clayton Ayling, a chartered building surveyor regulated by RICS.