A Lease will generally seek to manage or restrict the use to which a premises can be put.
It is important to realise that the user covenant itself is not the only clause that restricts the use of premises. Use may also be restricted by legislation, by common law, or restrictions contained within the Landlord’s title.
Dealing frequently with licensed premises, we need to check not only whether the occupational lease itself will allow the premises to be used a public house, bar or restaurant, but that there is not an historic covenant in the Landlords’s title which restricts the sale of alcohol, which could be enforced by a third party.
For a tenant, it’s important to understand the use to which the premises can be put, as a breach of the user covenant could result in the Landlord seeking to forfeit the lease for breach of covenant.
If a tenant wishes to change the use to which the premises can be put, reference should be made firstly to the user covenant to ascertain whether the degree of control which the Landlord may have around a change of user. Is it an absolute restriction or is the landlord obliged to act reasonably and not delay when considering a request for consent to change the use.
The tenant should also be aware of the planning which exists for the premises, as even where a lease may allow for a change of use within the user provisions, if there is no planning for the use to which the premises are to be put, the Landlord may be able to restrict the substituted use as this would breach planning legislation.
Advice should always be sought before a tenant seeks to change a use to which the premises are put.
Prior to commencement of any work, a tenant should consult the lease and their solicitor to ascertain the level of consent required. Some leases also contain a requirement for the tenant at the end of the term to reinstate all alterations made, if required by the Landlord.
In seeking consent to any alterations and having regard to the level of work being carried out, a tenant should ensure that the potential for reinstatement is considered and if possible negotiated with the Landlord.
A breach of the covenant not to alter could result in a substantive dilapidations claim.
Most leases will also oblige the tenant to carry out works required by statute and works required by insurers.
At commencement of the lease, a tenant should ensure that they take appropriate advice to ensure that the premises comply with most statutory requirements.
Depending on the term of the lease, and without a crystal ball, it is going to be impossible to deal with statutory change, though it can be possible, landlord permitting to try and limit the extent of a tenant’s obligations.
Possible qualifications to clauses of this nature obligation, could be, where the same requires substantial capital expenditure.
It is important to remember, that it is the Landlord who has the substantive interest in the premises, and the tenant should not be exposed through the lease, to incurring significant costs in improving the premises for the benefit of the Landlord at the end of the term.
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