Will tenants turn to old legislation to carry out green improvements?

Tenants in particular that are looking to establish and meet ambitious net zero targets may have concerns that their leases do not afford them the appropriate rights to carry out alterations to their premises in order to achieve such goals.

Those tenants might consider turning to legislation that will celebrate its 100th birthday in five years: the Landlord and Tenant Act 1927. Under that act, a tenant that intends to carry out improvement works to its premises can serve a notice on its landlord and, subject to the notice (and the works) meeting certain criteria, reclaim its costs for the works from its landlord at the end of the tenancy.

Crucially, the ability to rely on the act is not contingent on there being any corresponding right in the tenant’s lease to carry out alterations. The act allows the tenant to jump that hurdle if it can establish that the works constitute a genuine improvement. On that basis, we might expect to see an increased reliance on the act by tenants in the coming years.

Some might argue that use of this statute, which sees landlords bearing the cost, is difficult to reconcile with the original intention of the act, being to ensure a tenant was not left out of pocket at the end of its lease after having carried out works that would ultimately benefit its landlord.

The current push towards sustainability is in response to the rising threat of global warming, which will affect landlords, tenants and society more broadly. Arguably, the financial burden for such works should be borne by both sides, rather than falling on the shoulders of one party.

It will be interesting to see how the costs of these works will trickle through the market, how the tribunal will deal with any contested applications and if this century-old statute will step back into the spotlight.

Joe Perry is an associate at Ashurst