Alterations and landlord consent for academy trusts

The distinction between repairs and alterations may seem clear, but there are certainly grey areas. Under the model lease from the Department of Education (DfE), an academy trust is responsible for repairing any damage it causes and any deterioration that may arise from occupation.

However, the position on alterations is that a trust can’t make any structural or external alterations, additions or variations to any structures without the landlord’s prior written consent (which can’t be unreasonably withheld or delayed).

When it’s impossible to reinstate damage or deterioration to a building’s structure or exterior, it may need to be altered. Such works would then fall outside of the trust’s repair covenant and instead amount to an alteration requiring landlord consent.

It’s fair to say that a survey of the sector would identify many instances where alterations have been undertaken without obtaining landlord consent.

Why is this a problem?

Firstly, it puts the trust in breach of its funding agreement, under which it is obliged to comply with the tenant covenants in its lease. While this often goes unnoticed, it may be identified by a sharp-eyed auditor or, indeed, the DfE, if the trust in question is ever subject to heightened scrutiny. Clearly, trusts will want to avoid the consequences of any enforcement action under their funding agreements.

If identified by the landlord, they may wish to inspect the works undertaken and require further works to be carried out before issuing retrospective consent. In a worst-case scenario, the landlord may even require the removal of the works and reinstatement of the building. With finances already tight, having to spend additional funds reversing a historic expense is clearly not a good use of resources and could leave a trust open to accusations of misusing funds and failing to follow due process.

Another potential issue may arise if an academy transfers between trusts. The trust taking on the building may make it a condition that retrospective consent is obtained before proceeding with the transfer.

What is the process?

Trusts are required to submit plans and specifications of the proposed works to the landlord and take account of any representations they make. Consent may only be refused where the works are likely to have an adverse effect on the landlord’s statutory obligations, the structural integrity of the building or the value of the landlord’s interest in the property.

Where planning permission is required, the trust must provide the landlord with copies of its application and consent once granted, or notify the landlord if permission is refused. The trust is also liable for the landlord’s costs in connection with its consent.

It’s imperative, therefore, to factor in the need for landlord consent before commencing any works. Failure to do so could result in delays to the works and unnecessary costs being incurred.