Retail surgery: I want to assign my shop lease to another group company and refit it, can I just proceed?

Retail tenants wishing to take advantage of lease clauses that allow intra-group assignments or alterations without the landlord’s consent should check the lease carefully and consider taking professional advice before proceeding.

Pam Jones, head of retail property at law firm Hill Dickinson, explains the risks. “The recent case of K/S Victoria Street v House of Fraser held that the ability to assign the lease within a corporate group ‘without consent’ only dispensed with the need to obtain the consent itself and did not override any other pre-conditions in the lease, such as financial standing tests.”

Jones gives a similar warning in relation to store refits. “Tenants need to ensure that the entirety of the proposed works does in fact fall within the definition of alterations permitted without consent. Leases commonly limit this concession to internal non-structural alterations only, and so consent may still be required for external works and signage.”

Jones also warns that lease concessions permitting assignment or alterations without consent are commonly limited to the original tenant named in the lease, and maybe members of the same corporate group: “The tenant seeking to take advantage must be sure that the concession still applies and also that it will not fall away on the intra-group assignment.”