Tenant's improvements may not necessarily increase the value of the demised premises, but can have an impact upon the future rent payable by a tenant. Section 19 (2) of the Landlord & Tenant Act 1927 provides that a covenant in a lease against the making of improvements, without the consent of the landlord, is deemed to be subject to a proviso that consent will not be unreasonably withheld.
As a condition of consent however, the landlord will often require:-· The payment of a reasonable sum in respect of any damage to or diminution in the value of the premises or of any neighbouring premises also in the landlord's ownership.· The payment of the landlord's legal and other proper expenses incurred in connection with the granting of consent, usually by way of a Licence.·
In cases where the improvement does not add to the value of the demised premises, a covenant from the tenant to re-instate at the end of the lease.
Most rent review clauses will include a provision whereby Tenant's Improvements are ignored for the purposes of assessing the revised rental value.