The main focus of negotiations for the renewal of a lease tends to be the level of the new rent, the duration of the new term and whether there is to be an option to break.
How the fixtures are to be dealt with is often not given much (if any) consideration.
What do we mean by ‘fixtures’?
Fixtures are generally either landlord’s fixtures or tenant’s fixtures. ‘Landlord’s fixtures’ are items that were included as part of the premises when the lease was first granted, or those that the tenant attaches to the premises such that they become part of the premises themselves. An example might be a boiler or a fixed radiator.
‘Tenant’s fixtures’ are items that are attached to the premises (by the tenant) but could be removed without causing excessive damage to the fabric of the land or building to which they were attached and used elsewhere. For instance, racking or shelving in a warehouse.
The general rule is that in the absence of contrary wording in the lease, a tenant is entitled to remove tenant’s fixtures during the term of the lease and during any period of holding over. Once the tenancy ends, however, the right is lost.
But what if the term comes to an end and is replaced by a new term? What is the position concerning tenant’s fixtures under the new tenancy?
Well, it depends on how the demised premises are defined in the new lease. In some cases the drafting might exclude from the definition “all tenant’s and trade fixtures and fittings”. In that case a restriction on altering “the demised premises” would not restrict the tenant from removing its fixtures and fittings as they would not form part of the demised premises.
However, if the definition includes for example the wording “all additions alterations and improvements from time to time”, then without an express right to remove its fixtures and fittings, those fixtures and fittings would form part of the demised premises – removal of which would no doubt constitute a breach of the the lease. To add insult to the tenant’s injury in this case, the landlord will often have the power to decide whether to accept the fixtures and fittings as a ‘gift’ or require the tenant to take them with them at the end of the lease.
Equally, where a lease fails to require the tenant to remove fixtures at lease expiry, the landlord may inadvertently become burdened at the end of the term with fixtures that it did not bargain for and may have to pay to have them removed.
Finally, note that where fixtures become part of the demised premises, unless one is dealing with a rent review by way of a lease renewal*, those fixtures are likely to be rentalised on subsequent reviews under the new lease.