Whether an object in a property is a chattel, tenant’s fixture or landlord’s fixture, it has implications for both landlords and tenants and is an issue that continues to reach the courts.
A fixture is anything which has been affixed to the demise in such a way that it has lost its temporary “chattel” nature. Fixtures can be divided into landlord’s fixtures and tenant’s fixtures.
A landlord’s fixture is a fixture which cannot be removed by the tenant generally because it was present when the lease was granted. A tenant’s fixture is a fixture which is removable, in certain circumstances, by the tenant.
A chattel is something which is not an integral part of the demise nor a fixture.
In the case of South Essex Partnership University NHS Foundation Trust v Laindon Holdings Limited  EWCA Civ 377 the Court of Appeal had to decide whether carpet tiles were chattels belonging to the landlord, landlord’s fixtures or tenant’s fixtures. If the carpet tiles were landlord’s fixtures the Court was asked to determine a subsequent question regarding an unqualified right for the tenant to make internal non-structural alterations without the landlord’s consent.
The Trust occupied premises in Basildon between 2002 and 2011. The agreement for lease provided for a substantial programme of works which included the installation of a lift, internal partitions and the lifting and re-installation of tiled carpeting. The works were undertaken by contractors employed by the landlord but were at the tenant’s expense.
Shortly before the end of the term the tenant informed the landlord that it would be replacing the tiled carpeting system with carpet strips of the same colour and specification. The landlord did not respond and the tenant undertook the works at a cost of £38,234.
Following termination of the lease the landlord made a dilapidations claim which included a claim for re-carpeting in the sum of £41,445. This was on the basis that the carpet was a landlord’s fixture and the tenant had failed to repair or replace it on a like for like basis. For that reason, the landlord had chosen to replace it to match what had previously been there.
In the High Court the judge agreed with the landlord and ordered the tenant to pay £41,445 in respect of carpets. The tenant appealed this point and another point regarding void costs.
On appeal, the Court of Appeal agreed that the carpet was a landlord’s fixture. The court held that it was clear from the agreement for lease that the carpet had belonged to the landlord prior to its removal and re-installation. This was the case even though some of the carpet was new and paid for by the tenant as part of the original works.
However, the Court of Appeal held that the lease contained an unqualified right for the tenant to make internal non-structural alterations without the landlord’s consent. As this was unqualified it included a right for the tenant to alter the landlord’s fixtures and the new carpet installed by the tenant shortly before lease expiry fell within this provision. As that carpet was not out of repair at the termination of the lease the tenant was not liable to pay the £41,445 ordered by the High Court.
Landlords and tenants should ensure they understand the meaning of the words chattels and fixtures and should consider including within the lease a schedule of landlord’s and tenant’s fixtures.
Landlords should also consider the implication of granting tenants unqualified alteration rights. If a landlord wishes to maintain a degree of control they should consider including within the lease express provisions that apply on lease expiry.