Much Chatter about Chattels: Returning premises free from tenant’s occupation

When a tenant reaches the end of their lease (e.g. by exercising a break option, or simply by reaching the expiry of the term), it is a common requirement that the premises must be returned to the landlord free from the tenant’s occupation.

What objects should a tenant remove from the premises in order to meet this requirement? This will largely be determined by any specific lease terms agreed between the parties, but there is a general presumption that the tenant must remove any loose items i.e. chattels. The law differentiates between chattels which belong to the tenant and must always generally be removed, and fixtures which have become part of the property and may not need to be removed.

This difference is important from both a tenant’s and landlord’s perspective:

• For a tenant, leaving chattels behind may mean they are in breach of their break conditions and yielding up (premises exit) obligations. This can expose the tenant to the risk of:
  • not having validly exercised their break and therefore still being tied into the lease and responsible for rent payments etc.; and
  • a claim from the landlord for damages (e.g. for the cost of removal/disposal of the tenant’s chattels and loss of rent due to delayed reletting).
• For a landlord, having a tenant’s possessions on the premises may mean they are under duties as an involuntary bailee, with potential liabilities for storage or disposal of such objects.

The Law

There is no hard and fast rule for determining whether an object is a chattel or a fixture. However, the leading legal authorities advise that a useful starting place is to consider the following factors:

1. The degree of annexation to the property
2. The purpose of annexation

1. Degree of annexation

The common definition of a chattel is a loose item ‘which would fall out if you held the building upside down and shook it’ (e.g. pictures hung on the wall and furniture).

Where an object is attached or connected to the property, the law presumes that the more firmly the object is attached to the property, the more likely it is a fixture rather than a chattel.

This is especially so where the object cannot be removed without doing serious damage either to the premises or the object itself (Berkeley v Poulett [1977] 1 EGLR 86). For example, fitted kitchens and bathrooms or appliances permanently affixed to walls are more likely to be fixtures, whereas freestanding appliances or furniture are likely to remain chattels.

2. Purpose of annexation

However, it cannot be assumed that an item is a fixture just because it is connected to the premises. The purpose of connecting the item to the premises is also relevant. If the item is intended to be permanent and a lasting improvement to the property, it is more likely to be considered a fixture. By contrast, where the attachment of an item is necessary for the item to be used for a temporary period, it is likely to remain a chattel (Roch LJ in Botham v TSB Plc [1995] EG 3 (CS)).

As such, items of the same kind which are similarly affixed can be held to be fixtures in one case but not another. For example, cinema seats fixed to the floor have been held to be a fixture when intended to be permanently fixed (Vaudeville Electric Cinema v Muriset [1923] 2 Ch 74), whereas they were held to be chattels when the chairs were hired for only 12 weeks and therefore fixed to the property for a temporary purpose (Lyon & Co v London City & Midland Bank [1903] 2 KB 135).

Key takeaway

The above factors can provide a useful indication as to whether certain objects should be removed by a tenant before the end of their lease. However, given there are no hard and fast rules, where there is uncertainty it is best to try and reach a clear agreement between landlord and tenant before the relevant exit date.