If you own the freehold of a converted house or small block of flats what do you do if you are approached by a tenant in your building for consent to carry out works to their flat. You are probably reading this because you are not a ‘professional’ landlord or ground rent investor. It is likely you acquired a share of freehold or the whole freehold title when you bought your flat. Alternatively you may have granted long leases on the flats in a building some time ago and you simply now collect the ground rent.
We can help you (usually at the cost of the tenant) to deal with their request in a professional manner.
The Basics
The terms used in many articles may be confusing to the lay person because lawyers use the terms ‘Landlord’ and ‘Tenant’ and many people confuse this with the same terms in short term leases i.e. where you, the Landlord are letting your home to a “Tenant” for 6 months on an assured shorthold tenancy. However these terms apply equally to long leases. Basically in most small blocks ‘Landlord’ means the ‘freeholder’ and ‘Tenant’ means the owner of the flat which is quite often let on a lease of 99 years or more. So throughout this article reference to Landlord and Tenant mean just that.
The other assumption is that the tenant making the request does not hold a share in the freehold so does not have any other right to demand this licence other than through the terms of their lease.
What is a Licence for Alterations?
It is simply a written consent by the landlord to the tenant permitted works to be carried out to their flat. It does not need to be in a formal legal document (unless the lease specifies this) – a letter or email could suffice but often these matters are formalised in a “Licence for Alterations” deed because:
- the parties will want it to be clear about what exactly is being agreed to for example using a detailed description of the works and/or drawings;
- a time limit is often imposed to ensure the tenant is under an obligation to start and complete the works within a reasonable timescale;
- the consent would normally be conditional on the tenant obtaining at their cost the planning and other statutory consents (e.g. building regulations);
- the landlord will want to ensure that the works are carried out in a safe manner and that the tenant is responsible for this;
- you will want to be clear when the insurance obligation (which is often the landlord’s under the terms of the lease) shifts to the block policy i.e. only when the work is fully completed and signed off; and
- as this will form part of the documents the tenant will need for a subsequent sale of the property it is important that these terms are documented formally.
Why is it required?
Invariably the lease will set out specific terms on what is and what is not included in the ‘demise’ i.e. the extend of the flat owned by the Tenant. This may or may not include structural elements – in most modern leases for larger blocks (3 or more flats) there tends to be an arrangement whereby the Landlord is responsible to maintain the structural (roof foundation and main walls) and as a result the flat only includes the non structural parts – the plaster finishes of the walls and roof and the floor covering. In some purpose built maisonettes or houses converted into flats sometime the structural parts of the building are included within the flats so the Tenant is responsible for repair of their part of the building.
In either case the Landlord’s consent is often required before any alterations are to be made to the flat.
What type of work requires Landlord’s consent?
The terms of the lease are key here but most leases have some sort of restriction on alterations.
Quite often:
- all structural changes are prohibited absolutely
- there are restrictions on floor coverings e.g. the flat must be carpeted except for the kitchen and bathroom;
- non-structural changes are permitted with the prior consent of the Landlord, often with the phrase ‘such consent not to be unreasonably withheld’ added (or implied); and
- other changes such as external additions and alterations to services e.g, electrics, water and other utility supplies may also be prevented.
Normally any internal changes (e.g. removal of a wall, loft conversion, even sometimes installing wooden flooring) and external changes (e.g. the erection of a satellite dish, solar panels or an extension) would be caught by these provisions.
However lease formats do vary and you cannot generalize as to what your lease may say. Only careful consideration of the terms can assist you.
The nature of the change may determine the Landlord’s response – in all cases professional advice should be sought and invariably the tenant is responsible for payment of your legal advice in applying for consent..
Can the Landlord charge for consent?
Landlord’s will often be able to rely on provisions of the lease to ensure that their legal and/or survey fees are covered by the Landlord. If you instruct us at an early stage we can often obtain an undertaking (binding promise) from the tenant’s solicitors or funds from the tenants to cover your legal costs whether or not consent is actually granted. You should not therefore be out of pocket for considering such a request with professional advice.
Whether you can charge a fee (i.e. which will be profit for you) for giving consent is another matter. Even if not determined by the lease many landlord’s charge an “administration fee” for consenting to the arrangements (on top of their legal costs).
However there may be opportunities to charge larger sums if the tenant is not in fact asking for a consent to carry out works to their flat but in reality is asking for an extension to the land included in their “demise” outside the extent of the demise for example a rear extension or loft conversion are good examples. Sometimes the tenant may have the right to use the garden or loft area but this right to use these areas does not mean the Tenant includes this area in their ‘demise’. Smaller sums could be charged for minor works e.g. by adding a new boiler or air conditioning – the external parts may ‘trespass’ into your external airspace.
In some cases the lease will contain an absolute prohibition on certain types of works e.g. structural works. The landlord may in those circumstances also charge a fee to issue a consent if those works are required.
The landlord may also increase the ground rent payable under the lease as opposed to taking a premium payment.
However the detail is not all in the lease terms. If the lease indicates that the landlord consent is required then statutory provisions will help the tenant as invariably the type of work proposed will be an improvement and in such circumstances the landlord’s consent cannot be unreasonably withheld or delayed. A fee could not easily be charged in such circumstances however you would need to be aware of the tenant’s position e.g. is the property being sold and is the sale dependent on consent being granted. There may also be reasons for refusing consent for example if the proposed change breaches one of the other provisions in the lease or puts the other tenants in the block at a disadvantage in some way.
What if the Tenant has made alterations already without the Landlord’s permission
If the Tenant has already carried out works which are or may be in breach of the lease, they may have difficulty in selling the property.They may approach you at this stage for a retrospective licence to alter. This provides the Landlord greater scope to charge a administration fee or premium because the Tenant is in a difficult position.
What other obligations are there on a Landlord when asked for consent?
You may have to act quite quickly when asked for consent as you may find yourself on the wrong end of a Court application if you unreasonably withhold or delay your consent.
Initially you should mark all correspondence “subject to formal licence” and ask for full details of the works including plans and any structural calculations and any planning or other consents. This will give you time to take advice whilst this is collated.
What we can do for you?
We can initially assess the lease and advise on the correct course of action. We will normally be able to obtain our fees from the tenant and therefore the process will have no cost to you.
This article does not purport to cover all the areas of law and practice in this area but if you instruct us at a early stage we can guide you on the correct course of action.
If you have any questions or want further information please call Mark Sadler on 01708 757575 or email Mark on mbs@ker.co.uk
by Mark Sadler
18 comments on “Freehold Owner – Licence for Alterations”
Do I need a permission from landlord about changes, which do not require a Licence for Alter?
It is clearly difficult to give a categorically answer when I don’t know the type of work nor have i seen your lease. I assume you mean that you lease does not contain any restriction on alterations or other changes. Although this is rare (I would read your lease very carefully as this type of provision may appear in different sections of the lease) in such circumstances you would not require consent from the landlord.
We have a flat in mansion block with 999 year lease and share of freehold. Our proposed work involves a minor reconfiguration of part of a non load-bearing internal wall. The lease states that consent is required for any changes to walls. We have had drawings and structural engineer’s report all ready.
What sort of license to alter should we expect, time frame and costs involved for the process?
Hi there I am a Freeholder of a Victorian Property with two flats and the leaseholder of the Upper Flat, I am by no means a professional Landlord this is my previous home which I rent out. The Lower flat leaseholder has significantly developed his property since he bought it a couple of years ago and although I tried to engage with him from the start to ask for his plans etc he refused. He now wishes to sell and of course I have concerns with some of his development especially as he did not request authorisation for his development. He states nothing is structural, the definition of what is structural appears difficult to find. He has moved purposes of rooms, the kitchen and bathrrom from the rear of the property which had lower ceilings and was below the kitchen and bathroom above to the front of the property where the ceilings are high and it is now below a bedroom above. He has punched through an internal brick wall to make a new door way and he has created a new soil pipe out the external wall, trespassed onto the neighbouring property (my leasehold) to achieve, and it vents through what was previously independent plumbing of the property above. Those are a couple of things which concern me. His solicitor states we should share the cost of a survey to resolve but I am not certain that a survey will address some of the issues created.
The lease states “Clause 6.10 Not to make any alterations or additions affecting the structure of the property or its appearance as seen from the exterior”
Help! I am feeling bullied by his solicitor and just want to do the right thing.
Hi, I’m looking for consent from my joint freeholder to allow me to go and dig out my basement to add an additional two rooms
The case law generally indicates that you do not own the sub-soil beneath your flat unless your lease is very specific on this point (which would be highly unusual). Therefore you need to in effect purchase the sub-soil from your neighbour (even if it is only a few feed beneath an existing basement with insufficient head height) and get their consent to carry out this work.
They would need to be convinced about the structural integrity etc and I am sure you will be able to supply sufficient evidence from your structural engineer/contractor to support this.They may want their own expert to look at this at your cost.
There are no hard and fast rules about what should be paid or indeed whether they will agree to transfer this space to you in the first place. You just need to ask and see if a deal can be brokered.
Hi Mark,
My lease contains an absolute prohibition on some of the changes I want to make to the flat (eg moving the boiler to a different room which means making a hole in the external wall for a flue). Does the freeholder have to be reasonable when asking for a premium or they have a full freedom as to what to charge? Can I use Pt I of the Landlord and Tenant Act 1927 procedure as an alternative way to get things done (assuming I can prove this is an improvement )?
If the flue is passing through his land (the external wall of the building) then this can problems. Obviously leases are different so you need to check if the external wall is his or yours first.
Hi Mark
This is very interesting. I am a managing agent working on behalf of the freeholder of a block of purpose built flats. The lease seem quite clear that ANY alteration needs consent:
“No alterations or addition shall be made to the premises (whether internally or externally) or other parts of the managed building except with and in compliance with the previous written consent of the lessor nor (without prejudice to the generality of the foregoing) to interfere with injure or remove the main wall timbers or any other structural or load-bearing parts of the premises and in the event not to prejudice the support for the other units or other adjacent premises”
The freeholder (my client) says that even small changes such as replacing a water tank like-for-like (or general refurbishments) need permission, but in my view that doesn’t seem reasonable, or practically enforceable.
How does one proceed with this type of situation?
The water tank may also be covered by a separate restriction on changes to services but the issue stems around the definition of premises. This would need to be looked at. The demise premises may include the items within it and particularly those attached to the building – fixtures for example fitted kitchen units. Some leases list “Landlord’s fixtures and fittings” or similar as part of the demise to confirm this point (although this term is not really very clear). If so, the Landlord’s consent would be required to change the kitchen even if the layout remained the same. I don’t think that a water tank (as it would be fixed to the structure of the building and presumably existed at the date the lease was first granted) would be treated differently and arguably the landlord would want to approve the location/size etc of the replacement tank for obvious reasons.
As you say running this in a practical way is not really going to assist anyone. The landlord does not really gain from requiring consent for each and ever change – only the professionals will get paid for this (by the tenant) but it is difficult for a landlord to withhold consent because of course if a water tank required replacing (with the obvious inference that this would reduce the chance of failure/leaks) then I could not see in what circumstances a landlord could reasonably object. The landlord could introduce a global consent for a replacement tank if it was possible to specify the size/type of replacement tank. This could reduce the cost. I am not sure if this helps.
Thanks so much Mark, this is really helpful
Hi there, I am considering buying a house which is a share of freehold. The owners of the property applied for planning permission to do a rear extension and loft conversion with no dormer, which has been agreed in principle subject to structural engineer’s report (there is a car park underneath and so the stability of this would be a key part of this report). Can the Licence to Alter be transferred to a buyer or would I have to go through the process only after I have bought the property?
We would need to look carefully at the wording of the licence but generally this is consent which would run with the ownership and of course in any event it would be difficult for a landlord to consent to works once and then at a later date state this was not permitted as this would on the face of it be unreasonable.
Hi Mark – thank you so much this article – it clarifies an awful lot, for both freeholders and leaseholders. I am at point of trying to negotiate with a freeholder for a licence to allow me to create a fill in (side return) extension at the back of my property, a ground floor flat. The lease is very specific about alterations, no alterations to be made without consent from freeholder, not be unreasonably withheld, etc etc, but I am aware that a lot of the time these things are open to interpretation.
LEASE, the government advisory body make it very clear that if the structure of a building is not demised to a leaseholder, even if there is a clause about ‘consent not to be unreasonably withheld,’ then the freeholder could in theory ask for a premium or refuse consent. Having examined my lease really carefully, I found the only clause regarding what is demised:
ALL THAT ground floor flat and garden ground situate at and known as *** being edged red on the plan annexed hereto to include one half part in depth between the ceiling of the said flat and the floor of the flat above but not the basement and excluding the communal entrance hall hatched brown on the plan
attached hereto.
So from a solicitor’s point of view, would you say the bricks are demised to me? On the actual plan, the whole of the ground floor is outlined, including front and back gardens, minus communal areas, ie path to front door and hallway.
Be grateful for your take on this – I already have planning permission, and just submitted building plans, but am anticipating the freeholder charging me a premium as soon as I ask for consent!
Regards
Steve
Hi there
I am the leaseholder of a ground floor flat and am planning a rear garden extension. I have received planning permission and have submitted this along architectural and structural drawings to the managing agent who is acting on behalf of the freeholder. My lease mentions that the freeholder cannot unreasonably withhold permission but at the same time external walls are demised to the freeholder. Garden and internal walls are demised to me. Can the freeholder outright reject the request ? I’m asksing as the managing agent is delaying the process by saying that my plans are impacting freeholder property and that they (managing agent ) will advise freeholder against agreeing alterations.
Thanks
Mark, where you state that a Landlord has greater scope to a charge a fee if the Tenant is trying to sell a property doesn’t the Landlord risk the Tenant bringing a claim for duress in the event that the Landlord refuses consent unless a fee is paid? Surely a tribunal could see this as a ransom note? Thanks, D Finn
If it gets that far however this is just my experience of dealing with some landlords and their attitude can be quite bullish.
This is one of the most informative article I could find on this matter. Spoke to Mark for a significant time and he gave us very sound and helpful advice. Can strongly recommend Mark if you find yourself in a similar situation to the one outlined in the article.