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 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.
- 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 firstname.lastname@example.org
by Mark Sadler