In this blog, Icon Surveyors will consider:
1. What is a Licence for Alteration?'
2. Do I need a Licence for Alteration?
3. Can a landlord refuse a Licence for Alteration?
4. How to obtain a Licence for Alteration?
What is a ‘Licence for Alteration’?
In the simplest of terms:
A ‘Licence for Alteration’ is a legal document that grants an applicant, usually, a leasehold tenant, or, a joint freeholder (a party that owns a proportion of the freehold), conditioned permission to carry out alterations to an existing structure or building.
Such licences fall into two categories and are determined as alterations for minor works or alterations for major works. The required permissions apply equally to commercial and residential tenants and/or joint freeholders. Such permissions are usually granted by a Landlord.
Licence for Alteration - Minor Works
Minor works are usually categorised as works that are not structural. Though not structural, these types of works tend to affect either the aesthetics of the property, the rights guaranteed by the Landlord to other tenants occupying their building, or indeed any other minor alterations a landlord has prohibited being carried out without their consent.
Alterations of this nature might include the installation of a new kitchen or bathroom that does not involve any alterations pertaining to a supporting wall; the replacement of internal carpets with hard flooring, or, the installation of new windows or a satellite dish, or perhaps the reconfiguration of internal electrical or plumbing components.
Licence for Alteration - Major Works
Major works usually involve some form of structural risk and/or alteration. As such, legislation pertaining to Planning Permissions and/or Party Walls will apply. Works in this category of the licence may include the construction of an extension, or a dormer on the roof, the reconfiguration of internal walls and/or utility components that cross over party walls.
In general, minor and major alterations are usually governed by the Construction (Design and Management) Regulations 2015. Any works to which these Regulations apply are notifiable. For further information, Icon Surveyors would ask the reader to read Part 3 of this blog.
A Deed of Variation
A ‘Licence for Alteration’ is usually obtained from a Landlord and is made in accordance with the terms of the lease. However, in some instances, a landlord may consent to a tenant carrying out certain works that are strictly prohibited by the lease. In such circumstances, the ‘Licence for Alteration’ might be held to constitute a ‘Deed of Variation’.
A ‘Deed of Variation’ is a legal document that permits a landlord and tenant to vary the original terms of a lease with agreed and revised terms.
Do I need a Licence for Alteration?
In the simplest terms:
Under the provisions of both commercial and residential leasehold agreements, there is often a clause restricting the rights of a tenant to make certain and/or any alterations. Such provisions are usually formed in one of two ways. The first is an outright prohibition to carry out any and/or certain alterations and the second forbids a tenant from carrying out alterations without first obtaining the landlord’s consent.
As the landlord and tenant have entered into a legally binding agreement, both parties have a legal obligation to abide by the terms and conditions of the agreement. Any deviations of the agreed terms by either party would constitute a breach of the agreement.
A tenant who is in breach of a covenant that prohibits alterations being carried out, is more likely than not, to be reprimanded with severe penalties, these might include hefty costs, the reversal of any alteration, or, in more serious cases, the forfeiture of the lease.
For this reason, Icon Surveyors would always recommend that any leaseholder proposing to carry out any works that incorporate an alteration, seek advice from a Party Wall Surveyor at the earliest opportunity, and in any event, prior to the proposed commencement of the works.
When do I need a Licence for Alteration?
As stated above, there is a legal obligation on a tenant whose leasehold agreement incorporates a clause prohibiting or restricting alterations to the leasehold property. In these circumstances, a "Licence for Alteration" will be required.
However, many leasehold agreements have clauses that allow a tenant to make alterations that are both internal and non-structural. If such a clause has been incorporated within the agreement there is usually further permission to carry out such alterations without the Landlord’s consent.
In the case of a tenant carrying out an alteration where the consent of a landlord is not required, Icon Surveyors would always advise a tenant to be prudent in their approach to carrying out such works.
Firstly, we would suggest that a tenant notifies the landlord of the proposed works, and secondly, that the tenant acquires photographs of the property before and after the alterations have been carried out.
The purpose of these exercises is to ensure that a tenant has a comprehensive record of property in the event that any subsequent problems arise as a result of the works between either the landlord and tenant or an adjoining owner.
Can a landlord refuse a Licence for Alteration?
In the simplest of terms:
Written consent or a ‘Licence for Alteration’ cannot be refused by a landlord unless the landlord’s reasons are reasonable or the landlord’s consent would cause the landlord to breach their obligations to other leaseholders.
Under section 19(2) of the Landlord & Tenant Act 1927, a landlord is given a statutory right to include a covenant prohibiting improvements without a licence or consent, in spite of any further provisions to the contrary, the landlord, must not withhold such consent unreasonably.
However, the landlord is permitted to incorporate into a licence any reasonable conditions including the right to compensation for any damage to the landlord’s property together with any legal or other expenses properly incurred in connection with the licence or consent and/or a condition that the tenant undertakes to reinstate the property to its pre-alteration condition.
Everything you should know about "Right to Compensation"
With regard to a tenant’s belief that a landlord is withholding consent unreasonably, a tenant may make an application to the court to determine whether or not a landlord has acted reasonably.
Section 19(3) Landlord & Tenant Act 1927, deals with non-structural ‘Alterations’. The Act permits the landlord to prohibit alterations without a licence or consent on the proviso that such a licence or consent shall not incur on a tenant any sum payable by way of a fine or increase of rent. However, a landlord is legally entitled to any costs and/or damages that were incurred in connection with the licence or consent.
In relation to the reasonableness of a sum requested by a landlord, again, a tenant may make an application to a court to determine whether such costs and/or damages are reasonable? Once the court has ruled on this matter, a landlord is legally bound to grant a tenant a licence or consent on receipt of the determined payment.
However, in the recent Supreme Court case of, Duval v 11-13 Randolph Crescent Ltd UKSC18, the court concluded that a landlord who owned a property in which it had granted several leasehold tenancies is prohibited from granting a ‘Licence for Alterations’ to an individual leaseholder if all of the leases included a uniform clause that prohibited improvements or structural alterations.
The court’s reasoning was simply that the landlord would be in breach of their obligations to enforce such clauses in the remaining leases unless s/he obtained the permission of all of the remaining leaseholders.
If after reading the terms of the lease a leaseholder is in doubt as to whether a landlord is able to consent to a ‘Licence for Alteration’, Icon Surveyors would always advise that a leaseholder refers the matter to a solicitor that specialises in leasehold matters.
How to obtain a Licence for Alteration?
In the simplest of terms:
The ‘Licence for Alteration’ can be acquired in one of two ways:
1. Written consent from the landlord
2. Application to the court
To obtain a licence or letter of consent is not too difficult a task. This is particularly true if you engage a Party Wall Surveyor or solicitor to help determine what type of ‘Licence for Alteration’ is required.
The first step is to read the leasehold agreement which will determine what permissions or restrictions are within it and whether or not consent needs to be obtained from the landlord.
The second step is to gather all of the required documents, for example, the plans/drawings, specifications, structural calculations, planning/building permissions and insurances, health and safety statements, schedules and any other information pertaining to the proposed works.
These documents should be appended to the request for either written consent and/or a licence pursuant to the leasehold agreement. In our experience, the more information a leaseholder provides during the initial stages, the quicker the process will be.
Once all of the information is provided to the landlord, the landlord will usually appoint a surveyor who will advise on any further documentation that may be required. Thereafter, the surveyor will visit the site to carry out an inspection. The site visit will determine what terms and conditions the surveyor believes need to be incorporated into the licence.
Although each licence is drafted according to the specifics of a proposed project, generally speaking, the terms of the licence will include conditions that require:
- A schedule of conditions of both the leaseholder’s internal and external parts together with any adjoining owner's property
- A review of the plans by an impartial technical engineer
- Restrictions as to working hours or materials used and perhaps a security deposit for any future damage that may be incurred in connection with the licence or consent
Further conditions might include:
- Specific protections to be put in place prior to and throughout the duration of the project
- Production of any and/or all legally required notices, awards, certificates and permissions as and when they are received by the leaseholder
- Consent to allow the landlord's surveyor access to the site
- Cleaning of the site throughout the duration and on completion of the project
- Submission of built-up drawing(s) together with any other completion documents and any reasonable costs incurred drawing up the ‘Licence for Alteration’.
Once the surveyor has determined what conditions should be incorporated into the licence, a solicitor will be instructed on the landlord’s behalf to draft the licence. The licence is then sent to the landlord and leaseholder to be agreed upon and signed.
On receipt of the ‘Licence for Alteration’, the leaseholder is legally entitled to commence with the proposed works.
On completion of the works, the landlord’s surveyor will visit the site to ensure the works were carried out in compliance with the ‘Licence for Alteration’. The surveyor will also inspect the areas from which the schedule of conditions was initially formed to confirm whether or not any damage has been caused in connection with the ‘Licence for Alteration’.
Provided the leaseholder adheres to all of their undertakings pertaining to the ‘Licence for Alteration’ the landlord’s surveyor will sign off the ‘Licence for Alteration’, and return any deposits made by the leaseholder.
Icon Surveyors are happy to provide free consultation on such party wall matters to any Leasehold or Freehold owners who may be affected by the subject matter raised in this blog.