Thank you for clicking on our property blog post. In today’s post, we are going to be taking a look at property surveying and in particular the scenarios that come into play when a leaseholder/tenant intends to undertake a rear extension to their property/demise.
For those leaseholders who own properties, under the terms of the lease, if they are planning on undertaking any form of alterations to their property, which would include:
- Development
- Alterations
- Additions
- Changes
- Service works
The requirements of the lease and the Landlord and Tenant Act 1954 will result in the leaseholder needing to gain their freeholder’s/landlord’s legal consent and permission to progress and undertake the planned works.
Whether they are able to undertake these works or not, will very much depend on the leaseholder’s lease and the wording within. Generally speaking there are three different types of licence alteration covenants that are set out within property leases.
Licence for Alterations Covenant:
Fully Qualified Covenant
A fully qualified covenant is the most positive alterations covenant and lease wording that a leaseholder can have within the lease. The wording will effectively set out that the leaseholder is going to be able to undertake their works, however prior to doing so they will need to gain the written consent from their landlord. The key element within this, is that the landlord cannot withhold the leaseholder’s consent unreasonably.
What this means in practice, is that so long as the leaseholder goes through the necessary procedures and protocols in order to gain the licence for alterations, the freeholder will be legally prevented and stopped from stopping the works.
Even in a scenario whereby the freeholder may be against the idea of the works in the first place.
Qualified Covenant
A qualified covenant has similarities to a fully qualified covenant. However, the key difference between fully qualified covenants and qualified covenants, is that the wording setting out that the landlord must not unreasonably withhold consent is missing.
In practice, this means that the freeholder has the right to refuse the leaseholder’s alterations request and proposed works.
Importantly and a key consideration for a leaseholder to make, is that from a legal perspective, the consent refusal doesn’t need to be justified or reasoned with any form of justification.
Instead, a freeholder can very much choose to refuse consent and in many cases if they are going to give it there will be some form of condition that the leaseholder has to account for.
Here at Stokemont, over the years we have seen these conditions include: premiums payable to the freeholder for granting their consent, as well as other requests such as added protection, limited working hours, and other onerous requests.
From a legal perspective the leaseholder will have no option but to comply with this, as otherwise the freeholder can rightfully opt to withhold consent thereby thwarting the leaseholder’s proposals and plans to better their property and demise.
Absolute Covenant
An absolute covenant shares no characteristics with the aforementioned covenants. Instead, an absolute covenant is totally and completely restrictive on leaseholder plans, to the extent whereby if a leaseholder has an absolute covenant within their lease, they are not going to be able to progress with the works.
Furthermore, there is likely to be very little, if not no negotiation on the overall alterations plans, as the restriction is now very much governed by case law.
This therefore takes precedent and results in a scenario whereby the leaseholder will need to scupper their plans, significantly change them to the extent whereby they are not determined as alterations work or simply walk away from the proposals as a whole.
In most cases, if a lease does have an absolute covenant, upon purchase the leaseholder’s solicitor should have made them fully aware of this as in effect the leaseholder will purchasing into an incredibly onerous leasehold demise and situation.
This will also significantly reduce a leaseholder’s opportunity to add value to their property in the normal development, improvement, and alteration procedure.
Rear extensions to converted properties, often being turn of the Century houses which have been converted into multiple different flats are one of the most common types of alterations works that we deal with here at Stokemont.
The planned alteration and introduction of a rear extension is often a logical choice for a leaseholder, as they are going to be gaining the benefit of added floor space at very little cost to the overall internal layout. This is never more present than when the leaseholder has a large garden, outrigger or rear addition.
However, as with an absolute covenant, leaseholders should be wary of whether their lease actually demises the garden space to them.
It is often overlooked by leaseholders in the run up to purchase and it is not uncommon for the garden to be restricted from the ground floor leaseholder’s demise and instead remains in the ownership of the freeholder.
If this unfortunate scenario is present, it will mean that the leaseholder is unable to progress the rear addition, without having purchased this area of space from their freeholder.
Licence for alteration procedures are complicated at the best of times, have multiple moving pieces and generally speaking require the input and advice of expert surveyors and solicitors.
If you would like to discuss licence for alterations procedures with our team of qualified and experienced RICS chartered building surveyors, please feel free to give us a call today and we would more than happy to assist and advise you.
