Home improvements – the freeholder has a vested interest too!

/ Agents, Blocks of flats, Freeholders, Leaseholders, News

Improving a flat, either to boost its resale value or to create your own dream home, is probably on everyone’s wish list, but what happens when the ideas go beyond a lick of paint?

The man upstairs won’t want to find his bathroom collapsing into his neighbour’s enlarged en-suite wet room!  And who wants to see Velux windows in the roof of a listed building as happened to at least one couple.

Favourite ways to makeover your home are new kitchens and bathrooms and remodeling existing space to create an extra bedroom or a larger open-plan area.

All of these are likely to require the freeholder’s consent.  Usually the lease will tell you what works need to be referred to the freeholder. Some restrictions may seem a bit daft to leaseholders, but they are bound by the lease nevertheless. Go ahead without consent, and you may be forced to pay for reinstatement.

Some leases may ban significant alterations altogether, but in general leaseholders can go ahead in the end as the freeholder cannot withhold consent unreasonably (freeholder and Tenant Acts 1927 and 1954).

Structural alterations that could compromise the integrity of the whole building or alter the layout and fixtures of a flat will probably need to be approved by a surveyor and maybe an engineer.

It is the leaseholder who will pick up the bill for their services as well as, probably, an administration fee from the freeholder or their managing agents.  Internal decorative work may rarely need consent, but do double-check you lease.

Typically, a lease will contain up to three provisions for different types of alterations. You need to check which category any proposals for home improvement fall into under your particular lease:

  • Absolute Covenant: prohibits the alteration absolutely.
  • Qualified Covenant: prohibits alterations without the freeholder’s consent;
  • Fully Qualified Covenant: provides that the alteration may only take place with the freeholder’s consent which, the clause specifies, must not be unreasonably withheld.

A Licence to Alter is a formal consent document that is designed to protect the freeholder’s  interest in a leasehold flat, but protects leaseholders too by ensuring that the right questions are asked and answered before work begins.

How to obtain consent

Start early. Get it right and you could avoid lengthy disputes down the line.

As a leaseholder, if you decide that you want to carry out alterations, why not send the freeholder or agent a brief description of the proposed changes and get the ball rolling.

If they confirm that formal consent is needed, then you will need to do all the preparation work to submit designs and specifications. The freeholder’s surveyor and, if necessary, a structural engineer, will check the information provided and may personally visit the property.

Typically, the consent will then be drawn up by the freeholder’s solicitor, who will liaise with the surveyor. The surveyor will probably also monitor the work and check that other flats and common areas, before and after, to confirm they have not incurred any damage.

All these professional costs are usually charged to the tenant leaseholder wanting to do the work, and they might still find that consent is withheld.

If this sounds expensive, bear in mind that engineer and surveyor fees are for work that you, as the leaseholder proposing the work,  would need to commission anyway.

Admin fees

Some online forums feature complaints about freeholder’s charges for granting a Licence to Alter, but leaseholders do enjoy some protection and their invoice must be served with a summary of freeholder’s rights (under the lease) to make administration charges. Of course, you should discuss likely charges at an early stage in the process to avoid any surprises!

You can find more helpful advice in the ‘Understanding your Lease‘ section of the Leasehold Advisory Service website.

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The sole purpose of this article is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area.  We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited trading as Deacon accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.  Any links included were active at the date of publication.