Property Alterations - Licence to Alter and the associated legal considerations

We all like to make our home right for us. It may come as little surprise then that some leaseholders wish to make changes to their properties too. In these cases, the leaseholder will usually need to submit a request to their landlord to make these changes. Changes may be small cosmetic tasks or may be larger undertakings – but the landlord will in most cases need to approve the request so the leaseholder can make them lawfully and without going against the terms of their lease.

Laura Severn, Director at LMP Law explains what you need to know about a Licence to Alter.

What Is a Licence to Alter?

If the landlord is to approve the suggested changes, they will need to provide a Licence to Alter. A Licence to Alter is a legal document that gives the leaseholder permission(s) to make changes, but the document also sets out terms and conditions for the changes. Using a legal document in these instances is crucial to prevent misunderstanding and any wrongdoing in relation to the property or lease – misunderstandings that could lead to further legal proceedings.

Can landlords automatically dismiss improvement requests?

Leaseholders are always advised to check their lease before lodging a request as some improvements may have already been discussed within the agreement and a request may not even be needed. Lease agreements can vary significantly on what they do and do not allow in these circumstances, so always consult your agreement first.

In some leases there is an absolute prohibition on alterations or improvements and therefore you would be seeking approval for a waiver of this provision – which could be lawfully refused.

Prohibitions aside - some more promising news for those seeking improvements is that the landlord cannot refuse these improvement requests without good reason. Consent can not be unreasonably withheld.

Can landlords charge for granting consent?

If a landlord allows a Licence to Alter, they are also legally able to charge their tenants for costs associated with granting their consent and other expenses that may arise from granting consent.

For example, the landlord may pass on legal service fees that were required to draw up the Licence to Alter. They could also charge for the likes of surveyor fees prior to work beginning. Landlords are sometimes accused of trying to make a profit from these processes. If a leaseholder feels that this is the case then there is legal recourse that can be taken. Leaseholders can challenge any of the fees associated with their request that they believe are unreasonable.

Landlords charging premiums for consent

You may have heard of landlords charging a premium for consent to alterations. There are situations where the landlord can request a lump sum payment – and others where they cannot. To understand these situations clearly, we need to define a ‘demised premises’.

What is a Demised Premises?

The demised premises will be described within the lease, usually alongside the parts of the property that the leaseholder is responsible for. It is more often than not, the interior aspects of a property, including the rooms surfaces and interior walls. The external parts of the property are usually not included within the demised premises. The bottom line is that it is always best to check the lease agreement to work out what the demised premises constitutes.

So, why does this matter?

If the request for improvements is within the demised premises, landlords cannot charge a premium and this could also be deemed as an unreasonable refusal. However, if the requested changes impact part or the whole of the property which is outside of the demised premises, i.e. the common areas, external walls, etc., the landlord is enabled to charge a premium.

One example would be a tenant asking for an extension which would might involve works to external walls. They would be asking for alterations outside the premises of their lease and therefore the landlord would be enabled to charge a lump sum.

It should be noted at this point that regardless of the required works – other leaseholders properties or rights should not be interfered with.

In conclusion

As always, the bottom line for both leaseholders and landlords is to check the details of their lease and consult with leasehold law experts to ensure they go about the legal process in the right way.

Laura Severn is a Partner at LMP Law who act directly for investors, developers, freeholders, managing agents, residential management companies, property managers, and leaseholders.