Leasehold Property Specialist Niki Adkins debunks the misconception that a freehold owner can do what they want; and discusses how a co-freeholder can use a licence to alter to make alterations to their property.
What changes can a joint freeholder make to their property?
A common misconception is that when a flat owner also owns a share of their freehold, they can do what they like in/to their flat. However, in the vast majority of cases, this isn’t true.
Even if you co-own your freehold (also known as ‘share of the freehold’) the flat lease will still exist; you will still own a leasehold flat, but with the added benefit of a share in the freehold.
What can and can’t a co-freeholder do?
Mortgage lenders and future buyers will still need a lease to be in place (and want that lease to be extended), regardless of the fact that the flat benefits from part-ownership of the freehold.
The main reason for this is because the lease is the ‘contract’ which governs what goes on in the building and, for example, what proportion each flat contributes towards the building’s maintenance and insurance etc.
If the lease did not exist, none of this would be regulated and lenders would not be happy to lend against the flat. It could also potentially cause chaos amongst the flat owners who, after all, have to live together.
Can I make alterations to a leasehold property?
My related article ‘Can I alter or improve my flat?’ explains the position with regards to alterations in general, and the same principles apply to this scenario, despite the fact that a flat owner may co-own their freehold.
It doesn’t mean that a co-owner of the freehold can grant to themselves consent without their co-owners also consenting.
What is a ‘Licence to Alter’?
A ‘Licence to Alter’ is the legal document that records the freehold-owner’s permission and the basis on which the permission is granted.
The complexity of the Licence would depend entirely on the nature and complexity of the proposed alterations.
What is a ‘Deed of Variation’?
In this context, a Deed of Variation formally varies an existing lease. It would usually be completed once the works had been carried out and the freehold owners are satisfied that they have been carried out in accordance with the Licence to Alter and to an appropriate standard.
For example, where an extension is being built in respect of a ground floor flat, or the internal layout of a flat is being altered, a new lease plan would be required to formally change the footprint or layout of the flat. This new lease plan would be incorporated by way of a Deed of Variation.
A deed of variation can also be used to vary ground rent, you can read my colleague Anne Albritton’s article on this here.
Do I need a license to alter if I own a share of the freehold?
If the lease (which, remember, is still in place) requires the freehold-owners’ permission before works are carried out, then formal permission is still needed, yes.
This would mean that the individual owner would essentially be applying to their fellow freehold-owners for consent.
It should be remembered that such formal consent is likely to be required by a buyer or mortgage lender if the flat owner decides to sell or re-mortgage. Therefore, a Licence is as much to the flat-owner’s benefit as it is to their co-freeholders’.
Can a freeholder refuse to consent to a license to alter?
Again, it depends entirely on the wording of the flat lease.
If the lease contains wording to the effect that the freeholder cannot unreasonably withhold consent, then the co-freeholders cannot refuse to consent to ‘improvement’ works. However, there will of course sometimes be a difference in opinion as to what constitutes an ‘improvement’.
Issues and disagreements often occur between co-freeholders when it comes to licence to alter consent. We've written a dedicated article which looks at how these disputes can be resolved, which can be read here.
What if only some of the co-freeholders agree?
The answer to this depends on how the freehold is owned i.e. in the name of a limited company or in the individuals’ personal names.
Limited company = it will depend on the Company’s Memorandum & Articles of Association as to how many Directors/Shareholders need to agree.
Individuals’ names = all owners will need to agree as all of their signatures will be required.
How do you obtain a license to alter?
The process can differ depending on the nature of the works; usually, the more complicated the works are, the more steps and more complex documentation is required.
The first step would be to approach the co-freeholders about the proposed works to gauge their opinion; communication is key!
Assuming there is no objection, our ‘Alterations to Residential Flats Guide’ provides a general overview of the process.
If the freehold-owners object to the proposed works, our Dispute Resolution Team can advise as to the available options.
Who pays for all the legal work and surveyor’s assistance?
As the flat-owner is the party seeking the freehold-owners’ consent, and the works are for the flat-owner’s benefit, the flat-owner would be required to cover all associated costs for both itself and the freehold-owners.
See a related article, ‘Why do I have to pay leasehold fees if I own a share of the freehold?’, here.
Leasehold Property Solicitors
If this article has raised an queries regarding licences for alterations or any other leasehold and freehold related queries, please contact our friendly and experienced Leasehold Property Team.
We offer a free initial chat for all new clients, so please don't hesitate to call us on 01202 499 255 or contact us here.
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