Licence to alter can often seem like an awful lot of trouble over what might appear to be a trivial matter. Leaseholders tend to think of themselves as home owners with the right to do what they like to their own properties, even if that’s technically not the case. And managing agents typically have enough on their plates that they’d rather not go looking for trouble. But turning a blind eye to unlicenced works is a mistake. Potentially a very big mistake.
The whole point of licence to alter is to protect the interests of the landlord and other leaseholders. Naturally these include the integrity and value of the building as a whole as well as other properties within it that could be affected by work undertaken by a leaseholder on their own property. The process of applying for and granting licence to alter is meant to ensure no unforeseen damage takes place, especially as careless alterations could result in a drop in the value of one or more properties for practical or aesthetic reasons related to the work.
For example, if a leaseholder converts a bedroom to a kitchen, this could lead to problems with water leaks and noise penetration in the corresponding bedroom in the flat below. Other alterations might simply be unsightly or even in violation of building regulations or planning laws, bringing legal liability on the landlord. And of course, any significant works can lead to accidental damage. It is always much more expensive and inconvenient to deal with such problems after the fact than to anticipate them in advance.
There is another ‘value’ consideration – that of the rebuild value for insurance purposes. Substantial alterations can markedly increase the rebuild value assigned to the building so if there are substantial unauthorised works which are not declared to the insurer, the building as a whole may be undervalued. An undervalued building which subsequently suffers insurable damage, risks only a partial pay-out from the insurer in the event of a claim. In insurance terminology, ‘average’ will apply and leaseholders could be significant out of pocket.
If a leaseholder ignores the need for a licence and goes ahead with works without consent, the landlord or managing agent has a number of options. The can simply grant a retrospective licence, or accept the works with conditions or changes to the scope of works. Alternatively, they can insist that the leaseholder ‘undoes’ the works at their own expense, or demand financial compensation.
Clearly, though, it is preferable not to allow any works to be carried out ‘under the radar’ in the first place. That means ensuring leaseholders understand their obligations, and maintaining good communications to prevent any unpleasant surprises.
How we can help
The Licence to Alter team at Earl Kendrick is ready to help property managers and landlords deal with applications from leaseholders – or indeed to guide leaseholders in their own applications. The team now produces bespoke licence to alter ‘manuals’ for individual developments, so that no one is in any doubt as to what types of work require formal consent – and the correct, tailor-made process to follow. Please feel free to call the author, Bill Pryke on 07714 744 727 or contact us on firstname.lastname@example.org
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