The importance of checking your lease plan24 Apr 2020 // Insights
Residential Real Estate Solicitor Ben Gardner discusses the importance of ensuring you have your house in order when looking at you lease plan.
Most leases of leasehold properties contain a lease plan which shows the internal layout of the property. When purchasing a property, you should ensure that the layout of the property accurately reflects the layout in the plan to the lease. This is best done by cross checking the property against the estate agents’ plan in the first instance, and then by inspecting the property in person.
If the lease plan does not accurately reflect the layout of the property then it is likely that works have been carried out to the property since the lease was originally granted. This is not unusual, but in the absence of any written consent from the Landlord to such works then this could be an issue and will need resolving before you proceed.
Most leases will contain covenants which outline the Landlord’s requirements when making alterations to the property. Generally speaking, these covenants are either:-
- An ‘absolute’ covenant – where the lease prohibits you from making any changes, I.e. ‘not to make any alterations to the property’ or
- A ‘qualified’ covenant – where the lease permits you to make certain alterations on the basis that Landlord’s consent is obtained beforehand (with such consent not to be unreasonably withheld). I.e. ‘not to make any alterations to the property without obtaining the previous written consent of the Landlord’.
If alterations have been made to the property since the lease was granted, and Landlord’s consent has not been obtained, then it is likely that there would have been a breach of the lease. If so, then the current seller, and any future buyer, could face enforcement action by the Landlord. Furthermore, if you are buying with a mortgage, then this would affect your ability to borrow unless it is resolved.
Breach of Qualified Covenant
In the event that the lease contains a qualified covenant, then the solution would be for the current owner to obtain the Landlord’s written (retrospective) consent to the works and consent to the current layout of the property. This could be documented by way of formal licence, or deed of variation to the current lease, (depending on the nature of the breach and the wording of the lease). This does not negate the fact that planning permission and/or building regulation consent may have been required for the works and this would have to be investigated too.
Breach of Absolute Covenant
If there has been a breach of absolute covenant, then a potential resolution has been made significantly more complicated given the recent Court of Appeal case of Duval v 11-13 Randolph Crescent Ltd. As it stands, if there is a breach of absolute covenant, then a Landlord is not free to simply license works or to waive compliance with the absolute covenant. This case was however subject to an appeal hearing by the Supreme Court on 10 October 2019 and Judgement is eagerly awaited given the potential, far reaching, implications. We will report again when the Judgement is handed down.
It is therefore very important to check the lease plan, and the wording of the lease before you purchase a leasehold property, and before you carry out any works to your leasehold property.
Should you have any questions regarding the above information, or need any residential property related legal advice, please get in contact with Ben Gardner, at email@example.com or on 0207 725 8046, or your existing contact within Seddons’ Residential Real Estate team.