What is a Deed of Variation of a Lease?
In simple terms it is a formal legal document that records agreed changes in a Lease.
There can be various reasons for a change. Common reasons with long residential leases are that, on sale, it is discovered that there is an error in the Lease or it’s plan and this needs to be corrected to satisfy a buyer or lender. Another common reason is that, whilst the terms of the lease may have been appropriate for the law when the lease was granted, perhaps 30 years ago or more, they are no longer compliant with good or safe legal practice today, or perceived risks for leaseholders or lenders.
Another key issue for altering a lease is to extend it.
The Deed is a “statement” of what all the parties want and apart from the intervention of the Court, requires agreement between the Landlord & Tenant and possibly a Third Party such as a Lender if either party has a Mortgage.
If you want to change physical layout of your flat (and usually this can only be internally) you may need your Landlord to agree otherwise when you sell, you may be in difficulty as your Buyer is going to ask you to produce that Consent
This will update your Lease and or the plan although in rare cases, you might find that there is a mistake in the original plans and this will need to be corrected (varied).
The most common reason for a Deed of Variation of your Lease is that you have agreed with your Landlord to extend the Term, on you paying a certain sum which is calculated by putting together your gain in years as opposed to the Landlord’s loss of getting the Property back at the end of the original Term.
Unless you Landlord is the Queen, a Charitable Housing Association or certain other limited exemptions, by law, as long as you qualify to extend your long residential lease, the statutory right is to extend it by an extra 90 years, but the amount you pay has to be worked out by a Professional Valuer. In practice, the vast majority of lease extensions are agreed by consent, usually after the statutory process has been started by the leaseholder. In that case, the additional length agreed and other adjustments to the lease may differ from the standard 90 year extension or could be longer, but the freeholder may seek other concessions such as an increase in ground rent.
The figure is very much based on the amount of years left, so if it is a long time, you will pay less.
With almost any variation to a lease, the leaseholder will invariably have to pay the freeholder’s legal and other costs. These can prove to be expensive for a relatively simple document but unfortunately, as detailed above, there are a number of situations where there is little choice because a lease needs to be altered to enable a sale. In such situations, it may be the case that if you bought your flat fairly recently, your solicitor who represented you on the purchase should have spotted any lease defects. A possible claim for professional negligence is outside the scope of this page.
We can help with any type of lease variation, whether for leaseholder or freeholder. Get in touch to find out more.