Don’t let Licence to Alter Drive you up the Wall

The number of leaseholders seeking permission to alter their apartments are on the rise. This has been driven by the need for more homeworking space, perhaps a children’s playroom, or simply to capitalise on the value created from an alteration.  Building surveyors and property managers are seeing more sophistication and ingenuity in effecting those changes, and the added complexity increases the likelihood not only of a licence to alter being necessary but also a requirement on the leaseholder to serve notices under the Party Wall etc Act 1996.

When is a Party Wall Award applicable?

The chances are, under the terms of the leases, more substantial works (especially those of a structural nature) will require a formal licence to alter. That’s formal landlord’s consent for the works to proceed. Is a Party Wall Award necessary as well? Quite possibly.

The word ‘wall’ can be a little misleading, as the Party Wall etc. Act 1996 applies also to the floor or ceiling (horizontal structures) separating two apartments or between an apartment and the common parts, hence the term “etc” in the title of the Act.

As part of their works, if a leaseholder is undertaking work that is notifiable under the Party Wall etc Act 1996 (for example, cutting into a wall, floor or ceiling that is shared with another party, or inserting a new structural beam), party wall notices will be required and a Party Wall Award may need to be drawn up.

The requirement to serve a party wall notice is a “statutory” requirement for notifiable works. The leaseholder undertaking the work (known somewhat confusingly as the “Building Owner” under the Act), has the obligation to serve prescribed notices on the “Adjoining Owners”, the neighbours in close proximity.

If party walls are therefore involved in the works, the leaseholder undertaking the project (as the Building Owner) would appoint a surveyor to prepare and serve party wall notices on those Adjoining Owners concerned. The Adjoining Owners may either “consent” to the works, meaning that they are happy for the works to proceed without a formal Party Wall Award, or they may “dissent” to the works, meaning that they do require a formal Party Wall Award to be drawn up between the Building Owner (leaseholder undertaking the works) and themselves as the Adjoining Owner. The Party Wall Award sets out the terms under which the work can proceed.

Are Licences to Alter and Party Wall Awards statutory requirements?

For most property managers and owners, a leaseholder seeking alterations automatically triggers a licence to alter process and rightly so, yet you may find it surprising that there is no statutory process for obtaining/administration of a licence. There is, however, a statutory requirement and process to serve a Party Wall notice, if the works are “notifiable” under the Act. The requirement to serve a party wall notice is not optional, or desirable, but essential.

Who can confirm whether or not Party Wall Notices are needed?

In the same way that you will look to your chosen surveyor to ascertain if a licence to alter is required and to protect the interests of both landlord and leaseholder, you can turn to them for advice on party walls too. And if you choose your surveyor wisely, they can be act for the landlord in respect of both the licence to alter and the party wall matters – and guide the leaseholder as to their obligations.

What are the timings for Party Wall Notices?

When a party wall notice is served by the leaseholder wishing to undertake notifiable works, the adjoining leaseholder (and the landlord/freeholder, if the common parts are affected) have 14 days in which to respond. If they do not respond within 14 days, the leaseholder will serve a 10-day notice requiring a response within that new timescale.

If the adjoining leaseholder and/or landlord still do not respond, the leaseholder wishing to undertake the works can go ahead and appoint a surveyor on their neighbours’ (the Adjoining Owners’) behalf.  This also applies if notices that are served on the landlord (for example where works are being undertaken to walls separating the apartment and the common parts).

If this happens, the Adjoining Owners (either the adjacent apartment(s) and/or the landlord) will no control over the appointment of the surveyor acting for them. Whilst this may not lead to any adverse consequences, the landlord – your client – will likely be displeased that their managing agent failed to follow the right procedure to protect their interests.

Seek out the experts

Some managing agents – and even some surveyors – are mistaken in the belief that party wall Notices/a Party Wall Award are not needed if a licence to alter is in place. This is categorically incorrect. The party wall Notices must be served on those Adjoining Owners affected by the works. The landlord may “consent” to the party wall Notice and rely on the terms and conditions of the Licence, or the landlord may “dissent” to the party wall Notices and require a Party Wall Award in addition to the Licence for extra protection. This may be judged on the complexity of the works. Similarly adjacent leasehold Adjoining Owners may consent or dissent.

The issue to consider is the route for recourse in the event of damage being caused as a result of the leaseholder’s works.  Say damage was caused to a neighbouring apartment due to some works under licence but with no party wall Notices served and no Party Wall Awards in place. Yes, a damage deposit may have been held by the landlord to compensate but if the damage is structural and serious, the lack of a Party Wall Award removes the statutory route to remediation between the leaseholder affected by damage and the leaseholder undertaking the works (i.e. direct link between leaseholder 1 and leaseholder 2). The alternative route would be from the affected leaseholder to the landlord and the landlord back to the leaseholder undertaking the works.

Neither managing agents nor surveyors will be thanked if the requirement to serve party wall Notices (either on the landlord/freeholder, or leasehold interest or both) has been missed or perhaps even incorrectly advised as part of the licence to alter review stage. This could lead to complicated claims and potential negligence issues.

Julian Davies is a director of EK Licence to Alter and EK McQuade, experts in LTA and Party Walls respectively