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“We are residential long leasehold specialists. Should you have any questions on deeds of variation or leasehold matters more generally, contact us on Contents
- What is a deed of variation?
- What if the parties do not agree?
- Section 35 Landlord and Tenant Act 1987
- Section 37 Landlord and Tenant Act 1987
- Cost of a deed of variation
What is a deed of variation?
Sometimes, one or more parties to a residential long lease is unhappy with a lease term or terms. Often, the cause is a perceived injustice resulting from poor lease drafting. Common examples are:
- A failure of a lease to apportion service charges.
- When the leaseholders’ combined payments are less than 100% of the landlord’s expenditure.
Other times, problematic lease terms materialise during a sale of the flat, and the purchaser’s lender refuses to lend unless the lease is varied.
If all parties agree, the landlord can draw up a deed of variation for signature. However, irrespective of the parties’ agreement, tenants are strongly advised to take specialist legal advice at an early stage. Indeed, never sign a deed of variation without taking legal advice.
Will the proposed change affect other leaseholders? It is preferable to vary all the leases simultaneously to:
- maintain uniformity; and
- avoid the landlord being in breach of a covenant requiring the leases to be in the same form.
It is important to remember that your mortgage lender’s consent is required to the variation before proceeding.
“The insights that you provided have been very helpful and confidence boosting.” MG
What if the parties do not agree?
If the parties cannot agree the proposed variation, the following can apply to the First Tier Tribunal (Property Chamber) for an order to vary the lease terms:
- a leaseholder;
- the management company;
- a Right to Manage company;
- the landlord.
There are two routes to the Tribunal: Section 35 and Section 37.
Section 35 Landlord and Tenant Act 1987
Any party can apply to vary the lease under Section 35 of the Landlord and Tenant Act 1987 if the lease fails to make “satisfactory provision” for one or more of the following:
- Repair or maintenance of the flat or building.
- The provision or maintenance of any services.
- Insurance of the building.
- Repair or maintenance of any installations.
- The recovery by one party from another party of any expenditure incurred or to be incurred.
- The computation of a service charge payable under the lease.
However, the Tribunal will not vary all poorly drafted leases. For example, where a lease unfairly apportions the leaseholders’ contributions towards service charges, the Tribunal may refuse to order a variation if all contributions total 100%.
If an application succeeds, any other leaseholder may apply to the Tribunal to vary their lease if it contains the same defect.
Section 37 Landlord and Tenant Act 1987
An application can be made under Section 37 of the Landlord and Tenant Act 1987 to vary the lease if supported by a minimum number of parties and:
- if the required variation does not fall under one of the “satisfactory provisions” listed above; or
- more than two leases are defective.
Where there are more than nine flats, at least 75% of the leaseholders must agree to the variation, and no more than 10% can oppose the variation. If there are fewer than nine flats, all, or all but one, must agree to the proposed variation.
Cost of deed of variation lease
The cost of varying a lease term or terms depends largely on the amount of work involved. Where both parties agree in principle to the variation, the cost should be limited to taking legal advice and thereafter drafting the deed. If an agreed variation is at the request of the tenant, the landlord may require the tenant to meet both parties’ legal costs.
If an application to the First Tier Tribunal (Property Chamber) proves necessary, understandably, costs will be higher.
