Licences to Alter – Flats with long leases – A game changing legal decision?

By Terry Bartholomew

Those of us involved in dealing with Licences to Alter on behalf of both Landlords and Lessees have noted with interest the recent Supreme Court judgement handed down in the Duval v 11-13 Randolph Crescent Limited case concerning a building where all Lessees are shareholders in the Freehold Company – a situation not unusual in many London blocks.

In this case, one of the Lessees applied to undertake works within their flat which included the removal of a load bearing wall in the basement, but the lease contained an absolute covenant against such works, typical of restricted covenants that are found in many similar Leases, i.e.

“not to commit or permit or suffer any waste spoil or destruction in or upon the demised premises nor cut maim or injure or suffer to be cut maimed or injured any roof wall or ceiling within or enclosing the demised premises or any sewers drains pipes radiators ventilators wires and cables therein and not to obstruct but leave accessible at all times all casings or coverings of conduits serving the demised premises and other parts of the building”.

This case centres on the objection from one of the other Lessees (the Claimant)  who was not happy with the proposed work and who therefore raised objections with the Freehold company who, having taken advice from professional consultants, confirmed that they were proposing to permit the works.

The Claimant, therefore, commenced a claim against the Freehold company in the County Court seeking a declaration that the Landlord did not have the power to permit any of the Lessees to act in breach of Lease and at first, the County Court ruled that the Landlord indeed could not permit works without the consent of all of the Lessees of the flats in the building, however, on appeal the County Court decided that the landlord could licence the works.

The matter then proceeded to the Court of Appeal, which found in favour of the Claimant and this has now been affirmed by the recent Supreme Court decision and, looking ahead, is set to have major ramifications in approving alterations.

The covenants relied upon are commonly found in leases and whilst unlikely to have a bearing on general upkeep, maintenance and routine alterations to the interior of a Lessees property, major works of alteration are likely to be dealt with differently going forwards.

For those persons interested in purchasing a leasehold interest in a flat, it is essential that you take legal advice as to the drafting of the lease and the applicability of this judgement and we would also recommend taking advice from qualified Building Surveyors on the nature of future proposed alterations to assess whether they are likely to be captured by the recent judgement.

For further advice and assistance with regards to Licences to Alter, please do not hesitate to contact us at contact@cirpro.co.uk