Are You A Landlord Or Freeholder Who Needs To Change The Terms Of A Tenant's Lease?
As a landlord, you may find yourself needing to change the lease terms that you originally agreed with your leaseholders.
Perhaps there is a defect within the existing lease; or perhaps you’ve simply changed your mind about leaseholders being allowed to keep pets.
Changing the terms of the lease is a legal matter. It’s very important to consult an expert and ensure that the correct procedure is followed, preventing future repercussions.
Can Lease Terms Be Changed?
Yes, a lease can be varied even after it has been completed.
Changes to a lease can be actioned by both leaseholders and landlords. However, both sides must agree before any change can take place. This prevents one side from forcing unfavourable lease terms on the other.
Careful consideration must be given to the terms of the leases that are being changed and whether all of the other leases in the building require changing.
How Do I Change A Lease Agreement?
Changes to a lease are actioned through a document called a ‘Deed of Variation’. It means that the landlord and leaseholder have both agreed to the amendment of a previously completed lease.
If there is a third party written into the lease, such as a third-party management company, that company may also need to agree to the changes to the lease. This will ultimately depend on the details being changed.
A lease cannot be varied unless all relevant parties agree to it. Without this agreement, you can’t proceed.
What Is The ‘Deed of Variation’ Process?
If the building is owned by a company which is owned by the leaseholders, the freehold company will first call an extraordinary general meeting (EGM) to approve a motion for a deed of variation.
Alternatively, the freehold company can approve a motion at their annual general meeting (AGM), or the directors can approve a motion (if the freehold company’s memorandum and articles of association allow this).
If the landlord is an individual, they may approach the leaseholders at any time.
The leaseholders and the landlord must then decide whether or not to enter a deed of variation.
What If Leaseholders Don’t Agree With A Lease Variation?
If there isn’t total support from leaseholders, the landlord can instruct its solicitors to consider applying to the First-tier Tribunal.
A tribunal application may succeed provided certain criteria is met.
How To Amend the Lease
Once the lease variation has been agreed, a deed will need to be created, incorporating the changes to the existing lease.
It will need to specify exactly which provisions of the existing lease are being changed.
If any of the existing lease plans require changing, a surveyor will need to be instructed to provide Land Registry complaint plans to be inserted into the deed.
What If A Leaseholder Wishes To Vary the Lease?
Leaseholders can also request a change to lease terms by approaching the landlord directly, but all sides will need to agree to the changes.
As the landlord, you do not have to agree to any changes the leaseholder wishes to make but you may be required to make reasonable efforts to vary the lease if failing to do so would impinge on the tenant's right to not be discriminated against based on sex, disability, religion or sexuality.
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