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Changing the terms of the lease

This content applies to England & Wales

Changing the terms of a lease, known as a 'variation', how to apply to the First-tier Tribunal (Property Chamber) for a variation, the conditions for doing so, and the variations that can be ordered. Also, the effect of variation on other leases with the same freeholder.

Applying for a variation

Part 4 of the Landlord and Tenant Act 1987 enables a leaseholder or freeholder of a flat held under a long lease to apply to the First-tier Tribunal (Property Chamber) for a variation of the terms of the lease if it is defective in respect of certain terms.

The Act permits holders of long leases to apply for a variation. It defines a long lease as:[1]

  • a lease or a fixed term exceeding 21 years, whether or not it can be terminated before the end of the fixed term by notice by the leaseholder or forfeiture
  • a lease for a term fixed by law under a grant with a covenant or obligation for perpetual renewal
  • a lease granted as a result of the right to buy or right to mortgage provisions in Part 5 of the Housing Act 1985.

Where a single lease applies to three or more flats in the same building, or where the lease comes under the business tenancy regime of Part 2 of the Landlord and Tenant Act 1954, there is no right to apply for a variation.[2]

An application can be made where the lease fails to make satisfactory provision with respect to one or more of the following:[3]

  • the repair or maintenance of the flat, or the building containing the flat
  • the insurance of the building containing the flat, eg where the freeholder is not obliged to insure under the lease or where the insured risks specified in the lease are inadequate
  • the repair or maintenance of any installations reasonably necessary to ensure that the occupiers enjoy a reasonable standard of occupation
  • the recovery of expenditure incurred by one party to the lease for the benefit of the other, for example where the freeholder cannot recover the full costs under the lease
  • the calculation of the service charge. See the page Obligation to pay for services for more on this.

It does not matter how the lease fails to make a satisfactory provision with regard to any of the above. It may have been badly drafted, be too much in favour of the freeholder, or be very old so that it does not reflect modern standards of living. It is a question of fact in each case for the Tribunal to decide whether the lease fails to make satisfactory provisions.

In one case, it was held that in the absence of any evidence of the need for major repairs or structural works beyond the means of the freehold company, the fact that one leaseholder was not required to contribute towards the cost of repair or renewal of the structure of the building and employing staff or agents did not make their lease unsatisfactory.[4]

Variation orders

If the Tribunal decides to vary the lease, the variation does not have to be that requested in the application: the Tribunal can vary the lease as it sees fit. The Tribunal should not make an order for a variation if the effect would be to substantially prejudice any person – whether s/he is mentioned in the application or not – and that person cannot adequately be compensated for the loss. The Tribunal has the power to award compensation in appropriate cases.[5]

The order varying the lease is binding on the current freeholder, and on past and future freeholders, even if they were not involved in, or notified of, the proceedings. However, a person not notified of the proceedings may have a right to apply to the Tribunal to modify or cancel the change, or to obtain damages from any person who should have notified her/him.[6]

The Act also gives leaseholders of houses the ability to apply to the Tribunal to vary the terms of their leases in relation to insurance only.[7]

Where a lease is varied so as to include additional land, this has the effect of a surrender of the original lease and the regrant of a new lease to include the original and additional land.[8] The new lease will have equivalent terms and conditions, and a term equal to the unexpired term under the surrendered lease.

Other leases with the same freeholder

When an application to vary is made, the freeholder or leaseholder can apply to the Tribunal for an order for corresponding variations to other leases of flats with the same freeholder. The other flat or flats need not be in the same building, and their leases need not be drafted in identical terms, but for the application to succeed it must be in the interests of the applicant or the affected leaseholders to have all of the leases varied to the same effect.[9]

There is also a provision for the variation of other leases held by other leaseholders of the same freeholder. These leases need not be of flats in the same building, nor be drafted in identical terms. However, such an application can only be made if the object of the variation cannot be achieved unless all the leases are varied to the same effect. This provision could be used to make common improvements to a number of leases drafted in defective terms, or to bring into line a number of leases with inconsistent provisions.

There are limitations on such an application, ie a required number of all leaseholders must consent as follows:

  • two to eight flats – all but one leaseholder must consent
  • nine or more flats – 75 per cent of leaseholders must consent and the application should not be opposed by more than 10 per cent.[10]

Varying the lease as part of lease extension procedure

Under the Leasehold Reform, Housing and Urban Development Act 1993, where a leaseholder of a flat successfully applies to extend her/his lease, the new lease will generally be on the same terms as the previous one. However, the legislation provides various exceptions which allow for the lease to be varied.[11]

See the page Extend lease or buy freehold: flats for more information.

[1] s.59(3) Landlord and Tenant Act 1987.

[2] s.35(6) Landlord and Tenant Act 1987.

[3] s.35 Landlord and Tenant Act 1987, as amended by ss.162-163 Commonhold and Leasehold Reform Act 2002.

[4] Triplerose Ltd v Stride [2019] UKUT 99 (LC).

[5] s.38 Landlord and Tenant Act 1987, as amended by the Commonhold and Leasehold Reform Act 2002.

[6] s.39 Landlord and Tenant Act 1987, as amended by the Commonhold and Leasehold Reform Act 2002.

[7] s.40 Landlord and Tenant Act 1987, as amended by the Commonhold and Leasehold Reform Act 2002.

[8] Tweedie v Souglides [2012] EWCA Civ 1546.

[9] s.36 Landlord and Tenant Act 1987.

[10] s.37 Landlord and Tenant Act 1987.

[11] s.57 Leasehold Reform, Housing and Urban Development Act 1993.

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