How to vary a property lease using a Deed of Variation

A Deed of Variation is used in conveyancing to vary part of a lease between the freeholder and leaseholder. It doesn't change all of the original lease; it either amends specific clauses within it, such as ground rent, or inserts a new clause, such as a Mortgagee Protection Clause. Much like a will, you can't simply edit an executed original document, but you can create a

The need to vary a lease normally arises when selling the property. The buyer's solicitor identifies an issue in the original lease that requires it to be varied. The issue can't be ignored if the buyer has a mortgage lender, so the seller faces fixing the issue. The most common issues are:

• Doubling Ground Rent
• Lease term
• Mortgagee Protection Clause

As the buyer can't proceed until the lease is varied or indemnity insurance is provided, the sale hits an impasse. This article explains what you can vary in a lease, how to vary, the cost for the leaseholder and freeholder, the common delays that occur as part of the process, what happens if the freeholder doesn't agree or is absent, and what indemnity insurance is.

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What is the process for varying a lease?

Only the leaseholder and freeholder can vary a lease, and you can't vary your lease without the consent of your freeholder, even if your lease is defective due to changes in the law. To vary a property lease, the leaseholder must:

• Contact the freeholder/Management Company and agree in principle on the clause to be varied. Do this first to avoid costs if the freeholder declines the variation.
• Instruct your solicitor to liaise with the freeholder's solicitor and confirm the terms of the variation.
• If terms are agreed, the leaseholder must pay to their solicitor the legal fees for the freeholder's solicitor.
• Freeholder's solicitor drafts the Deed of Variation.
• Leaseholder's solicitor agrees on the terms in the deed.
• If you have a buyer, buyer's solicitor and mortgage lender, confirm they accept the wording of the variation. This part can take several weeks to confirm.
• The lease is signed, dated and registered at the Land Registry alongside the original lease.

You can't vary a lease without the help of a solicitor, and the freeholder instructs their own solicitor.

Why would you get your lease agreement varied?

Lease agreements have scope for any number of restrictive covenants to be written into them by freeholders. The very nature of a restrictive covenant means that a leaseholder is restricted or forbidden from doing some action or enjoying some activity. A leaseholder can, assuming the freeholder agrees, get their lease changed via a Variation Deed, which is a document which acts to vary the lease legally, such that the leaseholder can now do whatever was previously restricted in some measure, as dictated by the freeholder and subject to any new limits that the freeholder might choose to impose.

Here are a few examples of restrictions which a Deed of Variation can address:

• 1. The keeping of pets

A typical clause which restricts the keeping of pets might be worded  like this:

"Not to keep any bird dog or other animal in the Demised Premises without the previous consent in writing of the Lessor…such consent to be revocable by notice in writing at any time on complaint of any nuisance or annoyance being caused to any owner tenant or occupier of any other flat in the building."

What if the lease doesn't refer to pets at all?

In legal terms this is referred to as the lease being 'silent' on pets. In this situation, if a freeholder discovers you have pets and wants to stop this, they may seek to rely on a general nuisance clause and argue that pets aren't allowed in a building. However the freeholder may struggle to get support from the court unless they can produce actual decisive evidence of nuisance being caused.




• 2. Alterations to the building, whether internal or external

Some leases can be surprisingly strict about disallowing any alterations to the fabric of a leasehold. One real-life example of this in a lease reads:

"Not to make or permit or suffer to be made any alteration in the construction or the arrangement of the demised premises nor to cut or alter or injure any of the walls, timbers, ceilings, floors doors or windows thereof."

• 3. Using the leasehold as a business premises

Many lease contracts specifically disallow you from using the premises to conduct business. This is an actual example of such a restriction:

"Not to carry on or permit upon the demised premises or any part thereof any trade business or occupation whatsoever nor to do or suffer to be done thereon any other thing which may be or become a nuisance, annoyance or inconvenience to the Lessor or to the owners lessees or occupiers of other parts of the Building or the Property or whereby any insurance effected by the Lessor under these presents may be rendered void or voidable or whereby the rate of premium may be increased."

• 4. The right to sublet the whole premises

There are many examples of leasehold contracts which forbid or restrict subletting. In all Help to Buy (whether leasehold or freehold) and Shared Ownership contracts, the default position is to forbid subletting in all situations: it would be very rare that either Homes England or a Housing Association would consider varying this restrictive covenant.

The wording of such a restriction can be something like the following real-life example:

" Not to assign sublet or otherwise part with possession of any part or parts (as opposed to the whole) of the demised premises and not without first obtaining the written consent of the Lessor (such consent not to be unreasonably withheld) to assign sublet or part with the possession of the whole of the demised premises (otherwise than by way of mortgage or charge) and will pay to the Lessor on demand its legal charges incurred in or in connection with the application for and the giving of such consent."

• 5. Attaching aerials, telecommunications equipment or advertising to external walls or fixtures

There might be wording in the contract like this:

"Not to affix any radio or television aerial placard announcement advertisement fascia board or sign upon the external walls or in or on windows or doors of the demised premises or expose to view any such decal name or sign."

• 6. Access to a garage
• 7. Access to roof or loft space
• 8. The right to sublet roof space (e.g. for leasing to a solar panel company)
• 9. No Mortgagee Protection Clause. This is becoming more and more common that leases don't include the MPC. Read more: I don't have the Mortgagee Protection Clause in my Lease

Deeds of Variation are used to lease extensions and for varying ground rent charges and/or other charges written into a lease agreement.

Who needs to be involved in a Deed of Variation?

For a property deed of variation, the leaseholder wanting to vary the lease terms and the freeholder would always be involved and named in a variation deed. Additionally, there might be third parties if the subject of the variation concerns them. Typically, this would be the case if a mortgage was involved because a variation will most likely require lender consent.

Which party has to pay for a Deed of Variation?

The leaseholder side would pay for a Variation Deed because it is they who wish to instigate a change; this means that they also have to pay any reasonable costs that the freeholder incurs, which is always the case with a lease extension.

If you get a leasehold restriction varied, does this automatically benefit any other leaseholder?

No. When one specific lease is varied, it doesn't automatically affect other leaseholders in the same block. For example, let's say one leaseholder has been granted rights to use loft space by the freeholder via a variation deed; the leaseholder next door doesn't get that right. However, once the freeholder agrees on a change for the one flat, they might reasonably expect to be asked by another leaseholder in the same block to allow a similar change. It would always be solely down to the freeholder whether to grant the request.

Do you need to register a variation deed with the Land Registry?

Yes, you do because varying the terms of an individual lease is a legal matter which must be recorded officially and the associated documents accessible to interested parties. A mortgage lender considering a remortgage or a buyer's solicitor, for example, would want to inspect your lease agreement and they would naturally want to know if any of its terms and conditions had changed since it was originally issued.

Where can you get a Deed of Variation? How much do they cost?

Our experienced solicitors can conduct all the legal work you'll need as a leaseholder for creating a Variation Deed, including communicating with your freeholder (and lender, if applicable) right through to completion. They can also carry this service out as part of an ongoing wider leasehold purchase conveyancing transaction because they find a restrictive covenant in the lease contract and bring this to your attention.

Understandably, deeds of variation fees depend on the exact nature of what the deed addresses; however, our prices are always competitive, but our client care is always of the highest standard.