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When someone that owns a leasehold flat is looking to make structural changes to the home, they must first get the freeholder to approve what’s known as a licence to alter. Not having one of these agreements in place could potentially complicate your ability to sell your flat in the future, but this guide shows how to overcome those hurdles and get a fair and fast offer.
- What is a licence to alter and where do I stand legally?
- Typical information included in a flat’s licence to alter
- Potential barriers to selling a flat without a licence to alter
- Steps involved with getting a licence to alter for your flat
- Can the freehold owner of a flat refuse to grant a licence to alter?
- Four methods for selling a flat that lacks a licence to alter
- Selling a flat without a licence to alter: top queries and answers
What is a licence to alter and where do I stand legally?
Leasehold owners of flats and possibly some houses should be aware that if they want or need to make any type of physical change to their home, they may need to apply for a licence to alter.
A licence to alter is unique to leasehold properties, which are often flats where you own the home for a set number of years as stipulated in lease agreement that you will have signed with the freeholder that outright owns the property and the land on which it was built. Lease agreements also specify the ground rent and other fees that you will pay the freeholder.
If you currently own a leasehold flat and would like to make changes to the property before selling, such as extensive renovations or even minor physical alterations, you might first need to obtain a licence to alter, as Frettens Solicitors notes. But this can be a complicated process with no guarantee of success. Obtaining sound legal advice is often a good idea so be sure to consult with your solicitor.
That’s why many leasehold flat owners often find themselves in the situation of wanting to sell their home without having a licence to alter in place, and this can create a number of problems with attracting buyers to the home and otherwise complicating a potential sale.
Keep reading to learn more in this guide about the various hurdles to a sale that can be caused as a result of the lack of a licence to alter, as well as useful information on how to overcome some of these issues. You’ll get advice on whether to try and get the licence to alter before selling, as well as steps to take to increase your chances of getting a fair and fast offer. If you are unsure where you stand with regard to your leasehold property, be sure to speak with your solicitor.
Typical information included in a flat’s licence to alter
If you are thinking about potentially applying for a licence to alter your flat before trying to sell the property, it can be useful to learn which details may have to be part of the document.
Although every licence to alter will have conditions that are unique to the affected property, there are certain pieces of information that you’ll typically find in most licences, as Anthony Gold Solicitors explains. These include:
- A time period for completing the work you have planning
- Any limits or other restrictions on the work you want to pursue
- Specific details about the alternatives that you are planning
- Your responsibilities for the alternatives at the flat
- The freeholder’s responsibilities as they apply to the work
But just because a licence to alter does not include all of the above factors doesn’t mean it is not valid. Should you try to get a licence to alter before selling your flat, you may want to check with a legal professional to review the document to see that it is not missing key information.
Potential barriers to selling a flat without a licence to alter
Not having a licence to alter in place for your leasehold flat could make it be seen by some potential buyers, as well as mortgage lenders, as a “problem” property.
Failing to obtain a valid licence to alter could make it harder to sell your flat, as noted on the Osbornes Law website. Buyers could have a few reasons to be concerns about the lack of a licence.
Even if you have not commenced any work to make changes to the flat, the lack of a licence could be a significant worry for prospective buyers because they might believe that they will be prohibited from making almost any alterations to the property as the next owner. This could be a dealbreaker for those buyers that originally showed an interest in your flat but no longer want it because they think that the lack of a licence will prevent renovations that they have planned.
And if you’ve already made physical alterations to the flat without first getting approval for a licence from the freeholder, this could make it even more difficult to sell your home.
That’s because prospective buyers could worry that the freeholder or the local authority might eventually pursue legal action against the leasehold owner of the flat because of the unapproved work. Regardless of whether this legal liability would actually pass to the next owner of the flat, the fear of this scenario can be enough to make someone lose interest.
Home loan providers could similarly worry about the legal liability issues associated with a leasehold flat where you have completed alterations with a licence, or where no licence exists because it could make the property less attractive to buyers if resold in the future. This is a concern for lenders as they may need to resell the home should the next owner default on their mortgage, and the company needs someone else to buy the flat to recoup the loan debt.
Steps involved with getting a licence to alter for your flat
If you’re trying to sell your flat, you might want to consider trying to obtain a licence to alter before seeking a buyer.
In order to apply for one of these licences the freeholder will want you to prepare a detailed brief about the planning work that you want to do at the flat. This should include drawings of the alterations that you want to make, cost estimates, technical specifications and more. You’ll also have to provide assurance that the work will comply with all relevant building regulations.
The freeholder will then review the licence and decide whether to approve it, or to order additional surveys and other assessments before making that decision.
You may be liable for various other costs involved with getting a licence to alter and then embarking on the work at the property. For example, a freeholder could potentially include in the terms and condition of your licence that you will be responsible for paying the costs of any inspections they order to check on the status of the work as it’s being done, as Property Investments UK says.
Freeholders are able to reject an application for a licence to alter, and the next section of this guide elaborates on those circumstances. If your request for a licence is denied, it could create yet another step in the process beyond those detailed here because you would then have to decide whether to pursue a potentially lengthy and costly legal appeal of that decision.
Trying to obtain a licence to alter for your flat could therefore become quite expensive, particularly if you have to challenge a freeholder’s rejection of the licence, or if there are various complex issues involved with the licence that would require hiring a legal expert to resolve.
Can the freehold owner of a flat refuse to grant a licence to alter?
As noted briefly in the previous section, a freeholder could refuse to grant you a licence to alter, which time you will have to consider whether to challenge this decision before selling your flat. Leasehold flat owners are not automatically guaranteed the right to have their application approved by the freeholder.
And indeed, there are some situations where the lease agreement will include a provision that imposes a complete ban on any alterations to the property. This means that seeking a licence to alter would effectively be asking the freeholder to provide you with an exception to the terms of the lease agreement, and they may be within their legal power to simply reject it.
But if there is no such language in your lease agreement, typically the freeholder will have to provide some reasonable explanation if they plan on refusing your licence application. If you are denied a licence but think the justification was unreasonable, you could challenge this in court.
Some potentially legitimate reasons why a freeholder might turn down a request for a licence to alter at your flat include that the changes you’re planning could weaken the building’s structural integrity, create problems for other flat leaseholders in the building, reduce the overall value of the property and other explanations that a court could be inclined to uphold.
But there are also scenarios where a freeholder cannot legally refuse a licence, for example if you have to make the physical change to the flat because of a requirement by law.
If you have applied for a licence to alter and been refused by the freeholder, you might worry that this will make it impossible to sell your flat. There’s no need to have this concern because, as the next section of this guide shows, there are still viable ways to sell the property, such as selling to a quick home buyer that can complete the purchase in a handful of weeks.
Four methods for selling a flat that lacks a licence to alter
If you are ready to sell your flat without a licence to alter, you will next need to decide which method to use in order to find a buyer. The four usual choices are selling to a quick home buyer, selling at an auction, selling without any assistance or selling with an estate agent.
To help identify which selling option best fits your situation, try writing down your top goals with the sale such as whether you can accept paying fees as part of the sale, how long are willing to wait before selling and your ideal selling price. Then compare and contrast these facts against the details of the four choices below and this should assist with making your decision.
Note that some of the selling strategies have prominent advantages, like only having to a wait a few weeks before the sale is completed when you choose a quick home buyer. Other selling methods have notable disadvantages, like having to pay commission when you sell through an auctioneer or an estate agent, as this fee will be subtracted from the final sale proceeds.
Selling to a quick home buyer
Quick buyers can complete the purchase of your flat in a few short weeks, and this includes the key steps of exchanging contracts and paying you the full proceeds. That makes quick buyers often by far the fastest way to sell any type of home, including a flat without a licence to alter.
And some of these companies are experts at buying so-called problem properties, as they won’t reduce their offer just because of a home’s age, condition, location, shape, size or type. That means you are promised a competitive offer even though your flat lacks a licence to alter, which can be a quick solution compared to the potentially lengthy and costly process of seeking a licence before trying to sell your flat – and there is no guarantee that your application would succeed.
LDN Properties’ long list of purchases and offers that it has made since launching more than 15 years ago includes not only flats without a licence to alter but also properties with Artex, Airey houses, flats with an absent freeholder, homes with an overgrown garden, off-plan properties, houses located near an industrial estate, flats that have a Section 20 notice, homes that do not have a structural warranty, student properties, Wimpey No-Fines houses, penthouse flats, homes situated near to traffic lights, properties with Japanese knotweed in the garden, smoker’s houses and more.
You also will not have to pay any commission when you sell your property to an honest no-fee quick buyer, which helps with keeping your selling costs low. That compares favourably to having to pay potentially expensive fees when selling with an auctioneer or estate agent, because this commission is deducted from the sale proceeds, which adds to your expenses.
Selling at an auction
This is a risky way to sell your home because there is no guarantee about the final sale price, or even if your property will sell. If you do not receive any bids at the auction then the home does not sell and you’ll need to start over with finding a buyer, delaying the timeline even further.
Buyers can place bids on your home starting at the reserve price, which is the lowest price at which you are comfortable selling the flat. Ensure that you calculate a reserve price that should generate a profit even after paying the auctioneer their commission, because a bid at this value is a binding legal sale that the buyer can sue to enforce if you try to cancel it after the auction.
Auctioneers’ fees cover the work that they do in selling a flat, which includes producing a listing describing your flat and featuring photographs of it, advertising this to generate interest from auction attendees, hosting the auction and hopefully overseeing a successful sale. This fee is usually charge at 2.5 percent of a home’s final auction sale price but may be higher or lower.
It’s a slow way to sell your home, starting with a wait of many weeks or longer after you choose this method and before the auction takes place. If your flat does sell at the auction, the buyer will then typically have at a least a month to complete all of their mandatory steps for finalising the purchase of your property, for example signing the relevant legal documents.
Selling without any assistance
Selling on your own puts the burden on you to take care of all the work, such as creating and marketing a listing, scheduling viewings where you’ll take people on tours of the flat, hearing offers from prospective buyers and trying to get a serious offer to exchange of contracts.
This will be a time-consuming approach to selling and it could take more than a year to sell if you do not have any experience with finding buyers for properties. Only consider this method if you have a suitably qualified family member or friend that can help you at no cost to sell the flat, or if you have previously successfully sold a flat without a licence to alter.
The only obvious benefit of selling this way is that you will not have to pay any commission to an auctioneer or an estate agent, which lowers your expenses. But this saving may be eliminated by the funds you have to spend on other tasks, such as advertising your listing.
One stress-free, streamlined and no-hassle alternative to selling on your own is selling to a legitimate zero-commission quick buyer like LDN Properties. You will enjoy the same great bonus of not having to pay any fees but you can also experience the additional advantage of securing a much speedier sale. That’s because quick buyers are usually able to finalise the process of purchasing almost any home within a few weeks after your first contact them.
Selling with an estate agent
This can be another relatively slow way to sell your flat because it could take several months or even more than an entire year, which is not ideal if you are aiming to sell quickly.
And you may encounter the scenario where you get an offer from a buyer only for them to change their mind and withdraw it. This would cause the sale to collapse and require you to begin again with seeking another buyer, delaying a sale even further. And the person making the offer can do this without penalty if you have not yet already exchanged contracts.
You’ll also need to pay commission when you sell with an estate agent and this is usually at a rate between 1.15 percent and 1.40 percent of your flat’s final sale price. This will be deducted from the eventual sale proceeds, which will increase your overall selling costs.
The fee covers the work that estate agents do in preparing and advertising a listing, organising viewings, hearing offers from buyers and ideally taking one to completion.
Beware also that some estate agents might not have any experience with trying to sell a flat that does not have a licence to alter, and so they might find it hard to attract interest in your home from buyers. Always check with individual estate agents about their past success selling properties like yours and avoid using the services of someone with no such experience.
Selling a flat without a licence to alter: top queries and answers
LDN Properties can consider buying your flat without a licence to alter, and here are our answers to seller’s top questions about these homes:
Your top questions when selling flat without licence to alter
A licence to alter is a document that the freeholder – the outright owner of the building in which a leasehold flat is located and the land on which is was built – signs that authorises the leaseholder of the flat to make certain alterations to the home. Without having this document in place, the leaseholder is otherwise prohibited from pursuing those changes.
Although each licence to alter will be unique to the specific property at issue, this document must typically include a range of information relevant to the alterations that the leaseholder plans on making the to the flat, including a general timeline for completing the changes, any restrictions or other limits imposed on that work, and other important details.
Possibly, because buyers may have a few concerns about the property as a result of the lack of a licence to alter. One worry they might have is that it will be all but impossible for them to make any alterations to the home in the future. Another fear could be about potential legal liability they may face as the next owner if you have already completed some changes without the licence.
You will have to ask your freeholder directly to approve your application for a licence to alter, and this request must include a highly detailed range of information. For example, you’ll need to provide in-depth specifics about the work that you would like to have done in the flat, along with a timeline for getting it done, assurances it will comply with building regulations, and more.
Yes, the freeholder of a flat does have general authority to reject an application for a licence to alter on several grounds, including that the planned work would undermine the building’s structural integrity. But they cannot deny a licence in some cases, such as if the work is required by law, and you can also consider appealing the rejection of an application.
Contact a quick home buyer because these companies, such as LDN Properties, have the ability to complete the entire process of buying a home in a handful of weeks, and that includes paying you the sale proceeds and exchanging contracts. It’s usually weeks or months faster than you can expect when selling on your own, with an estate agent or at an auction.
Not if you decide to sell without any third-party help or if you choose to sell your flat to a zero-commission quick buyer like LDN Properties, as these are two great ways to avoid paying any fees. But if you opt for selling your home using the services of either an auctioneer or an estate agent then you will need to pay them fees that will be taken out of the sale proceeds.
