What is a Deed of Variation on a property?
A Deed of Variation, also known as a variation deed, is a legal way to change part of a contract rather than the whole thing. A variation deed can be used for different things relating to property, leases, employment contracts and wills.
Anyone in a contract can suggest using a Deed of Variation to change it. However, all parties must agree to it unless the law forces a change.
Why might I need a Deed of Variation for a property?
Even though they last for a long time, sometimes residential property leases need to be extended or the terms updated. A Deed of Variation can be used for both of these purposes.
Sometimes a mortgage lender will ask for a Deed of Variation to meet their requirements, which you’ll see in the examples below.
Also, property lease can have rules limiting what you can do, called restrictive covenants. If you want to change or remove these rules and your landlord agrees, you can use a Deed of Variation to legally change your lease, allowing you to do new things, like renovate your property or sublet it.
Common Deed of Variation examples
Keeping pets
In lease agreements, there’s sometimes a rule that says you can’t have pets . However, you may be able to talk to your landlord (freeholder) and try to work out a deal to change or remove this rule. If you do, a Deed of variation would be used to change the lease agreement.
Internal or external alterations
Some leases might say that you can’t make any changes to your property. For example, it may say that you can’t make any changes to the walls, floors, ceilings, or windows.
While for some, this is no big deal, for others who are keen to renovate it can be a substantial obstacle to overcome. A Deed of Variation, therefore, can be a useful way to remove restrictive covenants that otherwise would put the breaks on refurbishment.
Using the property as a business premises
Lots of lease agreements say you can’t use a leasehold for business. In these cases, a variation deed might be used to help you modify your lease to allow some business activities.
The right to sublet the premises
Many leaseholders can’t rent out their properties. This is called subletting. In contracts like Help to Buy or Share Ownership, this is usually a strict rule, and being allowed to change it is very uncommon.
Lots of leases might say that a leaseholder can’t rent out any part of a leasehold without the landlord's written permission.
In some circumstances, a Deed of Variation could be used to change this and get permission to rent out some of, or the whole property if the landlord agrees.
Attaching aerials to external wall fixtures
A common inconvenience for some leaseholders is that their lease says they can’t attach things like antennas, ads, or signs to the outside walls. This can be a major inconvenience, especially if you’re looking to install cable TV.
Therefore, a Deed of Variation might be a viable option to get around this for your viewing pleasure.
Lease extensions
If a leaseholder wants to extend their lease, they follow the statutory lease extension process, which involves sending a Section 42 notice to the freeholder. Following this process, the lease gets extended for a minimum of 90 years, and the ground rent is reduced to a peppercorn ground rent (i,e a nominal amount).
Sometimes, mortgage lenders have rules about how long a lease should be. To meet these, a borrower might need to extend the lease through a Deed of Variation, which changes the old lease term to the new extended one, replacing it.
Restrictions on the mortgage or selling of the lease
Sometimes a lease has restrictions on selling the leasehold or borrowing money against it. However, lenders will only allow these kinds of restrictions if the landlord can’t say no without a good reason. Therefore, it may be necessary for the lease to be changed using a Deed of Variation
The lease allows for forfeiture on the insolvency of the tenant
Some leases have a clause that says the landlord can take away the lease if the tenant becomes insolvent. If this clause exists, a mortgage lender might not approve the lease unless it is removed using a Deed of Variation.
This list is by no means exhaustive of how a Deed of Variation might be used to make changes to a lease without changing the whole thing. However, it should give you a good idea of the type of problems you might encounter with your lease and how you might go about solving them through a variation deed, providing your landlord is open to it.
Who should be involved in a Deed of Variation?
When using a Deed of Variation to change the terms of a property lease, both the leaseholder and the freeholder are always involved.
In some cases where others are affected by the change, they might be involved, too. For example, for properties with a mortgage, the leaseholder might also have to get the lender’s approval to make the change.
If there is a residents’ management company (owned by leaseholders), they need a formal decision to approve a Deed of Variation. Shareholders usually vote on this. However, this doesn’t mean the management company and shareholders can ignore the rights of individual leaseholders or mortgage lenders.
When a Deed of Variation is made, all concerned parties should agree and be named in the variation deed for it to be valid.
Who pays for a property Deed of Variation?
A property Deed of Variation is usually initially suggested by the leaseholder, and the requested change is often for their benefit. Therefore, usually, the leaseholder pays for a variation deed, along with any reasonable costs of the freeholder.
If you vary a lease, does the change automatically apply to other leaseholders?
No, changing a lease with a Deed of Variation doesn’t mean it applies to all other leases and leaseholders. The Deed of Variation only benefits the leaseholder who requested it.
For example, if one leaseholder in a block of flats gets permission to install a satellite dish, this doesn’t mean that every other leaseholder can do the same. Instead, each leaseholder would need to make their own request, and the freeholder would decide on a case by case basis.
Should a Deed of Variation be registered with the Land Registry?
Yes, you have to officially record any changes to a lease with the Land Registry.
This is because other people, like a mortgage lender or a buyer’s lawyer, might want to check your lease and any changes in the terms if you decide to remortgage or sell your leasehold property in the future. For this reason, it’s really important that any changes to a lease are properly documented.
A Deed of Variation can be registered at the land registry by filling out Land Registry form AP1 and submitting it along with the Deed of Variation and the required fee to HMLR. The application will then be reviewed and once approved the property register will be updated to reflect the changes.
This process can take a few weeks and the cost of the registration fee can depend on the property’s value. If you instruct a property solicitor for your Deed of Variation, they will usually register it on your behalf.
How much does a Deed of Variation for a property cost?
The cost of a Deed of Variation can vary depending on what the deed is about, but at Lawhive our solicitors work on a fixed-fee basis and we’re often cheaper and more efficient than your average high street firm in getting your matter sorted quickly.
When you work with us on your variation deed, our skilled property solicitors will handle all the hard work for you, from talking to the freeholder (and mortgage provider, if needed) to making sure the Deed of Variation is registered with the Land Registry.
If you’re buying a leasehold property, our solicitors can also flag up potentially problematic restrictive covenants and suggest a Deed of Variation early on.
For more information, please contact us for a free case assessment and quote for the services of our Deed of Variation solicitors and property lawyers.
Do you need a solicitor for a Deed of Variation?
Legally, you don’t have to use a solicitor for a Deed of Variation unless your mortgage lender requires you to. Sometimes they might do this in order to make sure their interest in the property is protected, and changes are properly recorded with the Land Registry.
Even without a mortgage, doing a Deed of Variation without a solicitor can be risky. Unclear language in lease terms can lead to expensive disputes in the future that could potentially cost more in legal fees than it would to use a solicitor for the Deed of Variation initially.
How long does a Deed of Variation take?
Creating a Deed of Variation (known as drafting) can take 2-3 months if both the leaseholders and freeholder’s solicitors need to negotiate the terms.
However, if your freeholder is already open to changing the terms of a lease through a Deed of Variation, this process can be much quicker, with work completed in just a few weeks.
How can Lawhive help?
At Lawhive, our expert property solicitors are on hand to support with your legal matters. Our Deed of Variation solicitors can:
Give you personalised advice on a Deed of Variation;
Help you understand your obligations and responsibilities:
Draft and file a Deed of Variation according to your requirements;
Correspond with your mortgage lender.
Our services are flexible and can be tailored to your needs.
What’s more, our solicitors work on a fixed-fee basis, which means you only pay exactly how much you’re quoted - no hidden fees or nasty surprises.
To get started, contact our legal assessment team for a free consultation and fixed fee quote.