Not surprisingly, given land values, there's an increasing trend to development which maximises the use of existing assets: whether by infill development, building on garage sites or rooftop extensions.
If you are considering this type of development you should review, at an early stage, whether you can obtain the necessary access from existing residents to enable you to carry out the works. The same issues can apply on regeneration schemes if you intend to carry out remodelling works as part of a refurbishment scheme.
The rights of the parties will largely be set out in the tenancies and leases which residents occupy under. A sensible starting point would be to check the extent of the property demised to the tenant. Is this restricted only to the flat or house which the resident occupies, or does it include any other areas, such as gardens, parking spaces or stores which might otherwise be earmarked for development?
The lease may also contain definitions of the 'Building', 'Estate' and 'Common Parts' and any express or implied easements which residents have over those areas will need to be considered.
Tenants may also have a right to light to their premises. The erection of scaffolding or similar structures to facilitate works may interfere with this right.
A covenant for the tenant's quiet enjoyment will ordinarily be express (and where it is not, it will be implied). Essentially, this means that the landlord must ensure that there is no interference with the tenant's possession and enjoyment of the property. An express covenant may be dependent on the tenant paying rent and complying with the other tenant covenants in the lease and may also be restricted to the landlord only, so that the tenant will have no claim against the landlord if the tenant's possession of the property is interfered with or interrupted by anyone who derives title under the landlord.
Reservations in favour of the landlord are usually set out in a schedule to the lease, although in the case of secure/assured/ assured shorthold tenancies a review of the tenant's covenants may be necessary, in order to ascertain access rights.
These reservations will ordinarily include access to the tenant's home for the purpose of carrying out repairs and maintenance, but check whether this right to access also includes access for the purposes of making alterations or improvements to the wider building, estate or any adjoining premises. Any rights reserved will be subject to a requirement to give notice and are likely to be subject to an obligation to make good. Many leases, particularly those granted under the Right to Buy legislation, are widely drafted with a view to giving landlords the right to carry out development, but these do vary from scheme to scheme so the drafting should always be checked.
Even where a lease or tenancy contains reservations which are adequate to enable a landlord to develop, works should not interfere with the tenant's right of quiet enjoyment. A tenant who feels that his right has been interfered with may seek damages for the breach of the covenant for quiet enjoyment and an injunction to halt works or prevent future works. A Court will look to balance the rights of the parties and will expect a landlord to take reasonable steps to minimise the disturbance to the tenant.
In addition to rights held by any residents, landlords also need consider the terms of any other interest at the site – including rooftop telecommunication leases, substation leases, or third party rights of access over the site.
A further point to consider is whether the drafting of existing leases is likely to give rise to problems with service charge recovery, after the development is completed. You will need to review service charge mechanisms to ascertain how future maintenance costs will be apportioned between existing and future leaseholders and whether these allow you to recover the cost of new services (such as lifts). This is a complex area, but again is something which should be considered at an early stage.
Practical steps which a landlord might consider include:
- Checking the terms of any lease or tenancy agreement to ascertain whether development is permitted, what limitations apply and what costs can be recovered.
- Ensuring that tenants are forewarned of any redevelopment plans at the earliest possible opportunity.
- Taking into account the current use of occupied premises which will be affected by your redevelopment plans.
- Before works begin, consulting tenants as to how disruption can be minimised – can specific dates and times be agreed for particularly noisy or disruptive works? For London regeneration schemes, also bear in mind the Mayor's best practice guide.
- Considering whether any compensation should be offered – this might assist in demonstrating reasonableness.
- Where vacant possession of units is required, entering into an agreement to decant leaseholders (and providing alternative residence for the duration).
