Deed of variation of lease

Use this deed of variation to record an agreement between a landlord and a tenant to change the terms of a property lease. We include text for some of the commonest reasons to need this document.
Suitable for use in: England & Wales and Scotland
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What is a deed of variation of lease?

This simple deed records particular changes by agreement to the terms of an existing lease.

The document is a deed rather than a contract under hand because a lease is a deed and by law, to amend a deed requires another.

Why vary a lease?

It is important that your lease works for you in your current circumstances, whether you are the landlord or the tenant.

While the fundamental details of the transaction are unlikely to change, such as the property being leased, terms that are not at the heart of the transaction may at some point during the lease period no longer suit one party or both.

Alternatively, you might be in the process of buying leasehold property and wish to change some aspect of the current lease such as a restrictive covenant.

Common lease variations

A deed of variation might be used for many reasons, including:

  • removing restrictive covenants, such as those preventing a business being registered to or operated from the property, forbidding certain business uses or for pets to be kept

  • revoking or granting rights of way to common parts

  • giving a licence to use secondary space, such as a garage, cellar or loft space, perhaps for a specific purpose such as storage or parking

  • extending the lease period

  • to correct lease defects such as: unfair terms that would not be legally enforceable; inadequate provisions, for example, for claiming back the cost of services provided by a landlord; outdated terms in older leases given the current state of the property such as to maintain outbuildings that no longer are standing; provisions that are incompatible with current law; and the absence of provisions relating to matters such as periodic increases to ground rent; and errors in lease plans.

Long lease extension

In the vast majority of cases, lease extension is the most common use for this standard document.

A long leaseholder has a statutory legal right for the lease to be extended by up to 90 years. There are three ways of doing this:

  • by agreeing to another lease

  • by following the statutory process and issuing a section 42 notice under the Leasehold Reform Housing and Urban Development Act 1993

  • by deed of variation

If the freeholder (or landlord) and the leaseholder (tenant) agree to the change, then variation by deed is by far the cheapest way.

Having an entirely new lease drawn may not be practical and may be expensive. Changing to a new lease is known as surrender and regrant, since the parties must agree to the end the current lease and the terms of the new one. However, there may be other parties, such as a mortgage lender, whose permission is needed for the lease to be ended. Obtaining permission might be difficult and/or expensive. Drawing a new lease requires more work to be done by both the draftsman and the reviewers, increasing legal costs. A new lease may also be seen as an opportunity to include other less favourable terms.

The statutory lease variation process is time consuming and convoluted if both the landlord and the tenant already agree to the changes.

By contrast, a deed of variation can be edited and signed very quickly and for a much lower cost. Because it only considers terms of the lease to be changed, there is less legal work to carry out

Using this variation deed

The property should be located in England and Wales and the lease should be one under the Landlord and Tenant Act.

Variations can be made for commercial or residential property, provided that the property is not let as an assured shorthold tenancy or an assured tenancy.

Informal, voluntary lease extensions might be requested by either the freeholder (or landlord) or the leaseholder (the tenant).

It is usually the freeholder (or landlord) who draws the variation deed but it can be to the advantage of the leaseholder to suggest words in their favour.

We provide simple examples of things you might want to change. You can use your own words to record what you have agreed.

Whoever first suggests the changes or who stands to benefit the most usually pays the legal fees for the document and the review.

You will need a witness to the signature of each party.

Once signed you may need to lodge a copy of the deed with the Land Registry.

It is a good idea not to use a deed of variation if the changes you want to make go to the heart of the transaction, for example, if the property being leased changes, or an additional tenant comes in. For those types of changes, we recommend cancelling the old lease, and creating a new one. We stock a number of leases for business property.

Draftsman

This document was written by a solicitor for Net Lawman. It complies with current English law.

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