What is Licence to Alter Security?
It will often be a condition of a licence to alter that permits the undertaking of any works that a sum gets deposited in an escrow account as security for the freeholder so that if works are discontinued, or cause damage to neighbouring properties or common areas, the freeholder can have recourse to the security funds to remedy the issues.
When might I need Licence to Alter Security?
Particularly in super-prime central London, where even large houses belong to estates (such as the Crown Estate, Grosvenor or Cadogan), a licence to alter will more often than not be required - it is only on freehold properties that one wouldn't be used.
Who can hold Licence to Alter Security?
Historically, solicitors could be called upon to hold funds, though changes in the SRA's accounts rules meant that solicitors don't like to hold funds in this way.
Generally, we recommend engaging the services of an experienced and competent escrow agent who is familiar with licence to alter matters and able to provide the required service.
For peace of mind, you may prefer to use an escrow agent who is also regulated by the Financial Conduct Authority for the purposes of providing payment account services, too, because that will give you some comfort that they have the appropriate compliance systems in place and are accustomed to segregating funds separately from their own operational funds.
