Developing your property? Avoid a party wall dispute

In the original conveyance, a restriction meant that the client’s neighbours could, in essence, charge them for any reduction in the value of their property as a consequence of building works. The neighbours’ position only became apparent when the Party Wall Surveyor began the process of making his award.

Using the Party Wall Act

As house prices continue to increase, more and more people are choosing to extend rather than move and this can include digging down into the basement to create more living space.

The Party Wall Act is now being used to delay building works where neighbours perceive them as being disruptive, and this is particularly the case in basement ‘dig downs’. The works can bring disruption to neighbours lasting months or even years, and under the provisions of the Party Wall Act neighbours can request a security deposit which they hold in case the building work goes wrong.

The security deposit is returned at the end of the building works (with deductions as necessary if there has been any damage to the neighbour’s property). However, the figure that neighbours have demanded has increased rapidly with a five or six figure sum not uncommon in some affluent areas.

When a security deposit is demanded, this must be paid upfront if the amount is agreed. However, if the amount demanded is disputed, there can be further costs, delay and uncertainty.

Party Wall Act legislation did not make clear the purpose of the deposit and so, because of this, neighbours can (currently) name their price. As home owners hear of these cases it is becoming an increasing trend, particularly in areas in the UK where there is an untapped development potential in basements.

The legislation needs case law as guidance on how to deal with the issue of security deposits. However, as costs of redevelopment soar, it is preferable to reach settlement with your neighbours rather than add on court fees to development costs.

Prevent the soaring costs of home improvements:

• Discuss your proposals with your neighbours at an early stage. Ensure that they know what you are planning, and reach an agreement if possible.

• Instruct a Party Wall Act Surveyor and ensure that the requisite notices are served in time. If your neighbours do not consent, a Party Wall award will need to be made prior to the building works commencing.

• If a security deposit is demanded, be clear exactly why the neighbour is demanding this and agree clear terms as to how the deposit will be held, as well as in what situation deductions would be made. Budget for compensation particularly in the event of damage. Compensation can be proportionate to the overall development; your neighbour should not hold you to ransom.

• Finally, problems often arise when neighbours feel that what has been done is outside the initial remit or that their concerns are not addressed, so communication is vital throughout the redevelopment works.