Section 11(11) of the Act states that where a neighbour has already built, raised or underpinned a party wall at their sole expense, a Building Owner subsequently undertaking similar works should contribute towards these costs. Therefore the expense of shared structures is ultimately shared between the owners.
The Act requires that the cost calculation be according to usage and based on today’s construction costs. In essence a Building Owner must pay their neighbour 50% of the cost of the works they are benefiting from. The amount payable can be agreed between owners or alternatively determined by the Surveyor(s) and set out in a Party Wall Award.
Party wall surveyors usually usually use a construction cost index to determine the sum due. In calculating this sum, it is standard practice to make an allowance for preliminaries, professional fees and add VAT on top of the construction costs.
When is it payable?
The Act effectively states that the sum is payable when “use is made of”. The Act is therefore not entirely clear and it is suggested that the sum becomes due close to completion of the works, say once the relevant part of the property is sealed from the elements.
Who should the payment be made to?
Case law appears to confirm that provision should be made to the current Adjoining Owner, even if it is not the same party who originally undertook the works.