Security for expenses is essentially a financial safeguard. It is a sum of money set aside to cover potential costs or losses an adjoining owner might suffer due to the proposed works. Think of it like a safety deposit. The money is typically held by a third party (like the UK Security for Expenses Scheme) and can be used if the building owner fails to fulfil their obligations – for example, if they start the work but, say, go bankrupt before fixing the neighbour’s damages, the neighbour can draw on this security fund to cover repairs.
The concept recognises that construction work can sometimes go wrong or be left incomplete, potentially leaving the adjoining owner out of pocket. By obtaining security up front, the adjoining owner has peace of mind that funds will be available to fix any damage or complete any work that the building owner is supposed to do on their property. It’s a protective measure, not guaranteed to be requested in every case, but available when the risk justifies it.
Security can take various forms. The simplest is cash – the building owner deposits an agreed amount in a security for expenses account or with a stakeholder (oftenthe UK Security for Expenses Scheme, because it carries no fees). Other forms include a bank guarantee or bond, where a bank promises to pay up to a certain amount if called upon or possibly an insurance policy earmarked for the purpoe. The key is that the security must be readily accessible if needed. The Act doesn’t dictate the form, so long as both parties or the surveyors are satisfied it’s reliable.
Under Section 12(1) of the Act, an adjoining owner may serve notice on the building owner requiring security for expenses before the work starts This is a right, not an obligation – meaning the adjoining owner decides if they feel security is necessary. In practice, adjoining owners typically request security when the planned works are substantial enough to pose a real risk of significant damage or costs.
Security for expenses is most commonly requested in cases of high-risk work:
If you’re digging under the ground near your neighbour’s foundation (e.g., creating a basement), the neighbour may fear structural damage like subsidence. They might ask for a large security sum to ensure any potential underpinning or repairs can be paid for.
For example, if you’re removing a large section of a party wall or demolishing an adjacent structure, the neighbour might worry their building will be exposed or unstable, requiring urgent remediation.
If the building owner is a property developer or someone the neighbour doesn’t know well, the neighbour might be less confident in their personal assurance. Security provides a formal guarantee. In contrast, if it’s a small job by a long-time neighbour whom they trust, they might not bother.
If the adjoining owner has had past bad experiences (perhaps the building owner started work once and stopped due to funds), they may be quicker to request security.
Essentially, an adjoining owner asks for security when they perceive a non-trivial risk of financial loss if things don’t go as planned. For instance, if a project is large and expensive, they may worry “What if you, the building owner, run out of money mid-project? Will my property be left damaged with no recourse?” Security answers that by reserving money ahead of time.
Interestingly, Section 12(2) also allows the building owner to request security from the adjoining owner in certain situations.
This could occur if the adjoining owner demands some extra work to be done for their benefit, for which they are responsible for the cost. For example, if the neighbour says, “I’d like you to thicken the party wall or include special features for me as part of your project,” and that will cost the building owner more money initially, the building owner can ask the neighbour to provide security for the neighbour’s share of those costs.
Another scenario: if the neighbour has triggered a Section 12(1) request, Section 12(2) ensures the building owner can reciprocally ask for security if needed (though in practice, this is rare). The idea is fairness – if one side is asking the other to shoulder costs on their behalf, security can go both ways.
The adjoining owner must formally serve a notice on the building owner to invoke security for expenses (this can be included as part of their dissent response or as a separate notice). This notice should state that security is required and ideally suggest an amount or at least indicate the concern.
After a security request, the first step is negotiation. The building owner and adjoining owner may try to agree on a reasonable sum between themselves. For example, they might both acknowledge that £10,000 is enough to cover worst-case damages for a given project. If an agreement is reached, they will typically document how that money will be held (say, in a Security for Expenses Scheme Account) and the conditions for release.
If the owners cannot agree on the amount or terms of security, the matter is handed to the party wall surveyors under Section 10. In other words, it becomes part of the dispute that the surveyors resolve in the Award. The appointed surveyor(s) will then determine:
Security must be requested before works commence. You cannot typically ask for security halfway through a project. The idea is it’s agreed (or awarded by surveyors) as a pre-condition to work starting. Often the Award will state “Work shall not commence until the building owner has provided security of £X in the following manner…”.
What if the surveyors award that the building owner must provide (say) £20,000 security, but the building owner doesn’t pay it? In such a case, the building owner is not allowed to start the work. If they attempted to, they’d be in breach of the Award, and the adjoining owner could get an injunction to stop the work. Additionally, Section 12(3) provides a kind of safeguard for building owners: if the adjoining owner has requested security but then they fail to comply with any reciprocal conditions (like perhaps the building owner asked for security for a counter-work), the adjoining owner’s original request ceases to have effect after one monthdesigningbuildings.co.uk. This prevents an adjoining owner from, say, demanding security but refusing to do their part and thus stalling the project indefinitely.
Historically, surveyors tended to set security amounts to cover scenarios where the building owner might not finish a job that affects the neighbour’s property. For example, if part of the neighbour’s wall had to be taken down during construction, security would ensure funds to rebuild it if the building owner walked away. The old practice (pre-2011) as noted in the Green Book (a well-known party wall guide) was that security could only be asked for if the building owner was going to exercise rights over the adjoining owner’s property (like entering their land or doing work to their side). So if a job was entirely on the building owner’s own land (like digging just on your side, or building a wall on your land up to the line), the thinking was that the adjoining owner couldn’t seek security.
The case Kaye v Lawrence changed this understanding around 2011. The court decided that security for expenses can be requested for any works covered by the Act, even if those works are on the building owner’s land, as long as they carry risk to the neighbour. This effectively overrode the traditional limitation. Now, what matters is whether the works might cause the neighbour to incur expense or loss, not strictly where the work is taking place.
In plain terms, security is there to cover “any loss or damage arising from the works carried out under the Act”.Essentially, if the building works could impose a cost on the adjoining owner, the security should be sufficient to cover it. It’s not meant to punish the building owner or act as a bond for good behavior; it’s purely financial protection.
This can include:
The amount will vary widely with the project. Simple jobs often involve no security at all. For big projects like basement excavations in London, security amounts can be significant – commonly in the hof thousands of pounds. Surveyors will consider the worst-case damage scenario and the cost to fix it when deciding the figure. They don’t want it too low (or it’s pointless), but also not exorbitantly high such that it unnecessarily ties up the building owner’s funds.
Case Example: Imagine you are digging a basement and underpinning a party wall. Surveyors might estimate that if it went wrong, the worst case is the neighbour’s wall cracks severely and needs structural repair costing £40,000, plus the neighbour might need to stay elsewhere for a month (£10,000) and some engineer fees (£7,500). They’d likely set security around £57,500 in that scenario. If the project goes fine, you get that money back; if not, the neighbour can be compensated from it.
We've recently handled security for expenses deposits for as little as £1,000 and as high as several hundred thousand pounds. Some examples we've seen:
Once an amount is determined, the building owner will hand over that money (or instrument) to a stakeholder. Often, this will be held by an entirely independent, regulated third party who has suitable experience and safeguarding arrangements for the funds - like the UK Security for Expenses Scheme who hold deposits at the Bank of England. The key is both parties trust the stakeholder to only release the money under agreed conditions.
The security just sits untouched typically while works are ongoing. It’s not to be used for the works themselves; it’s there as an emergency fund. The building owner continues to fund and carry out their project as normal, knowing they can’t access that chunk of money until completion (which can impact their cash flow, one reason building owners sometimes resent security requests).
If the adjoining owner suffers a loss covered by the security (say, cracks appear and the building owner doesn’t promptly fix them), the adjoining owner can approach the surveyor(s) or stakeholder to claim against the security. Usually, the Award will outline this procedure. For example, it may say that the surveyors can authorise using the security money to pay a contractor to make good damage if the building owner fails to do so within a certain time. In any case, it would be an evidence-based process: showing quotes or invoices for repair, etc., to justify dipping into the fund.
If the project completes and no issues remain, the security is returned to the building owner (often with a formal confirmation from surveyors that they are satisfied the risk has passed). It could also be partially returned if only a part was used. The timing of release can vary – some awards say the security is held until the end of the making good period (often there’s a few months after completion where minor defects might still manifest). Others may specify a fixed period after work completion. The building owner will be eager to get it back as soon as possible, whereas the adjoining owner will want to ensure all is truly well.
From a building owner’s perspective, being asked to provide security can be a significant financial burden. For example, having to lock £50,000 or more in a bank account for the duration of a project means that money isn’t available for the project itself or other uses.
In some cases, building owners may need to secure a loan or facility to provide the security. There have been instances where a project couldn’t start because the owner simply didn’t have the liquidity to provide the required security. This is a double-edged sword of the Act: it’s protective, but it can also prevent works from commencing if the owner lacks funds.
Knowing the possibility of a security request, prudent building owners (and their architects/engineers) will consider ways to mitigate risks and thus avoid or minimise security. For instance, they might present a very robust method statement to reassure the neighbour that the risk is low, hoping the neighbour won’t request security. Or they might volunteer some security amount proactively in the notice to show good faith and possibly control the amount.
In some extreme cases, the requirement of a large security deposit might make a building owner rethink the scope of their project. For example, a homeowner considering a basement dig might reconsider if told they need to park £100k aside for security. They might opt for a shallower excavation or an alternative that doesn’t trigger such a high security – thereby the Act indirectly influences the design and extent of some projects due to these cost implications.
The security is tied up typically until the very end of the project (including any defect liability or making good period). That might be many months, or even years if a project is slow. Building owners need to plan for that money to be out of reach. This can affect cash flow projections, and in development scenarios, might require involving investors or financial instruments (like a bank guarantee, which itself can cost a fee).
Some building owners look to insurance as an alternative – for example, building a robust insurance coverage for the project (including cover for adjacent property damage) and trying to convince the neighbour that this removes the need for a cash security. Sometimes neighbours are comforted by insurance, but others still prefer a pot of money they know is earmarked for them if needed. Insurance claims can be contested by insurers, whereas a security deposit is straightforward to use. Still, showing proof of insurance can sometimes be part of negotiating the security amount down.
Requesting security can sometimes strain neighbour relations. A building owner might take offence (“Don’t you trust me?”) or feel the neighbour is being overly cautious or difficult. Conversely, a neighbour might feel it’s their right and they’re only being prudent. Good communication is key – often a neighbour will explain that they do trust the owner, but their advisors recommended security just in case. It helps if both see it as a normal part of the process, not a personal affront. Surveyors can mediate this conversation, explaining it’s standard for certain projects (like basements in London frequently have security and it’s not a judgment on the character of the builder, just a risk management step).
The adjoining owner has the right to request security but not an obligation to do so. If they feel comfortable with the building owner’s solvency and the scope of works, they might waive security to maintain goodwill. If they do request it, they should do so in writing and ideally specify concerns or a ballpark figure. They should also be prepared to demonstrate why it’s needed if challenged. Once security is in place, the adjoining owner has a duty not to unreasonably withhold its release when appropriate – i.e., they can’t unfairly claim against it for unrelated issues or try to keep it without cause.
The building owner, on receiving a security request, should not simply dismiss it. They should either negotiate or let the surveyor address it. They do have the right to contest the necessity or amount (through the surveyor process), especially if they believe the request is excessive. For instance, if a neighbour asked for £50k for a very minor work, the building owner can argue it’s unwarranted.
If surveyors agree a lower amount or none is fine, that will prevail. However, if the Award mandates security, the building owner is legally obliged to put it up before starting the work. Failing to do so basically halts the project (legally). If the building owner is concerned the neighbour’s surveyor is over-inflating the requirement just to pad fees, they can request a breakdown or involve the third surveyor. They also can choose the form of security (cash vs bond) as long as it meets the Award’s conditions.
Surveyors must tread a fine line – they have to ensure the adjoining owner is reasonably protected, but also that the amount of security is proportionate to the risk so as not to unduly burden the building owner.
They will typically rely on their experience and perhaps consult engineers on likely worst-case damages. Surveyors also oversee the eventual release or use of the security funds. Importantly, surveyors should recognise if an adjoining owner’s request is being made in bad faith (e.g., just to stall the project or punish the building owner) – they shouldn’t award security in that case beyond what’s justified. The Act expects surveyors to act impartially, so they won’t approve a grossly unfair security demand.
If the building owner requested security from the adjoining owner (a rare scenario, e.g., the neighbour wants additional works done), and the neighbour doesn’t provide it within one month of the determination, then the neighbour’s original Section 12(1) request becomes void.
This is a protective clause to ensure fairness. In simpler terms: both sides must comply with security requirements or neither side’s requirement stands. This prevents an adjoining owner from saying “I want £10k from you” while refusing to pay something they owe in return – if they don’t comply on their side, their security request on the building owner is canceled.
Not every project warrants a security request. Experienced practitioners note that security for expenses is relatively rare – one surveyor recounted that out of over 1,000 party wall matters, they dealt with security in only about half a dozen.
Some surveyors in London, dealing with frequent basement jobs, see it more often (one mentioned about half of their cases), but that’s in very high-risk works. The point is, an adjoining owner should use this right judiciously. If they demand security for a trivial project, it may sour relations and could be struck down as unreasonable.
There’s concern about questionable motives – a minority of surveyors might encourage security requests just to increase their workload (since handling the security arrangement can add to fees). Building owners should be aware of this and, if a very large security sum is proposed, ask for justification. Adjoining owners should also be wary if a surveyor they appoint pushes for security without clear reason – it’s fair to ask, “Do we really need this, and how did you calculate that figure?” Transparency can filter out any frivolous or self-serving suggestions.
Sometimes, simply talking it out can avoid a security standoff. A building owner might show the neighbour around the site, explaining how they’ll prevent damage, share structural reports, offer references or evidence of reliability, or even agree to a smaller security amount as a gesture of good faith. Conversely, an adjoining owner might be persuaded by assurances or modifications to the plan that reduce risk, thus retracting their request for a huge deposit.
If either party is unsure about security, they might consult a solicitor experienced in party wall matters. Although surveyors handle it, a solicitor can advise, for example, whether the amount is challengeable or how an injunction might play out if things go awry. However, engaging lawyers can escalate costs, so often it’s best to let the party wall surveyors reach an accord.
Adjoining owners should note that security is not a windfall or penalty to the building owner – it’s not “your money” to keep unless genuinely needed to cover loss. Ethically and legally, if no damage occurs, that money returns to the building owner. Any temptation to try to use it unjustly can be checked by the surveyors or court. So it’s truly for protection, not profit or inconvenience.
At the outset, assess if your project might trigger a security request. If yes, budget for it. Perhaps keep a line of credit or funds available.
Provide neighbours with as much information as possible to reassure them (plans, methodology, insurance certificates). A well-informed neighbour may feel safe enough not to ask for security.
If security is requested, try to engage constructively. Ask what specifically worries them. Sometimes adjusting your approach (thicker hoardings, vibration monitoring, etc.) can mitigate their concern and lead them to drop or reduce the security demand.
Consider alternatives: would the neighbour accept a bond or guarantee instead of cash? Sometimes that’s easier for a building owner to obtain.
Once an amount is agreed or awarded, comply promptly. It shows goodwill and keeps the project on schedule.
Don’t hesitate to request security if you truly feel the risk warrants it – that’s what the law provides for. Document your concerns (e.g., “I’m worried your excavation could cause X damage, which I estimate would cost £Y”).
Be open about your needs: maybe you’re less concerned about cosmetic cracks (which are easy to fix) but very concerned about structural issues. This can focus the discussion.
Listen to proposals from the building owner. If they show they have insurance or have hired a reputable contractor with a good track record, factor that in.
If you do get security, remember it’s there for a worst-case scenario. With any luck, it won’t be needed. Continue to cooperate and don’t view the security as a substitute for maintaining dialogue. Keep the building owner informed if you notice any issues during construction (it’s better to address problems early than just wait to claim on the security later).
Examine the project specifics neutrally. Use objective criteria (nature of soil, depth of excavation, condition of adjoining property, etc.) to judge the risk.
Justify the recommended amount clearly in the Award or discussions. Perhaps break it down (“£X for potential damage to wall, £Y for possible internal repairs, £Z contingency for accommodations”) so both owners see the rationale.
Ensure the terms of holding and releasing the security are explicit in the Award to avoid confusion or disputes later.
Remind both parties that security is not a commentary on trustworthiness; it’s akin to insurance – you hope not to need it, but it’s there if required.
If acting as the agreed surveyor, be especially fair – you are the sole determinant, so you might even suggest taking a cautious approach like setting a bit more with the note that it will be promptly returned if unused, just to satisfy the neighbour.
Security for expenses is a powerful tool under the Party Wall etc. Act 1996 that adds a layer of financial security to an adjoining owner. It exemplifies the Act’s spirit of balancing interests – enabling the building owner’s project while ensuring the neighbour isn’t left vulnerable to costs.
Not every project will involve security, but when it does, it often means the works are substantial. For building owners, understanding this mechanism is crucial for project planning; for adjoining owners, it’s a form of reassurance when faced with potentially disruptive works.
Both should view it not as an adversarial weapon but as a form of mutual protection – it ultimately benefits both, because if it facilitates trust, the project can proceed more smoothly. With clear communication and fair assessment, security for expenses can be handled in a way that safeguards property without unnecessarily hindering development.
In the end, like much of the Party Wall Act, it’s about striking that fair balance so neighbours can remain neighbours, not adversaries, once the dust of construction settles.