Joint Ownership (01/09/2013)
THE JOINT TENANCY
In the eyes of the law, joint tenants do not have shares in the land or, indeed, any individual existence. They are regarded together as making up a single legal entity, i.e. a sole owner: They are together wholly entitled, but individually they own nothing. Of course, they do have rights which are exercisable against each other (e.g. a monetary claim on any eventual sale). The outstanding feature of the joint tenancy is the right of survivorship
THE TENANCY IN COMMON
This form of co-ownership is favoured by equity and entails that each co-owner has a separate share in the property. A tenancy in common differs from a joint tenancy in the following ways:
Tenants in common hold in individual shares, i.e. they have distinct shares in the land that has not yet been divided between the co-owners. Although each tenant in common has a separate interest, it is not possible to say who owns what piece of the land. However this can be remedied by entering into a ‘Trust Deed’ which would state who owns how much of the net equity. The size of the shares of each tenant in common need not be equal. For example, one tenant in common may have a 60 per cent share whereas the other may have a 40 per cent stake.
There is no right of survivorship. The size of share of a tenant in common is fixed and unaffected by the death of any other tenant in common. The tenant in common can leave his share by making a Will and, if not, it will pass on intestacy to his next of kin
When two or more persons purchase a property together it is often the case there is no actual discussion between them as to who should own what. This can be a problem later if the relationship breaks down. Unless a Trust Deed has been drawn up stating who owns how much of the property the Court (if things were to go down that route) may well infer that it was intended a 50/50 split was intended. However, one party may have put into the pot at the beginning all the equity from a property previously owned in their sole name or that the deposit was paid by one party or even that one party’s parents donated towards the deposit and would want their son/daughter to retain that donation upon such a breakdown. This can all be done quite easily by setting out the details at the beginning in a Trust Deed which would state exactly what each intended from the outset. This way YOUR intentions will be recorded.
Land Registry - How to combat fraud (01/05/2012)
Property is usually the most valuable asset that people own. It can be sold and mortgaged to raise money and is therefore an attractive target for fraudsters. Properties most vulnerable to fraud are usually empty, tenanted or mortgage free. Individuals at a higher risk of fraud include owners who are often absent for whatever reason; for example that the owners may be in long term or residential care, live abroad, buy to let Landlord and where a relationship has broken down.
Land Registry‘s top tips to help owners protect their property from fraudster‘s are:-
•first of all make sure the property is registered. If the owner becomes an innocent victim of fraud and suffers a financial loss as a consequence, they will be compensated.
•once registered make sure the contact details are up to date.
•you can have up to three addresses on the register; e-mail addresses or an address abroad can be used. The information provided, the more chance the Land Registry has in contacting the owner if needed.
•owners who feel their property might be at risk can have a restriction entered on their property which is designed to help prevent forgery by requiring the Solicitor or Conveyancer to certify they are satisfied that the person selling or mortgaging the property is the true owner. From 1st February 2012, there is no Land Registry fee for homeowners to register this restriction, as long as they do not live in the property they wish to protect. Owner-occupiers will continue to pay.
Contact our Conveyancing department on 01270 212000 or 01270 610300 if you have any concerns.
PRIVATE SEWER CHANGES rom 1st October 2011 (01/10/2011)
On 1 October 2011 the majority of private sewers and lateral drains in England and Wales will transfer into public ownership of the relevant water companies. This is the biggest change in ownership of sewers since 1989 and will present a number of implications for water companies, homeowners and conveyancers.
What is changing?
The government is proposing a change in legislation, so that the majority of sewers and lateral drains in England and Wales will be owned by water companies, instead of individual property owners. This will end the current confusion regarding sewer ownership and liability, as well as help to improve the condition of the sewerage infrastructure.
Under the present system, sewers are the responsibility of a variety of owners. All sewers laid before 1937 are already the responsibility of the relevant water company. Newly laid sewers remain private unless the property developer or homeowner requests that the water company adopt them into public ownership. The vast majority of drains (disposal pipes serving a single property) and lateral drains (any section of the drain extending beyond the property boundary) are also currently private.
The government estimates that there are currently over 200,000km of private sewers and lateral drains in England and Wales.
How the situation will change following the transfer:
The final regulations dealing with the transfer were laid before Parliament on Tuesday 26 April 2011 and if they are passed, will come into force on 1 July 2011. In July and August, water companies will begin the process of notifying customers, both by mail, and through adverts in the local press.
From 1 October 2011 it is proposed that the majority of sewers and lateral drains will automatically transfer into public ownership of the respective water company. While there will be a few exceptions, such as owners of sewerage systems that do not connect to the public network, the vast majority of sewers will transfer over. Private pumping stations will transfer over a five year period between October 2011 and October 2016.
What issues will this cause for homeowners and conveyancers?
In the vast majority of cases, the transfer will be good news for homeowners as their potential liability for sewer repairs will be reduced. The majority of homeowners will only be responsible for the drains within their boundary. There are, however, a number of issues that homeowners will need to be aware of following the transfer.
As the sewers in question are currently in private hands, water companies do not currently know the location of all these pipes. Therefore, records will not immediately show the location of these sewers, and water companies will be responsible for pipes of which they may be initially unaware. Whilst water companies are working with developers and local authorities to add known sewer networks to records, not all private sewers have been mapped and it may be some time before comprehensive records are available. Another issue to homeowners will be the location of sewers within a property boundary.
Development over or near a public sewer will generally require consent from the water company. As the vast majority of sewers will be owned by the water companies, a higher proportion of developments will require water company consent. Water companies will also have statutory rights of access to properties on which they hold assets, and could therefore request access to homeowner’s properties if the assets need repairing or replacing.
The process for adopting newly laid sewers will also change. At present, sewers usually remain private unless a developer or sewer owner approaches the water company and applies to have the sewers adopted. This usually happens under Section 104 of the Water Industry Act (1991), and they are only adopted after the sewers have undergone rigorous inspection to ensure they are up to an acceptable standard. Sewers connected to an existing public sewer, which are currently subject to an adoption agreement, will be automatically adopted on 1 October 2011, regardless of their current stage in the adoption process and the standard to which they were built.
From the transfer on 1 October 2011, newly laid sewers will still be adopted under a Section 104 agreement, but developers will have to agree to build sewers to a nationally agreed minimum standard. Also water companies will have to agree to mandatory adoption as part of this agreement. There will also be changes to the way householders, builders and developers can connect to the existing and newly transferred public sewers. Before they can invoke their right of connection, they will also need to enter into a S104 Agreement.
How will the CON29DW be changing?
These changes in legislation will be reflected in the CON29DW from the date of transfer in October 2011. The Water Companies of England and Wales have been working closely with each other to ensure the revised CON29DW will offer the best advice possible for consumers.
This will include: Answers to modified questions which will take into account newly transferred public sewers. The plans accompanying the CON29DW search will be updated with the location of newly transferred public sewers as soon as the relevant water company update their records. Specific advice will be offered regarding the changes in legislation, and how this will impact on homeowners.
Source: Severn Trent Searches, Searchlight, Issue 18, May 2011
Leasehold Reform Act - part rent/part buy (19/04/2010)
The following is an extract of a letter from Wulvern Housing in relation to a query we raised on behalf of a client.
Can the tenant under a part-rent/part-buy arrangement with a Housing Association seek an extension of lease under the Leasehold Reform Act 1993?
’The Leasehold Reform Act 1993 gives a right to a qualifying tenant to call on their landlord to grant a lease extension. I agree that your client will not fall within the definition of a qualifying tenant however, this does not mean to say that she or her successors in title could not make a request to Wulvern for a lease extension. It seems to me that Wulvern is not obliged to grant such a request but there does not appear to be anything to stop it from doing so.
I have enclosed a note of the subject published by the then Housing Corporation in 2004, which encourages Housing Associations to grant extensions.
I cannot see why the Association would not want to grant an extension because it would derive additional income from it and preserve the value of the unsold equity in the flat. For this reason I will look to devise a policy for the Board to approve on this subject.
I am grateful to you for drawing my attention to this point.’
The position between the Leasehold Reform Act 1993 and a part-rent/part-buy tenant is clearly unsatisfactory, though in most cases it should not, it would seem, be too much of a difficulty in practice.
Stamp Duty, £250,000 and First Time Buyer (31/03/2010)
Some buyers are exempted from Stamp Duty for purchases up to £250,000
For the relief to be available, the transaction must satisfy the following requirements:
• The property must be residential property. Non-residential or mixed use properties do not qualify
• All purchasers (including joint purchasers) must intend to occupy the property as their main residence
• The transaction must not be linked with any others for SDLT purposes
• The transaction must consist wholly of the acquisition of a major interest in land (defined as a freehold or a leasehold interest with more than 21 years to run)
• All purchasers (including joint purchasers) must not have previously acquired such an interest in land.
‘First Time Buyer‘
To be a ‘first time buyer‘, the purchaser must not have previously acquired an interest in a freehold or leasehold property. ‘Interest‘ includes previously owning property as either a joint tenant or tenant in common.
Interestingly, this applies not just to UK properties, but properties anywhere else in the world.
If buying jointly, all purchasers must satisfy this requirement.
Deposit Protection - Home Lettings (28/09/2009)
Since 6 April 2007 it has been compulsory to pay tenant’s deposits into one of the protection schemes. This must be done within 14 days of taking the deposit and Landlords must also notify their tenants of the scheme details within 14 days. Despite hefty penalties for not adhering to the scheme - compensation for the tenant of 3 times the value of the deposit and restrictions on obtaining possession of the property while the deposit remains unprotected - some landlords remain unaware of the law.
If you appoint a managing agent to deal with your let, ask them whether they are a member of one of the insurance based schemes. Most professional letting agencies are, and will usually register your tenant's deposit with the scheme for a small premium. The agent will keep the deposit once registered and it will be returned to the tenant at the end of the tenancy less any agreed deductions. If you can t agree on how much to deduct, the schemes provide a free adjudication service to avoid having to take the matter to the small claims court, which usually takes more time and expense than the value of the deposit warrants.
If you are managing your own let, you will generally need to lodge the money with a custodial scheme, again within 14 days of receiving it, and notify your tenant in the usual way when this has been done. The insurance based schemes are also open to private Landlords and you can register the deposit and obtain your certificate online.
It is also important to make sure that any fixtures and fittings in the property are listed in detail and both landlord and tenant should sign and keep a copy of the list before the tenancy starts,
If you do not do this, a clued-up tenant can make an application to court to ask for an order that you pay them 3 times the deposit. With average deposits at around £800 it can be en expensive lesson. Complying with the scheme after the application to court is made but before the hearing won't necessarily get you off the hook either - there are two County Court decisions on the point, one of which ruled in favour of the Tenant and the other in favour of the Landlord. Until a higher court decides exactly how to deal with those set of circumstances, there's no guarantee available as to how your case will go. Don't take the chance - make sure you're quick off the mark and protect your deposit as soon as your tenant pays it over.
The three government authorised schemes are:
• The Deposit Protection Service (depositprotection.com, telephone 0870 707 1 707) is the only custodial deposit protection scheme. It is free to use and open to all landlords and letting agents. Landlords can register online while the scheme provides a template for the information to be provided to tenants.
Hall Smith Whittingham are registered under this scheme. If you are a landlord and ask us to deal with your lettings we will ensure that the requirements of the scheme are complied with.
• Tenancy Deposit Solutions Ltd (mydeposits.co.uk, telephone 0871 703 0552) .is an insurance-backed scheme jointly owned by the National Association of Landlords and Hamilton Fraser Insurance.
• Tenancy Deposit Scheme (thedisputeservice.co.uk, telephone 0845 226 7837) is an insurance backed scheme. Landlords can join online and access a range of related forms and documents.
It is important that landlords comply with the requirement to protect deposits since if they do not they can be ordered to repay the tenant three times the amount of the deposit.
For the leaflet Letting? Are you protecting your tenant’s deposit?
Go to direct.gov.uk/ewn/TenancyDeposit/DG_066385.
The Budget April 2009- Headlines (22/04/2009)
Stamp duty land tax (SDLT)
• The SDLT holiday announced by the Chancellor in September 2008 is extended to 31 December 2009. This means that the threshold for residential property will be £175,000. After 31 December 2009, the residential threshold will revert to £125,000.
Legislation will be introduced in Finance Bill 2009 to:
• extend favourable SDLT treatment to purchasers under shared ownership schemes operated by profit-making Registered Providers of Social Housing, where the scheme is assisted by public subsidy;
• extend the SDLT relief for purchases by Registered Social Landlords (RSLs) to profit-making Registered Providers of Social Housing where the purchase is assisted by public subsidy; and
• simplify the SDLT treatment of purchasers under rent to shared ownership ('Rent to HomeBuy') schemes.
The provisions for rent to shared ownership schemes apply where the effective date of the grant of the shared ownership lease, or the declaration of the shared ownership trust, under the scheme is on or after Budget Day, 22nd April 2009. The remaining provisions will only become effective when the legislation providing for Registered Providers of Social Housing comes into force (expected in late 2009 or early 2010).
• change the rules for the SDLT relief for leaseholders of flats purchasing the freehold of their block under a statutory right of leasehold enfranchisement.
This removes the requirement that the relief can only be claimed by a statutory 'Right to Enfranchise' (RTE) Company. The change will ensure that the relief can be claimed by those who are exercising statutory rights of leasehold enfranchisement. It applies to purchases where the effective date is on or after Budget Day, 22nd April 2009.
• Legislation will be included in the Finance Bill to introduce reliefs from charges to SDLT where people raise finance by issuing alternative finance investment bonds backed by land assets. Further legislation will set out the capital allowances consequences in relation to arrangements covered by the SDLT and capital gains tax measures.
• HMRC have published a consultation document entitled 'Disclosure of Tax Avoidance Schemes (DOTAS): Stamp Duty Land Tax' and exposed draft regulations to extend the Tax Avoidance Disclosure Regime to cover SDLT on high value residential property. The consultation includes options to extend the rules to identify users of all disclosed SDLT schemes.
Stamp Duty/Stamp Duty Reserve Tax (SDRT)
Legislation will be introduced in Finance Bill 2009 to:
• provide relief from unexpected stamp duty and SDRT charges that would otherwise arise where a stock lending or sale and repurchase arrangement terminates. (So that stock is not returned to the originator under the terms of the arrangement due to the insolvency of one of the parties to the arrangement.)
Source - HMRC
New Tax on Home Buying? (20/04/2009)
The Government has increased Land Registry Fees by about 25% from 6 July 2009 on most transactions - including registering new home purchases. These fees, for effectively managing the Government's Land Registry database, are now almost as much as solicitors charges for dealing with the whole transaction!
The cost is now £200 for a house worth over £100,000 and £280 for a house worth over £200,000. Other effective taxes include VAT on solicitor's costs and Stamp Duty.
If the new fees are not an additional tax, what are they for? Has the government finally blown it's cover of continuing to blame solicitors for the rising costs of home buying? Remember the HIP?
Warning - Loans to Children (12/02/2009)
The Law Society is warning parents to be careful when making loans to their children. The warning comes in the light of restrictive lending conditions in the mortgage market which have required young people to stump up large deposits when buying their first home.
The parents must decide whether they are making a loan, a gift or taking part ownership in the property. If they are making a loan they must decide on the terms of the loan. These terms must be set out in writing and should state at least the amount of the loan, the rate of interest payable, how and when the capital is repayable.
If it is not clear that a loan has been made then the money may never be returned as it may be treated as being a gift. The Law Society cite the case of parents making a £ 150,000 loan to a married child without documenting the loan. Unfortunately for all parties the child died, but the parents were dealt a double blow when they discovered he died intestate. This meant that all he owned passed to his widow. As there was no evidence of a loan the £ 150,000 could not be recovered.
If a loan is made at interest, the interest will be charged to income tax on the parents.
If the parents take part-ownership of the property, their share of any capital gains on sale of the property will be chargeable to capital gains tax, as it is not their main residence.
If the parents make a gift this will be a potentially exempt transfer for IHT purposes.
Visual Planning Guidelines (01/10/2008)
We recommend you use the link below to view a useful new home improvement or development animated guide in force from 1st October 2008.
New planning portal houseguide - click here
Planning Changes (01/10/2008)
From October 2008, extensions of up to two storeys will be permitted as long as they extend no more than 10ft from the back of an existing property, enough for a small kitchen or spare bedroom.
Loft conversions will also be allowed without planning consent, as long as they extend no more than 20cm (about 8in) from the eaves of a property. They must also be no more than 50 cubic metres in size, roughly the equivalent of a room 18ft by 12ft. In conservation areas, loft conversions will still be restricted but single-storey rear extensions will be permitted.
However, there will be new restrictions on home owners who want to pave their front gardens. In order to cut down on the volume of water flowing off driveways into drains, home owners will need planning permission if they want to lay more than five square metres of asphalt or other impermeable materials.
Paving in two strips to act as ’wheel tracks’ for parking will effectively escape the restrictions, as will driveways using water-permeable surfaces.
By extending the ’Permitted Development’ regime, ministers aim to prevent unnecessary applications for relatively minor alterations.
As long as building projects fall within the new limits, neighbours will not be able to object. Government officials say the new restrictions have been set to ensure that no “obtrusive” developments will escape the planning system.
Local councils will have discretion to vary the rules, meaning that people in heavily-developed areas may not get as much freedom to develop even under the new rules.
Building regulations will remain in place, meaning that householders will still have to demonstrate that alterations are constructed to health and safety standards.
Private Rentals require EPC (19/09/2008)
From 1st October 2008 all new lettings will require an Energy Performance Certificate (EPC) to be made available to the prospective Tenant before the agreement is concluded.
Click link for further information
EPC requirements for private lettings - click here
We can arrange one for you
Cheshire Roads - online Gazetter Search (07/07/2008)
A useful link for Cheshire Roads
Cheshire Roads - click here
OS boundary dispute help (09/06/2008)
Cheshire County Council’s records office has recently completed the digitisation of various maps for Cheshire, which includes related aerial photographs, in particular:-
Historic tithe maps
Ordnance Survey 1875 edition
Ordnance Survey 1910 edition
Modern Ordnance Survey
Aerial photographs 1970
Aerial photographs approx 2000/2003
These may be helpful with regard to boundary disputes when historic evidence of boundaries, may be helpful.
Click here for OS and Tithe Maps
Stamp Duty and Shared Ownership (80%) (05/04/2008)
Shared ownership purchasers acquire a lease, for which they pay a premium representing a percentage of the market value of the property, and rent in respect of the remainder. They may be able to make further capital payments (which will increase their share and reduce the rent payable) and ultimately to acquire the freehold. This is known as 'staircasing'.
SDLT and Shared Ownership
• Shared ownership purchasers can elect to pay SDLT at the outset on the market value of the property. In this case there will be no further SDLT charges at any stage.
• If no election is made, SDLT will be charged on the initial purchase in the normal way – that is, on the premium and the net present value of the rent payable under the lease. (In practice it is very unlikely that any tax will be due on the rent.)
• There is then a special SDLT relief which means staircasing payments are not charged to SDLT until an 80 percent share of the property is reached.
• Any further 'staircasing' payments which take the purchaser above this level - including the acquisition of the freehold, will attract SDLT.
• The measure announced in the Budget abolishes, from Budget Day, the so called '£600 rule' for residential leases. This rule meant that, where the annual rent under the lease (not the NPV) exceeded £600, SDLT applied at 1 per cent on the premium even where this was below the SDLT threshold (£125,000, or £150,000 in a disadvantaged area).
• The special rules for shared ownership purchasers have not changed, but in practice these purchasers were often hit by the £600 rule because their initial payment was below the threshold but their annual rent was more than £600.
Effect of the Measure for shared ownership purchasers
• Where a market value election is not made, no SDLT will be payable on the premium where this does not exceed the SDLT threshold (£125,000, or £150,000 in a disadvantaged area), whatever the annual rent paid. If the premium is more than this, SDLT will still be charged on the whole premium at 1 per cent (and at higher rates in the unlikely event that the premium exceeds £250,000).
• No tax will be payable on 'staircasing' payments which do not take the purchaser above an 80 per cent share of the property.
• Any further 'staircasing' payments which take the purchaser above this level - including the acquisition of the freehold, will attract SDLT. Tax will be payable on the amount actually paid at the appropriate rate in force at the time the payment is made.
• The rate of tax charged on these further 'staircasing' payments will be based on the total capital payments made to date – that is, on the initial premium and all 'staircasing' payments, regardless of whether any tax has previously been paid on them. This is because the various payments are treated as 'linked transactions' for SDLT purposes.
Market value of the property is £220,000.
Initial lease premium is £110,000, representing a 50 per cent share of the property. SDLT payable is nil (because this amount is below the SDLT threshold).
First 'staircasing' payment is £55,000, taking the purchaser’s share to 75 per cent. SDLT payable is nil (this payment attracts relief as it doesn’t take the purchaser’s share over 80 per cent).
Final 'staircasing' payment is £55,000, taking the purchaser’s share to 100 per cent including acquisition of the freehold. SDLT is payable at 1 per cent on £55,000 (because the rate of SDLT is determined by the total of all payments made, that is £220,000).
Market value of the property is £220,000.
Initial lease premium is £165,000, representing a 75 per cent share of the property. SDLT is payable at 1 per cent on £165,000 (because this amount is above the SDLT threshold).
Final staircasing payment is £55,000, taking the purchaser’s share to 100 per cent including acquisition of the freehold. SDLT is payable at 1 per cent on £55,000 (because the rate of SDLT is determined by the total of all payments made, that is £220,000).
HMRC website - click here
HIPs for all sales after 14th December 2007 (22/11/2007)
The Government has announced today that HIPs are to be required for the sales of ALL NEW property sales after the 14th December 2007.
It has also been confirmed that ‘First Day Marketing‘ will continue until 1st June 2008, until this date you only have to commission and pay for a pack in order to market your property
What's in a HIP? (01/06/2007)
The government has dropped the expensive requirement for a Home Inspection Report - a survey before sale. Most knowledgeable commentators thought this idea to be unworkable.
Everything needed for the pack is within the usual work done by solicitors in any event. The only real additional feature is the †Energy Performance Certificate, which must be prepared by a qualified Inspector.
The pack is now intended to include:
†Energy Performance Certificate
(The Energy Performance Certificate will be in a similar format to the coloured chart you often see displayed on new electrical goods for example, new fridges!)
• The terms of sale (the Contract)
• Evidence of the legal title to the property
• Replies to standard preliminary enquiries on behalf of buyers
• Copy planning permissions and or building regulations approvals relating to the construction of the property and any additions and or alterations
• For new properties, copies of warranties and guarantees
• Any guarantees relating to work carried out at the property
• Replies to searches to include Local Authority and Water/Drainage (Environmental and optional searches to be completed according to the properties location)
In addition for Leasehold properties:
• Copy lease
• Most recent service charge accounts and receipts
• Buildings insurance policy details and payments receipts
• Regulations made by the Landlord or management Company
• Memorandum and articles of the Landlord or Management Company
Spanish property owners - good news (01/01/2007)
The Spanish government has reduced the Capital Gains Tax rates for non-resident owners from 1st January 2007.
It reduces from 35% to 18%.
The 5% withholding tax previously levied against non-resident owners selling in Spain will reduce to 3%.
An application is in progress to the EU for a declaration that the previous descriminatory tax (resident owners were only charged at 15%) was unlawful. If the complaint is successful then those already charged at 35% may be entitled to a refund.
Tax on rents and profits received in Spain by non-residents has been reduced from 25% to 24%.
Good news all round.
Cornish & Co
Avda. Ricardo Soriano 22,
4°-6 29601 Marbella,
Telephone: +(34) 952 866830