What’s Changing?

1. Higher SDLT for Second Homes and Buy-to-Let Properties

From 31^st October 2024, the SDLT surcharge on second homes and buy-to-let properties increased by 2%. Buyers of additional properties currently pay a 5% surcharge on top of the standard SDLT rates, making it more expensive to invest in second homes or rental properties.

2.First-Time Buyer SDLT Relief

The SDLT relief scheme for first-time buyers, which provided a reduction or complete exemption for purchases below certain thresholds, will change. Currently, first-time buyers purchasing homes up to £625,000 (or receiving relief on the first £425,000) benefit from substantial savings.

From 1^st April 2025, first-time buyers will pay no SDLT on the first £300,000 of a property priced up to £500,000. Beyond £300,000, SDLT will apply at standard rates up to the purchase price cap of £500,000. Any property purchased above £500,000 will not be eligible to benefit from the relief.

This change means that first-time buyers will now pay higher SDLT rates, increasing their upfront costs.

3. Changes to SDLT thresholds

In a significant shift, the nil-rate SDLT threshold will be reduced from £250,000 to £125,000 from 1^st April 2025. This means buyers will now start paying SDLT on purchases above £125,000 instead of the current £250,000 threshold.

This reduction will result in higher upfront costs for most buyers.

What This Means for Buyers

Residential Buyers

For those purchasing primary residences, the reduced threshold means higher costs for a broader range of transactions. Buyers should factor these increased costs into their financial plans and consider completing purchases before 1^st April 2025 if possible.

Property Investors

If you’re considering adding to your property portfolio, now may be the time to act. The increased surcharge combined with the lower threshold will significantly increase transaction costs.

First-Time Buyers

The change in SDLT rates and thresholds may delay purchases for first-time buyers who are saving for deposits. This change could slow activity in the housing market, particularly for properties at the lower end of the price spectrum.

Planning Ahead

To mitigate the impact of these changes, buyers should consider:

• Acting Before April 2025: Completing transactions before the new rules take effect could save thousands of pounds.
• Seeking Financial Advice: Consulting a mortgage adviser or financial planner can help you navigate the changes.

Conclusion

The changes to SDLT in 2025 represent a significant shift in the property market. The reduced nil-rate threshold and higher surcharges will result in increased costs for most buyers. As solicitors, we recommend planning ahead, seeking expert advice, and ensuring you’re fully informed about the financial implications of your purchase.

If you have questions about how these changes may affect your property transaction, contact us, we are here to guide you every step of the way.

What is the Renter’s Rights Bill?

The RRB is a proposed law designed to improve stability for tenants in the private rental market. It introduces several significant changes that landlords and tenants should be aware of.

Key changes in the Renter’s Rights Bill

1 – Removal of section 21 evictions and fixed term tenancies

The RRB will abolish the ability, for both existing and new tenancies, to evict a tenant on a “no-fault” basis by serving a notice under section 21 of the Housing Act 1988 (“HA”). Landlord’s will have to provide a reason to be able to evict a tenant in future.

Assured shorthold tenancies (ASTs) will be abolished and will be replaced by tenancies that are periodic i.e. month to month so that tenants will be able to stay in a residential property until they decide to end the tenancy by giving two months’ notice (aside from where a landlord seeks to evict them under one of the remaining grounds under section 8, HA 1988).

2 – Changes to Remaining Grounds for Possession

To evict a tenant and obtain possession landlords will need to rely on mandatory and discretionary grounds.  A judge must award a landlord possession where they can evidence a mandatory ground, whilst discretionary grounds allow a judge to consider whether it is reasonable to award possession.

Ground 1 – where a landlord wishes to evict a tenant if they wish to move into their rented property or if they wish to move a family member into their property remains.

• Notice period extended from 2 to 4 months.
• Not available in the first 12 months of a tenancy.
• Restrictions on re-letting the property within 12 months.

Ground 1A – a new mandatory ground has been introduced to allow a landlord to evict a tenant if they wish to sell a property (or let it for more than 21 years).

• Requires 4 months’ notice and is unavailable in the first 12 months.
• Restrictions on re-letting apply.

Ground 6 – a landlord may evict a tenant where they wish to demolish or substantially redevelop the property, and this cannot be done whilst the tenant is living there, the notice required is extended from 2 to 4 months.

Ground 8 – where there are rent arrears and the landlord wishes to evict the tenant, there must now be 3 months of arrears, and the notice period required is increased from 2 to 4 weeks.

3 – Rent Increases

Rents can only be raised once a year and on two months’ notice to a tenant using the existing section 13, HA 1988 procedure.  At present tenants can challenge rent increases via the first-tier tribunal (FTT). However, the RRB will give the FTT the power to determine rent.

4 – Ombudsman and Database for landlords

All private rented sector landlords will be required to register with a new independent Private Rented Sector Landlord Ombudsman.

Tenants will be able to make complaints to the Ombudsman who will be able to make binding decision which will be enforceable through both civil penalties and criminal prosecution. The Ombudsman is intended to support quicker and cheaper dispute resolution outside the court process.

A Private Rented Sector Database will also be introduced, in which landlords of assured and regulated (under the Rent Act 1977) tenancies will also be legally required to register. Landlords who fail to register on the Database may be subject to enforcement action and will not be able to get a possession order to evict a tenant.

How Will the Renter’s Rights Bill Affect You?

For Tenants:

• More security: You cannot be evicted without a valid reason.
• Predictable rent increases: Limited to once a year and subject to challenges.
• Access to quick dispute resolution: File complaints through the Ombudsman instead of lengthy court processes.

For Landlords:

• Stricter eviction rules: Ensure compliance with the new grounds and notice periods.
• Obligatory registration: Failure to register may lead to penalties and restrictions.
• Portfolio review needed: Consider acting on rent arrears, properties requiring possession, or planned rental increases before the Bill becomes law.

 

When Will the Renter’s Rights Bill Become Law?

The RRB is currently at the Committee stage in the House of Commons and is expected to become law by summer 2025.

By reforming tenant rights and establishing stricter landlord responsibilities, the Renter’s Rights Bill 2024 could significantly impact the UK rental market. Whether you’re a landlord or tenant, staying informed will help you adapt to these changes.

Want to find out more, contact Caroline or check out our Residential Conveyancing page. 

Initial Consultation and Planning

The journey begins with an initial consultation where we understand the landlord’s objectives. Are they looking to expand their portfolio, invest in a specific type of property, or target a particular demographic? Understanding these goals allows us to tailor our services accordingly, ensuring that the legal advice and support we provide are relevant and effective.

Due Diligence and Property Searches

One of the critical aspects of buying property is conducting thorough due diligence. We perform property searches to uncover any potential issues such as:

• Title Issues: Ensuring that the seller has a clear and marketable title to the property.
• Planning and Building Regulations: Verifying that the property complies with local planning and building regulations.
• Environmental Searches: Checking for any environmental risks such as flood zones or contamination.
• Local Authority Searches: Looking into any potential issues with the local council, such as upcoming developments or road schemes that could affect the property.

Contract Review and Negotiation

The next step involves reviewing the draft contract provided by the seller’s solicitor. We consider the terms to ensure they are fair and favourable to our client. We then negotiate any necessary changes with the seller’s solicitor to protect our client’s interests.

Financing and Mortgages

If the landlord is financing the purchase through a mortgage, we act for both the landlord (our client) and the lender and must balance the interest of both parties. The Law Society’s guidelines and the UK Finance Mortgage Lenders’ Handbook sets out specific requirements for solicitors in these situations.

Exchange and Completion

Once all checks are satisfactory, and both parties agree to the contract terms, we proceed to the exchange of contracts. At this point, the purchase becomes legally binding. We ensure that all documents are correctly signed and witnessed.

On the completion date, we handle the transfer of funds and ensure that the title deeds are correctly registered in the landlord’s name with the Land Registry. We also make sure that any outstanding mortgages or charges on the property are discharged.

Post-Completion Support

Our support doesn’t end at completion. We provide ongoing assistance with any post-completion issues that may arise. We also provide landlord and tenant advice via our property litigation team.

Conclusion

Helping landlords buy properties requires a meticulous approach to legal due diligence, contract negotiation, and regulatory compliance. As residential real estate solicitors, our goal is to provide comprehensive support that ensures a smooth transaction and protects the landlord’s investment. With our expertise, landlords can confidently navigate the complexities of property acquisition and focus on growing their portfolios.

 

To find out more, contact Shen Hussein here.

The Help to Buy scheme was introduced in 2013 to provide equity loans towards the cost of buying a new-build home, and helped over 500,000 first-time buyers buy a property. Although it has helped many, the Government has no plans to extend the scheme and time is running out for those in the middle of transactions and building.

Conveyancers, solicitors, estate agents and homebuilders dealing with Help to Buy matters need to add these dates to their calendars: 17^th and 31^st March 2023, and here’s why:

Friday 17^th March 2023

Homebuilders must have finished building homes, using Help to Buy, on or before 17^th March so that they are ready to be lived in. This is called Practical Completion, and it is when your home is built and has received a new-home warranty. After this date, the property will not be able to use Help to Buy.

Friday 31^st  March 2023

The Help to Buy scheme ends on this date. Home buyers need to have legally completed their purchase using the Help to Buy: Equity Loan by this date.

Funding for Help to Buy is unavailable after 31^st March 2023 under any circumstances so purchasers that legally complete after this date will not qualify for a Help to Buy: Equity Loan.

If you are currently having a house built, or are in the middle of trying to complete your conveyancing, now is the time to check with your home builder, conveyancer and estate agent that these dates will be met so you still qualify for the scheme.

For more information regarding Help to Buy closing, please follow this link to go to The Government’s website.

Essentially, Deeds are the trail of legal documents that prove or record the ownership of a property.  Since 1990, on the sale of a property, it has been mandatory to register the ownership at Land Registry. When Land Registry complete the registration process, they provide an Official Copy of the Registry and an Official Copy of the Title Plan together known as the Official Copies of Title. These were historically on paper but are now mostly digital and these are what are considered to be the “Deeds”.  However, there are additional documents that make up the “Deeds Pack” or “Title Deeds” that will be required when you come to sell the property.  The Deeds Pack will vary depending on the type of property.

For Freehold properties, the Land Registry Official Copies of Title are usually the only relevant documents to retain and these are electronic so can be readily obtained from Land Registry.

Leasehold properties will require the addition of the original signed and dated Lease to be retained as Deeds, although an Official Copy of the Lease is also held digitally by Land Registry alongside the Register and Plan. There may also be further documents to add to the Deeds such as an original Share Certificate or an original Membership Certificate, if relevant.  For new build Leasehold Properties, you should also retain your 10-year NHBC Certificate (or equivalent such as LABC or Premier Guarantee) along with the Building Regulations Completion Certificate.

Other general documents to keep with the Deeds include any indemnity policy or Declaration of Trust. 

In preparing for the sale of a property, the Deeds Pack will be required alongside documents such as the Energy Performance Certificate, Electric and Gas Safety Certificates, FENSA certificates, building regulations and planning permissions for any alterations, party wall notices, listed building documents, guarantees/warranties for a new boiler/new roof/damp proofing, water bill, service charge and ground rent statements, mortgage details etc, so it may be advisable to retain these documents and keep them up to date as and when they expire.  Having these documents to hand will save delays when it comes to selling your property.

It is also worth noting that if you have a mortgage then your Title Deeds may be kept by the Lender, although this is increasingly rare for UK Banks, but not so for overseas Lenders.

To find out more, email law@sherrards.com 

To find out more about your property questions, click here to read another article in the series. 

As part of the due diligence process, your lawyer will investigate the title to the property held with the Land Registry, where registered, when the property is either being sold or leased.  This will include looking at physical alterations that have been carried out to the property and checking those against records held with the Local Council’s Planning Authority and Building Control Department. An indemnity policy maybe needed.

A buyer or prospective tenant under a lease would need to establish whether the seller is legally able to transfer the property and that all necessary consents have been obtained.

Where there are defects that would adversely affect the buyer’s interest then they will need to be resolved and possibly disclosed to the Lender before releasing security.

A defect is a matter that negatively affects the property and some examples are as follows: –

• Where insufficient Planning Permission or Building Regulation Consent has been obtained and a lack of Final Building Control Completion Certificate issued on completion of works. This can include lack of Conservation Area Consent or lack of Listed Building Consent.
• Title documents not being available which may contain covenants and easements affecting the property of which are now unknown, and the Land Registry just does not hold copies.
• Easement or rights benefiting the property which are not contained within the title, for example, rights of way, rights to use utilities or rights to enter on to third party land for a right of way or access to utilities which a seller has had the benefit of but cannot document legally. Armed with a sworn Statutory Declaration indemnity insurance may be obtained in the absence of an approach to the Land Registry for an adverse possession claim or prescriptive right of way.
• A title covenant which will be breached preventing a specified use or development being carried out.
• The title indemnity policy is only available in respect of a title defect to protect the owner of the property from loss which might arise from the defect, for example, a reduction in value of the property or paying compensation for damages. The policy does not remedy the title defect it just provides financial compensation in the event the defect causes actual loss subject to the limit of the indemnity stated on the policy.  The amount is usually the value of the property in question, the mortgage being obtained or the gross development value of that site.  The policies are usually always stated as successors in title policies and therefore future owners, lenders, licensees or tenants will have the benefit of such policies without the need of notification to the insurer.
• When obtaining an indemnity insurance quote, the insurer may raise certain items that need to be satisfied and add to the policy certain conditions, for example to provide planning documentation, enquire with the Council as to objections during the planning process, swear a Statutory Declaration to confirm use of the right of way or not to make any alterations to the property for at least a twelve month period.

An indemnity policy is a very good way of allowing us to move forward with a simple purchase of matters without such there would be invariable many stalemate positions where one party could not proceed.

To find out more, please contact Caroline Vernon.