A residential property solicitor is often concerned with ensuring that the Stamp Duty Land Tax (SDLT) is never underpaid. They also hold an equally important duty to ensure their client does not overpay on SDLT.

One of the instances in where this can happen is when a property is purchased with the benefit of an annex or several annexes.

Buyers can apply for multiple dwellings relief (MDR) where they buy more than one dwelling in a transaction and rather advantageously this relief is extended to properties with annexes. 

To qualify as an annex, there are several criteria that must be met, and these are:

1. It must have a bathroom and kitchen area and must include ‘facilities for basic domestic living needs’ as required by Fiander and Bower v HMRC (2021).
2. It must have its own front door and have some privacy from the main house.
3. It must be capable of being a separate dwelling although it can be attached to the main house but must have a lockable door between the two properties.

Should the criteria be met, the SDLT can be calculated so as to divide the total amount paid for the properties by the number of dwellings.  The SDLT is then worked out on this figure and multiplied by the number of dwellings.

Solicitors must ensure they make the correct investigations on whether there is an annex by asking the surveyor, the estate agent and the seller’s lawyers.

Please feel free to reach out to me, on the details shown below, if you have a question on this article or any property matter.

This is an often overlooked or misunderstood question, but a very important one for anyone who co-owns a property or land in the UK.

The simplest form of home ownership is sole legal owner and there is nothing to declare to the Land Registry in this scenario.  If there is more than one party purchasing a property then you will need to decide how to hold the property.  This could be by reason of a purchase, or for example, inheritance. You can hold the property either as beneficial joint tenants or tenants in common.

 

Joint Tenants

If you decide to hold the property as joint tenants, both of you will own the entire property and you will have equal rights. You will not each hold a quantified share in the property and will not be able to leave a share of the property in your Will.

If you sell the property, or for example if your relationship breaks down, it will be presumed that you both own the property equally, regardless of your respective contributions to the purchase price and associated costs such as stamp duty and fees. On the death of one co-owner, their interest in the property would automatically pass to the remaining co-owner(s) without any further action regardless of what may be stated in their Will. The surviving co-owner would then own all of the property and on their death it would form part of their estate. This is known as the “right of survivorship”.

Married couples or those in a civil partnership commonly use this method of co-ownership because the right of survivorship makes it straightforward to inherit each other’s shares in the property.

However, there may be reasons not to become joint tenants. For example, if one of you has made a larger contribution to the purchase price of the property and you would want this to be recognised if the property is sold or if you separate. A joint tenancy is also not suitable if you have a family from an earlier marriage and wish to leave your interest in the property to them, instead of passing it to the other co-owner.

 

Tenants in common

If you hold a property as tenants in common, each of you will own a specified share in the property. Your shares may be equal (in the absence of any statement to the contrary), but they do not have to be.  Alternatively, you can specify what share of the property belongs to each owner e.g. 70:30 or 80:20 by way of a separate document setting out these interests.

Any share of a property can be passed on to another person, either by Transfer or under your Will. If there is no Will at the time of your death then your share will pass in accordance with the rules of intestacy.

If you choose to hold the property as tenants in common, then you should sign a declaration of trust. A declaration of trust is a document that formally records that you hold the property as tenants in common and sets out your respective shares in the property. If you sell the property, or if you separate, the declaration of trust will be referred to, to work out your entitlement to the sale proceeds from the property.

The Declaration of Trust may also include terms such as giving you first refusal to buy out the share of the party wishing to sell.

Holding the property as tenants in common may be appropriate if you have children from previous relationships and would prefer them to inherit your interest on your death rather than your co-owner. Holding the property as tenants in common in unequal shares may be desirable if you have made unequal contributions to the purchase price of the property.

Note that Land Registry allow up to four legal owners (Proprietors) to be registered on the title so if there are five or more, then a Deed of Trust must be drawn up to name the additional Beneficiaries.

 

How to determine how you hold a property

You can find out how the property is currently held by looking at the Land Registry Office Copy Entries.  The Proprietorship Register will not state Tenants in Common or Joint Tenants but instead the wording of a Form A restriction in the title register as follows will indicate that the property is held as Tenants in Common:

‘No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court.’

If the wording is not present, then this would suggest the proprietors own the property as Joint Tenants.

 

How to change the ownership

Circumstances can change, and you may want to change how you hold your property.  Land Registry will not charge a fee for removing a restriction but they charge £20 for entering a restriction onto the title. 

If you decide to hold the property as joint tenants but then wish to split your interests, you can “sever” the joint tenancy and turn it into a tenancy in common at any time.  Either party can sever the joint tenancy without the other’s agreement or the joint tenancy may be severed automatically in several situations, including where one party becomes bankrupt.  This may also be required for example if your relationship breaks down.  A Notice of Severance can be served by one owner on the other followed by an application to Land Registry to enter a restriction using their Form RX1. 

Conversely, if you marry, you may wish to change from being tenants in common to joint tenants and an application made to Land Registry to withdraw or cancel the restriction using their Forms RX3 or RX4.

It is also possible following the death of one joint tenant to retrospectively sever the joint tenancy via a “Deed of Variation” to redirect the deceased joint owner’s share to someone other than the surviving joint tenant.

 

Seek Advice

Make sure that you advise your Solicitor before completion as to how you wish to hold the property.  Sherrards Solicitors will provide you with a “Joint Tenancy Form” to complete at the outset of the transaction.  You should take proper legal advice on your options based on your personal financial situation.  You should also ensure your Will is up to date.  Sherrards Solicitors Private Client Department are able to provide advise accordingly.

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. 

Being connected to the internet is something we almost take for granted these days. Tenants looking to move into new premises are likely to assume that adequate connections will already be available or reasonably straightforward to set up.  This isn’t necessarily the case and before you find yourself unable to get your business up and running in your new premises, check out the position as you may need to enter into a wayleave agreement.  It is worthwhile doing this and getting the landlord involved as soon as you can.

While modern buildings should have fibre optic cabling installed, older buildings may not. Having connection at a level and speed required for business purposes may mean entering into a telecom agreement (a wayleave agreement) with the service provider for the installation, or upgrading, of cabling within the building.  This can take time and involve multiple parties.

While tenants should have rights to connect into existing service media in the building in their lease, this may not extend to new cabling.  This may mean seeking the consent of the landlord to run cabling through common parts of the building. The telecoms provider will also want to know they can access and maintain their kit once installed and connected.

A wayleave agreement or telecoms lease will usually need to be entered into between the tenant, the service provider and the landlord. The landlord will want to be involved in the process to protect their position as far as possible to ensure that the service provider only has the rights they are entitled to and the landlord can control as best they can removal of the kit from their building when required.

Landlords should be aware that telecommunications providers have statutory rights which are heavily weighted in their favour. It can take over 18 months to secure the removal of telecommunications apparatus from premises with the landlord needing to prove grounds to do so.  Operators are also allowed to assign their rights, upgrade the equipment or share with other providers without the landlord’s consent.

Before refurbishing or redeveloping a property in the medium to long term, a landlord will need to factor in the rights of telecoms providers within the building if their equipment is to be removed. There need to be adequate ‘lift and shift’ provisions in place in any wayleave or telecommunications lease to require providers to move the equipment to allow the landlord to refurbish the premises. 

To find out more contact law@sherrards.com 

On 1 June 2019 the Tenant Fees Act 2019 came into force banning letting fees in England. Tenancy renewals, reference and administration fees will be prohibited under this law and are now to be covered by the Landlord on all tenancies created on or after 1 June 2019 in the private rented sector.

The Act also prohibits any need for the tenant to enter into a contract with a third party for the provision of services (with the exception of utilities or communication services), for insurance or to make a loan to any person in connection with the tenancy.

The aim of the Government is to make a fairer market place and prevent unfair practices of landlords and letting agents.

Any payment made by the tenant must be a “permitted payment” contained within Schedule 1 of the Tenant Fees Act 2019.  The following payments are permitted under the TFA 2019:

• Rent;
• A refundable tenancy deposit or holding deposit;
• Payments to change a tenancy;
• Payments associated with early termination of a tenancy;
• Payments in respect of utilities, communication services, TV licence and council tax;
• Default fees.

Any payments required by the landlord, letting agent or licensor, other than those listed above, will constitute a prohibited payment under the TFA 2019, and include:

• Viewing fees;
• Fees for professional cleaning;
• Credit check fees;
• Tenancy set up fees;
• Requiring payments to third parties, the entering into a contract of insurance or the provision of a service from a third party;
• Requiring the making of a loan to a person in connection with the tenancy agreement.

The Act also introduces a cap for tenancy deposits. If the annual rent is less than £50,000.00, only 5 weeks rent can be collected and where the annual rent is over £50,000.00, only 6 weeks rent can be collected.

A reminder that Assured Shorthold Tenancies include those rents that are less than £100,000 per annum and are to an individual and also includes student tenancies, licences but not long leases.

Essentially, this means payments such as credit checking fees, inventory fees and professional cleaning services are now not permitted to be re-charged to the tenant.

Trading Standards will enforce the Act together with local councils and the sanctions for non-compliance is a fine of up to £5,000.00 and criminal sanctions may be imposed.  Landlords will also be prohibited from serving a valid section 21 notice under the Housing Act 1988 to obtain vacant possession of a property whilst there are breaches of the Tenant Fees Act 2019.

All residential landlords must make sure precedents are up to date and compliant with the new letting laws.

To find out more, please contact Caroline Vernon. 

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. 

Break clause can greatly assist with a tenant’s portfolio management. It is a potential opportunity for the tenant to relocate to cheaper premises or renegotiate new terms and can be a valuable provision, particularly in this volatile market.

However, it is not an entirely straightforward process and there can be various conditions attached to break clauses which can be difficult to satisfy.

Ideally, you will only want one condition, that is, a condition of service of notice to break – this is often 6 months’ notice but sometimes it can be 12.

A condition with any uncertainty such as vacant possession should be avoided at all costs – every property lawyer knows the sack of coal story (more on this in a future article!)

Notice

Most break provisions do not specify a certain form of notice but some do and the tenant must comply with the terms. If no specific form of notice is mentioned, notice must be clear regarding who it is directed to, which provision it relates to and what it is intended to do.

It must be served by the date specified in the break clause and served on the right party at the correct address. The party is usually the landlord but for the avoidance of any doubt, it is usually advisable to serve a copy of the notice on the landlord’s agents and solicitors to cover all bases.

All other terms of the break must be fully complied with (e.g. paying outstanding rent by the break date) in order to have a realistic chance of breaking. The break clause should specify whether the conditions must be satisfied at the date of service of the break notice or at the break date, or both.

If there is a condition, for example, that all rents are paid, it is important to determine how the lease defines rent. If the lease provides for default interest on late rent payments, and the tenant had sometimes paid rent late, although the landlord had never demanded this interest during the tenancy, the landlord can resist the break clause by highlighting the interest “technically” due.

Seeking advice from us early on is essential to manage the process successfully, making sure the notice is properly drafted and served and that the tenant fully understands their obligations. Where there is an obligation to deal with dilapidations, an independent surveyor should also sign off works as being compliant before the break date.

When advising tenants, we always push hard to get written confirmation from the landlord that the break has been waived.

Contact Mike for more information.

In recent years, there has been a surge in articles produced on Japanese Knotweed, a highly invasive and fast growing bamboo-like plant which seems to be haunting many gardens in Britain. It was introduced to the UK in the 1820s for its ornamental qualities but has since proved to be a hot topic as it is extremley costly for landowners and developers, causing structural damage, growing between concrete and blocking drainage systems. It is nearly impossible to eradicate and requires professional Japanese Knotweed contractors who have access to very powerful weed killers.

It has now reached the point where those affected by Knotweed are applying to the courts for compensation. The latest position adopted by the courts is to provide compensation in circumstances where there has been a loss of amenity but not where homeowners claim diminution in value.

This position follows a case that has been widely circulated in the news – Williams & Waistell v Network Rail Infrastructure Ltd. In 2017, two adjoining bungalow owners brought a claim against Network Rail for allowing knotweed to spread from the railway land up to the boundary and under their properties. The knotweed had not caused any physical damage to the bungalows so there was no basis for a claim in that sense. However, the bungalow owners alleged it had caused the properties to suffer a diminution in value and had stigmatised them. Mortgage lenders are very careful and are hesitant to lend on such properties.

The pair claimed that the presence of the knotweed had encroached on their properties, interfering with their quiet enjoyment and causing a loss of amenity by reducing market value. The judge found that Network Rail’s breach of duty and failure to properly manage the situation once they had become aware of the risks, had led to damage and continuing nuisance. The court awarded each claimant £10,000 for diminution of value and £4,320 for treating the knotweed to prevent further ingress.

Network Rail sought to challenge this decision at the Court of Appeal. The original judgment was upheld but it is important to highlight that the Court of Appeal based their decisions on different reasons to those given by the judge last year. The court determined that the parties affected could not succeed in a claim solely for private nuisance as a result of diminution in value. They could, however, be successful in a claim for nuisance caused by encroachment of the knotweed because of a reduced ability to enjoy the amenity of their respective properties.

To find out more information, click here to contact Michael Lewis. 

Partner Mike Lewis, examines the blue Manchester v North West Ground Rents Ltd case where the landlord was in breach of its repairing covenant. This is the first of several case studies he covered in his recent talk at Heathrow Airport for 80 surveyors as part of their CPD training.

Being the largest skyscraper outside London, Beetham Tower is Manchester’s most iconic building. It’s 47 stories comprise of a Hilton Hotel, and residential apartments. The external part of the building is made up of a mixture of single and double glazed shadow box units (SBU’s). However, questions were raised when the windows started to fall out!

The Landlord of the building, North West Ground Rents Limited purchased the freehold reversion of the building from Carillion Construction Ltd for £400,000 in 2010. The lease for the hotel was granted to Blue Manchester Ltd for a premium of £60 million. Under the terms of hotel lease, the Landlord covenanted to keep the common parts “in good and substantial repair and when necessary as part of repair to reinstate replace and renew where appropriate…”. The parties agreed that the external face of the building (including the frame and SBUs) were within the common parts.

In 2014, it was discovered by Carillion that the sealant holding the SBU’s into place was starting to fail. As a result, and as a temporary measure, they screw-stitched pressure plates to the frame panels, to hold the 1,350 SBU’s in place. This temporary fix was not meant to last for more than three years pending a full investigation. However, in 2018, Carillion went into liquidation, and no solution had been found.

The tenant bought a case against the landlord for specific performance, seeking to compel the landlord to carry out the works under the repairing covenant in the lease.

The landlord disagreed with the claim – it argued that although the external façade of the building was its responsibility, it had already taken sufficient steps to comply with its repairing obligation.

The Court had to consider whether the external façade of the building was in disrepair – and it was held that it was. Because the stitch plates were only meant to be in place for three years, whilst a permanent solution was found, meant that the SBU’s were not in “good and substantial repair”. The SBU’s were only able to be regarded as safe if a full investigation and report had been commissioned from a qualified consultant, and this had not been done. The landlord was therefore in breach of its repairing covenant and the landlord was required to repair the SBUs by arranging for their like-for-like replacement.

The recent case of Blue Manchester Ltd v North West Ground Rents Ltd is interesting because it is not often that an order will be granted for specific performance, requiring compliance with a repairing covenant in a lease. Even though steps had been taken to ensure the SBU’s were fixed, this was only a temporary measure, and the Court felt no sympathy for the landlord. Even though the costs for the repairing works were not proportionate to the premium paid for the freehold reversion, the responsibility for inherent, or design and construction defects was with the landlord under the terms of the lease.

To find out more, please contact Michael Lewis.