All of this may prompt a pick-me-up for deal activity in both the commercial and residential sectors. There will also be a number of regulatory changes to keep up with in 2024, but with a general election on the cards, making accurate predictions of what will happen in the sector and what the legislation will end up looking like is probably best avoided.  What we can safely do is provide a rundown of some of the more significant developments in property law expected in 2024, with the finer details to be fought over in Parliament.

Leasehold and freehold reform

The Leasehold and Freehold Reform Bill will enable leaseholders to extend leases to up to 990 years, abolish marriage value and also limit ground rent. These changes will make it cheaper and easier for leaseholders to extend leases or buy the freehold or share of the freehold.

Renters reform

The Renters Reform Bill is likely to come into law this year, and it will make significant changes to the way in which landlords let properties to tenants.  This is the one promising the abolition of so called “no fault” evictions, but the reforms have been delayed due to the lack of a framework for the courts to deal with the proposed new eviction process.

Ending of lower residential stamp duty

The increase of the residential nil-rate tax threshold from £125,000 to £250,000 will end on 31 March 2025.  This means that buyers will go back to paying the full amount of stamp duty next year.  This may result in an increase in transactions towards the end of 2024 and the beginning of 2025, before the lower rate ends.

Building safety

The Building Safety Act 2022 brought in several measures intended to make buildings and residents safer, in light of the Grenfell tragedy.  In October, a number of measures were brought into law, which now relate to all projects, not just high-risk buildings.  The regime is complex and specialist advice should be sought when building or re-developing property.

Biodiversity net gain

Intended to ensure that development has a measurably positive impact, or “net gain” on biodiversity, developers must deliver a BNG of 10%. This means a development will result in a better quality natural habitat than there was before development. New BNG rules came into force for most new developments from January 2024. Draft regulations and government guidance were published at the beginning of December.          

To find out more, contact Chris Piggott or get in touch with law@sherrards.com. 

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.

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.

In an attempt to make the leasehold system fairer, Royal assent was granted for the Leasehold Reform (Ground Rent) Act 2022 on 8^th February 2022.

On the 23^rd June 2022 Government Guidance published the following:

“The Act will make home ownership fairer and more transparent for millions of future leaseholders. The reputation of the leasehold system has been damaged by unfair practices that have seen some leaseholders contractually obligated to pay onerous and escalating ground rents, with no clear service in return. The Act will prevent this from happening in future, tackling significant ambiguity and unfairness for future leaseholders.”

For the Act to apply, and the lease to be defined as a “regulated lease”, certain criteria must be satisfied. The lease must:

1. Be a long lease (more than 21 years) of a single dwelling
2. Be granted for a premium (purchase price)
3. Be granted on or after the commencement date, which in most cases is regarded as the 30^th June 2022 (the date the Act was brought into force)
4. Not be considered as an “excepted lease”

If the above is satisfied the landlord must not require a leaseholder to make a payment of prohibited rent (which includes ground rents) nor can the landlord charge an administration fee for collecting rents.

As far as the Act is concerned a permitted rent is a peppercorn rent which has been defined by the Act for the first time as “an annual rent of one peppercorn”.

As well as the Act reducing ground rents to a peppercorn it also protects leaseholders against landlords charging an administrative fee for collecting peppercorn ground rents so as to ensure leasehold properties are more affordable and further to reduce the incentive to charge a leaseholder an actual peppercorn ground rent.

So what does this mean for leaseholders/future leaseholders/you?

The Act does not currently apply to existing leases however, should there be a surrender and re-grant of a lease which extends the term or adds additional property to the demise, there is a possibility the Act may apply subject to the qualifying criterial being met.

There are however, certain leases to which the Act does not apply. These include:

• Business leases
• Statutory Lease extensions
• Community Housing Leases
• Home Finance Plan Leases
• Retirement homes up until 1^st April 2023 after which it is proposed the Act will apply

Should Landlords fail to comply with the Act, they could face penalties from £500 to £30,000.

 

Sherrards’ Real Estate Litigation and Residential teams worked together to help our client to get vacant possession.

Vacant possession means the property must be empty on the day you complete your purchase or sale of it. 

The £5million property in Kensington had been sold subject to contract, however, there was a tenant in the property who was refusing to leave which was jeopardising the sale.

Proceedings were issued in the High Court.

Michael Lewis and his team worked hand in hand with our Residential Real Estate department in order to provide vacant possession and a successful outcome for our client and the sale of their property.

At the end of the Lease the Landlord served a substantial dilapidations claim. Mike and the team used arguments involving a section 18 valuation to significantly reduce the Tenant’s liability. 

The team worked closely with Brasier Freeth one of the leading surveyors in Hertfordshire to help resolve this matter for our client.

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.