News

VAT rate changes

VAT rate changes have been frequently encountered in recent times – from 17.5% to 15% to 17.5% and now again (on January 4, 2011) to 20%. Detailed analysis of the property implications of the rate change will appear in this month’s CPI Update later this week. The rate change impacts on rental payments, rent deposits, SDLT calculations, contract deposits and completion balances. HMRC guidance on the effects of the rate change in all walks of life can be seen at the HMRC website under the heading Increase in the standard rate of VAT to 20 per cent.

Next Monday’s online VAT and Property seminar

VAT and Property
12.30pm, Monday 28th June 2010
Whether or not George Osborne raises the current rate of VAT this week, a review of how VAT affects property transactions is always essential. This online seminar will cover:
– What is standard-rated, what is exempt, and what is zero-rated?
– What are the principles of charging VAT, and how do VAT rate changes affect transactions?
– How does the option to tax work following the June 2008 changes?
– How does VAT affect rents, service charges, costs payments, rent-free periods, reverse premiums, inducements?
– What is a TOGC and what is […]

SDLT spotlight on sub-sale relief

HMRC has a section on its website called “Spotlights”. HMRC says that, in Spotlights, it will “Provide some advice on tax planning to be wary of, listing some indicators that we see as suggesting that a scheme may involve tax avoidance and which we are likely to investigate.”

One of the tax planning schemes HMRC places in the spotlight is sub-sale relief. SDLT sub-sale relief, or, rather, sub-sale treatment of property transactions, is available under sections 44 to 45 of the Finance Act 2003 (as amended). In general terms, SDLT treatment is achieved through the simultaneous completion of the […]

Demolishing property on a village green

There are only three days left to listen again to last Friday’s You and Yours programme on Radio Four, but in this programme – see http://www.bbc.co.uk/programmes/b00slb1k#p0089w07 – there is an interesting discussion of the possibility of an affordable housing developer having to demolish houses on land that becomes registered as a town or village green after development has commenced. Is this the right outcome? DEFRA thinks so. Its published view of the position is as follows:

“What happens if a landowner decides to develop the land before an application for registration is made? It is for the landowner to decide whether […]

Commercial Property Standard Enquiries (Version 3)

From June 2, 2010, the CPSEs have been made available as “Version 3” enquiries, to replace the various versions of the previous set of enquiries. All enquiries (CPSE.1, CPSE.2, CPSE.3, CPSE.4 and CPSE.5) are now in Version 3.0. You can click through to them by clicking on CPSE enquiries. However, it should be noted that no actual changes have been made to the content of the enquiries. The changes are merely stylistic. The enquiries are currently under review and are expected to be updated over the summer months. You can also click through to current drafts of the still-to-be-finalised CPSE […]

SDLT online

Next Tuesday’s online SDLT Commercial Property seminar will be covering what transactions are notifiable, and what are not, what consideration is chargeable (and what is not), which transactions are exempt (and which may be subject to relief), how lease duty works – and what traps lie in wait, what happens with lease variations, surrenders, and re-grants, and how leaseback relief affects property transactions, how to defer payment of tax, how the tax affects options, pre-emptions, sub-sales…and many other problem areas. See http://propertypsl.webex.com/ for further details.

HIPs suspension

The new Government has been quick off the mark in suspending, with immediate effect, the requirement for a HIP in the home selling process. The requirement to have a HIP was suspended from midnight on 20 May. The obligation to make available a valid Energy Performance Certificate remains as a requirement. However, a seller need only have commissioned an EPC to be prepared before marketing a property rather than actually be in possession of one. Full abolition of HIPs requires repeal of Part 5 of the Housing Act 2004. The Government says that this is a priority for its new […]

Section 106 agreements and section 2 LP(MP)A 1989

Do agreements under section 106 TCPA 1990, which provide for the grant or transfer of an interest in land in favour of a third party, need to be signed by all of the parties, including the third party, in order to satisfy the contractual formalities of section 2 LP(MP)A 1989? Some time ago, the High Court had held this to be the case in Jelson Ltd v Derby City Council [2000] JPL 203. In that case, a section 106 agreement between a developer and the planning authority, which required the developer to transfer part of its site to a housing […]

CRC – BPF consultation on drafting

The outcome of the latest BPF consultation on drafting issues for landlords and tenants (which concluded on 5 February) is still eagerly awaited. Latest reports are that those working on a report on the consultation process are intending to produce a report by mid-June. CRC has, of course, been in force since 1 April 2010, although the need to purchase CRC allowances does not arise until April 2011. It is not expected that the report will offer standard CRC clauses to be included in all appropriate commercial leases, as was the initial intention. Rather, it is anticipated that the working […]

Tenancy at will – terminable on notice?

Including a clause in an express tenancy at will to enable the parties to terminate the tenancy on, say, seven days’ notice would normally be regarded as fatal to the creation of such a tenancy. A recent Court of Appeal case (Katana v Catalyst Communities Housing Ltd [2010] EWCA Civ 370 – an application for leave to appeal heard before one Lord Justice) suggests that it is not. The tenancy in question ran for a fixed term of three months (which, naturally, was outside the 1954 Act because of section 43 of that Act), and then, if the […]

Personal break rights lost on assignment

More than 14 years after the commencement of the Landlord and Tenant (Covenants) Act 1995, the iniquities of original tenant liability are still the subject of sustained attacks in the courts. Linpac Mouldings Ltd v Aviva Life [2010] EWCA Civ 395 is one such example – and hardly surprising too, given that the “original” liability of the tenant in this case (actually, a liability of an assignee under a direct covenant given at licence to assign) will endure until 2070 in relation to 99 year leases at rack rents. The rents exceed £500,000pa. It is little wonder the tenant took […]

Monday’s property and insolvency seminar

Coping with Insolvency in the Landlord and Tenant Relationship.
Monday’s online property and insolvency seminar will cover:
– A detailed analysis of how bankruptcy, liquidation, administration, receivership and voluntary arrangement impact upon property ownership and property transmission.
– The rescue culture in 2010 – its uses and abuses. How administration and CVAs work, and how they may be reformed.
– What restrictions on rights and remedies apply in the different insolvency procedures? Will the rent be paid?
– What issues concern a tenant where its landlord is facing liquidation or administration?
– How does disclaimer work – for landlords, for […]

Good Harvest – food for thought

Several interesting questions were raised in relation to the Good Harvest case (Good Harvest Partnership LLP v Centaur Services Ltd [2010] EWHC 330 (Ch)) at this lunchtime’s Property PSL online seminar – “The 1995 Act – a Practical Insight”:

1. In the light of Good Harvest, could a tenant, instead of assigning, underlet the property, with its guarantor guaranteeing the under-lease? Subsequently, the landlord accepts a surrender of the head-lease from the tenant, thereby releasing the tenant.

At first blush, this sounds feasible – although a first and fundamental issue would be whether the tenant would agree to it. If the […]

Mortgage repossessions

The Mortgage Repossessions (Protection of Tenants etc) Act 2010 received Royal Assent on 8 April 2010. The Act will commence upon a date to be determined by order made by the Secretary of State. The Act is aimed at protecting residential tenants of repossessed properties where the landlord had let the property to the tenant without having obtained the lender’s consent to the letting. In such circumstances, the tenant is vulnerable to immediate eviction. This Act allows the district judge to delay repossession of the property for up to two months, to give the tenant time to relocate.

CIL Regulations

CIL commences on April 6. Accordingly, The Community Infrastructure Levy Regulations 2010 (SI 2010/948) have now been published.

CRC Regulations published

CRC commences on April 1. Accordingly, The CRC Energy Efficiency Scheme Order 2010 (SI 2010/768) has now been published.

SDLT Budget changes

The Budget 2010 included two announcements relating to SDLT rates – one an immediate change, and one for the future.

The one for the future is the announced new 5% charge to SDLT on residential property purchases where the consideration exceeds £1m. This applies where the effective date of the transaction is on or after 6 April 2011. Attempts to structure property ownership before then in manner that will avoid SDLT will have to take account of the new DOTAS regulations extending the Tax Avoidance Disclosure Regime to require the disclosure of certain Stamp Duty Land Tax schemes relating […]

Not entirely the whole?

The decision in North Eastern Properties Ltd v Coleman & Anor [2010] EWCA Civ 277 displays a fascinating bending of contractual terms by the Court of Appeal to get around the unfortunate rigidity of section 2 Law of Property (Miscellaneous Provisions) Act 1989 and to prevent a contract from being rendered void.

Without a doubt, the terms of section 2 of the 1989 Act are too restrictively drawn: if the contracts exchanged between the parties do not include a term that the parties have expressly agreed, the whole contract is void. Such a rigid provision opens a very wide door to […]