News

Leasehold enfranchisement of business premises

One case not covered in this month’s CPI Update, but which is attracting considerable interest in the property press, and the practical issues of which will be considered more fully in the February issue of the CPI Update, is the county court case of Hosebay Ltd v Day [2009] PLSCS 318. It is only a county court case, so it does not have the status of a binding precedent. However, the arguments aired in this case can be played out in many other business properties up and down the country, and the considered opinion of HHJ Hazel Marshall QC is […]

Mortgage repossessions

Just before the New Year, the Ministry of Justice announced a proposal to require mortgage lenders to obtain a court order or the consent of the borrower before repossessing and selling residential owner-occupied homes. The proposed changes aim to put current lending practice into law, and ensure that borrowers obtain normal protections offered by the court. The proposals relate to residential owner-occupied properties, and would not affect buy-to-let mortgages or other commercial loans, nor affect other remedies available to mortgage lenders where a borrower defaults on a mortgage. A consultation ends on 28 March. Click on: Mortgages: power of […]

Perpetuities

According to an announcement on the Ministry of Justice website, the Perpetuities and Accumulations Act 2009 will come fully into force on 6 April 2010 by virtue of a commencement Order announced in Parliament on 7 January 2010.

CRC – new BPF consultation paper

In June 2009, the British Property Federation launched a guide to the forthcoming Carbon Reduction Commitment – see Carbon Reduction Commitment – BPF Guide. After due consideration, the BPF has today published a CRC industry-wide consultation paper, the primary purpose of which is to explore whether a cross-industry consensus can be reached on how the costs of the Carbon Reduction Commitment (or, to give it its full name, the Carbon Reduction Commitment Energy Efficiency Scheme) should be apportioned between landlords and tenants in new leases. The underlying (or indeed overriding) aim of the consultation is to try to arrive at […]

End of ENDs

The Land Registry is discontinuing the electronic notification of discharge (END) from January 3, 2010. The Land Registry believes that affected lenders will switch to the electronic discharge of mortgages through form e-DS1. This form is processed automatically by the Land Registry and provides for instantaneous completion of the discharge application.

Click on ENDs announcement to read the Land Registry’s announcement.

Residential mortgages – new mortgage instructions

A new set of mortgage instructions for residential property comes into force on January 1, 2010. The Building Societies Association is introducing the BSA’s Mortgage Instructions to provide, so it says, a full set of conveyancing instructions for conveyancers acting on behalf of BSA Members and their subsidiaries in residential conveyancing transactions. These instructions, which will be made available on the BSA website (www.bsa.org.uk) do not fully replace the CML Handbook. Use of the instructions is voluntary for BSA members. The Law Society understands that approximately 25 building societies initially intend to use the new instructions. BSA members who are […]

Outsourcing arrangements – the “virtual assignment” survives

The Court of Appeal has upheld an appeal in the case of Clarence House Ltd v National Westminster Bank plc. This was the case in which the tenant had entered into a “virtual assignment” of its lease whereby all of the economic benefits and burdens of the lease had been transferred to a third party, without any actual assignment or change in the occupancy of the premises. The High Court had determined that the outsourcing agreement was an unlawful parting with possession of the property, as the virtual assignee had been assigned the right to deal with the property as […]

SDLT penalties for incorrect returns

Patrick Cannon’s website includes an item explaining that a legislative error may put HMRC on the back foot when pursuing a taxpayer for penalties in relation to an incorrectly filed SDLT return. The item is too technical for simplification here, and needs to be read in full, and it will be of interest to property tax lawyers in cases where the amount of the penalty to be raised against a client could be significant. Patrick Cannon’s own introductory simplification is that: “A drafting error may mean that penalties for incorrect SDLT returns cannot currently be charged and will only apply […]

Flood Risk Indicator (2)

As suggested in yesterday’s news item (Land Registry – Flood Risk Indicator) the Land Registry’s new Flood Risk Indicator may be of use in simple house purchases, or for the casually interested enquirer, but for commercial transactions it does not seem to be the appropriate tool. Commercial flood search providers Argyll Environmental Ltd, who provide the FloodSolutions products, point out the Land Registry’s terms and conditions for the Flood Risk Indicator state that the service is created “principally for the purpose of providing information and services for the personal use of the private citizen.” It is therefore clearly aimed at […]

Land Registry – Flood Risk Indicator

The Land Registry has launched a new service on its website – a flood risk indicator. In its website announcement, the Land Registry says it has combined its own data with the Environment Agency’s flood data to produce its new Flood Risk Indicator. The Land Registry’s new service might be regarded as useful and effective for simple home purchases, but other services are available, such as the FloodSolutions products provided by Argyll Environmental. The Land Registry itself states that customers who require additional flood information are advised to contact the Environment Agency.

Perpetuities and Accumulations

The Perpetuities and Accumulations Act 2009 (“An Act to amend the law relating to the avoidance of future interests on grounds of remoteness and the law relating to accumulations of income”) received Royal Assent on 12 November. There is currently no date scheduled for commencement of the Act. As mentioned last week (click on: The rule against perpetuities) the changes will have a minimal impact on commercial property, but due consideration will be given in these pages when commencement is imminent.

Capital allowance elections

HMRC states that, following the introduction of the classification of integral features in respect of relevant plant and machinery expenditure incurred on or after 1 April 2008, it is now necessary to distinguish between (i) fixtures that are integral features (thereby qualifying for allowances at the 10% rate), and (ii) other fixtures that qualify for the 20% rate in the main plant and machinery pool. HMRC say that, following Finance Act 2008 changes, it is now less likely that an election covering all the fixtures in a particular property without requiring an apportionment of value between groups (i) and (ii) […]

CRC registration

More and more fee earners are wondering whether their clients are likely to qualify as CRC participants for the CRC Energy Efficiency Scheme and will be required to register with the Environment Agency prior to the commencement of CRC in April 2010. The scheme will apply to large public sector and commercial bodies – basically, any organisation that used more than 6,000MWh (mega watt hours) of electricity from half-hourly metered electricity supplies in 2008. To assist, the Environment Agency has published guidance which provides information to organisations to help them understand what they need to do during the CRC registration […]

The rule against perpetuities

One for the near future: the Perpetuities and Accumulations Bill has passed its third reading in the House of Commons and is now awaiting Royal Assent before its implementation by commencement order on a date still to be fixed.

The new rules will restrict the long-standing rule against perpetuities to trusts, simplifying its operation by introducing a single 125 year perpetuity period – whether specified or not. The rule against perpetuities would only apply in the trust cases listed in section 1 of the Bill, and would therefore cease to apply to future rights over property such as options, rights of […]

Is rent an expense of an administration?

It seems to be.

In Exeter City Council v Bairstow [2007] EWHC 400 (Ch), the court held that business rates were to be treated as an expense of an administration, whether premises were occupied or unoccupied, and were therefore to be paid by the administrator.

What about rent? In a liquidation, rent can be seen as an expense of the liquidation, payable with priority. In Re Toshoku Finance UK plc [2002] 1 WLR 671, Lord Hoffmann said that: “The court will … interpret rule 4.218 [Insolvency Rules 1986] to include debts which, under the Lundy Granite Co principle, are deemed to […]

VAT on residential service charges

The July/August issue of the CPI Update reported on the ECJ case of RLRE Tellmer Property (Case C-572/07) in which the ECJ suggested that payment for the cost of cleaning the common parts of a residential block was not part and parcel of the cost of the supply of land interests to tenants, but should be treated for VAT purposes as a separate VATable supply.

In relation to residential leases, paragraph 12.1 of VAT Notice 742 has always stated that: “Service charges relating to the upkeep of common areas of an estate of dwellings, or the common areas of a […]

Group companies – Companies Act 2006 (2)

Further to the last post (see below) on the effect on the 1954 Act of the Companies Act 2006 changes, there is, in fact, no need to rely on section 1297(5) Companies Act 2006 to effect a change to section 42 (etc) of the 1954 Act. Paragraph 7 of Schedule 1 to the Companies Act 2006 (Consequential Amendments, Transitional Provisions and Savings) Order 2009 (SI 2009/1941) deals specifically with the group company provisions of the 1954 Act. In paragraph 7, it is provided as follows:

“In section 46(2) of the Landlord and Tenant Act 1954: (a) in the definition of […]

Group companies – Companies Act 2006

Much use is made, both in statute and in the drafting of group sharing and assignment provisions in leases, of section 42 LTA 1954. This deals with cases where a lease of premises is granted to one company in a group, but occupation is taken up by another company in the same group. To work out whether the companies are within the same group, use is made of the definition of “subsidiary” in section 46(2) LTA 1954, which refers in turn to section 736 Companies Act 1985. Of course, the latter provision has been repealed by the Companies Act 2006, […]