Blog Archives

Downsizing? You may have no choice.

Now is the time to invest in companies that make small furniture! The City of Westminster in the City Plan 2019- 2040 has suggested that new developments and conversions will (unless necessary to protect a heritage asset) not be allowed to provide units of greater than 150 sq m (1,615 sq ft) to ensure developments provide the number of homes required over the coming years in the area.Whilst this is above the nationally described space standards by a whole 12 sq m (129 sq ft), for a family home, this would hardly be palatial. The City of Westminster has pointed out that it is also 50% larger than the average size of a private market tenure home in Westminster, although presumably this figure includes the large number of pied-à-terres in the area.Without doubt something needs to be done to ensure there are enough decent quality properties at the correct price, however how many ‘average’ buyers could afford even a modestly sized property in Westminster, and will this solve the problem?  This does seem like another situation where wealthy foreign buyers are being blamed for a property market that just simply doesn’t allow for affordable homes as everyone on the property ladder wants to pull the ladder up behind them and make money on their own home. Realistically, how many first-time buyers are pushed out of the market by each mansion built in prime residential London?Whilst it has less than most boroughs, Westminster still has brownfield sites suitable for redevelopment, which I would argue would be a good place to start to create a stock of new, and hopefully decently sized, properties.The plans are open to consultation so watch this (lack of) space!

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(B)R you allowed Council Tax relief on a Holiday Let?

The Ministry of Housing, Communities and Local Government have opened a consultation into the ability for holiday lets to register for business rates, rather than Council Tax which has allowed over 45,000 properties to qualify for small business rate relief and therefore escape a charge completely.Properties are valued for business rates when owners declare their property is available to let as ‘holiday accommodation’ for 140 days or more in a year. There is currently no requirement for any evidence to be adduced as to the property actually being let by third parties, which, some argue, leaves the system open to abuse.A property registered for business rates, rather than Council Tax, may qualify for small business rate relief which means that no tax is due at all. Areas with significant numbers of holiday properties could therefore be missing out on significant income, despite the property owners using the local facilities.Since many councils removed Council Tax discounts for second properties it may be that people looked to business rates to reduce the expenditure on their holiday home. Anyone with a view on this should ensure they respond to the consultation before the January deadline. 

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40% of young adults cannot afford to buy homes, even with a 10% deposit

Research produced by the Institute for Fiscal Studies has shown that house prices in England have risen by over 173% in the last two decades. With that comes the frightening statistic that 40% of young adults (those aged between 25 – 34) cannot afford to buy the cheapest homes in their area.The research, cited in an article by the BBC, offers other worrying statistics – such as only 35% of 25-34 year olds own a house. This statistic is only made worse when you consider that this figure is down from 55% in 1998.These new statistics make it ever clearer that more needs to be done to make homes affordable for young people. The question is how do you do so? The research suggests that the key is for the government to increase the number of homes available for young people and to allow construction in green belt areas. I would suggest that these are steps in addressing an ever increasing issue but that more much more will need to be done to make the properties affordable for young people. Sadly this is something which is more easily said than done.

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Try before you buy?

The Express has commented on the data released by trade lending body UK Finance which demonstrates that the number of first time buyers in August was the highest monthly level since June 2017.  Whilst this is not a particularly long time, it may demonstrate to the Chancellor that the changes to the taxation of properties owned by investors is working to assist people get on the property ladder.If the Chancellor decides the existing changes have not made enough of a difference he may well consider implementing the rumored proposal to give a capital gains tax exemption to landlords who sell property to tenants who have lived in the property for three years or more.  It has also been suggested that the exemption is split between the landlord and tenant so that the tenant has a contribution towards their mortgage deposit.This would put tenants in a very strong bargaining position if they wanted to buy the properties they have been renting, but the overall effect on the property market is something the chancellor will want to consider carefully.The fact that the phrase ‘housing ladder’ is thrown about so often demonstrates how we in the UK treat our homes – always an investment rather than just a place to live, waiting to move to the next ‘rung’.  The UK economy in turn in intrinsically reliant on the property market ‘working’ and further taxes on landlords could be the straw that breaks the camel’s back.Landlords and tenants alike will be waiting with baited breath for the budget to see if the proposals are to be implemented, however the effect of them will take far longer to be realised.

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A New Homes Ombudsman has been announced by government – but that’s about it!

The Ministry of Housing, Communities and Local Government made a new announcement on 1 October 2018.On the face of it, it is brilliant news. The announcement addresses the need for planning reform to provide the homes the country so desperately needs, measures to improve the safety of high rise buildings following the Grenfell Disaster and a ‘New Homes Ombudsman’.This new ombudsman is said to “champion the rights of homebuyers and help ensure that when they buy a new home they get the quality of build they rightly expect”. The announcement continues that “the New Homes Ombudsman will protect the interests of homebuyers and hold developers to account when things go wrong.”This sounds like great news for homebuyers and could help boost the market if buyer concerns over ‘dodgy developers’ are reduced. However, developers would be right to be slightly more sceptical about the announcement. This is because the government has stated that they intend to introduce legislation requiring developers to belong to a new homes ombudsman – and frustratingly, that is all the information there is at present!This leaves developers and home builders with the potentially onerous obligation of being required, by legislation, to belong to a watchdog but there is a complete lack of detail about that watchdog. There is no information as to how many watchdogs a developer will have to select from when they join, how the watchdogs will be made up or what powers they will have.This seems to be a bit like the recent announcement on ground rents – where a grand statement has been made but those it affects will have to wait some time (and presumably until after Brexit is sorted) until housing is back on the agenda and some clarity is finally given.

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Can it be right that average rents are 30% of a person’s income?

The BBC has published an article with some shocking statistics on the affordability of renting for young people.The article states that “a salary of £51,200 is needed to “afford” to rent a one-bed London home”. This is an astonishing figure, particularly when you consider that this could provide you with a 10% deposit for a half million pound house (should you be able to save up these monies instead of paying them on an annual rent).The report focuses on those in their 20’s, as recent studies have shown that they are more likely to rent.Collyer Bristow LLP has commissioned its own report looking into ‘generation rent’. A copy is available here.This report found that 100% of 20-24 year olds have aspirations of owning their own home. This seems an insurmountable task when you consider the huge rents they are expected to pay each year.Alex O’Connor, Partner in Commercial Real Estate said: “We all know that there is a housing crisis in the UK and that it is particularly acute in London and the South East. We have seen developers bring forward new tenures, such as dedicated Build-to-Rent schemes, but home ownership remains the ultimate goal.”“It is interesting that all of our panel’s 20-24 year olds say that they will own their own home, only for those hopes to be dashed when the reality of buying a property hits home. That picks up slightly, perhaps as our panel start to marry and think about starting a family.”Whilst measures are being implemented, new types of tenure considered and there are new and creative ways being introduced to improve the market, the housing crisis is not going to disappear and something needs to be done urgently if young people’s dreams of owning their own properties are to be fulfilled.

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Mortgage Fraud and Negligence – the case of Stoffel & Co v Grondona

Judgment has now been handed down in the appeal by the Appellant, Stoffel and Co, in the case of Stoffel & Co v Grondona [2018] EWCA Civ 2031 (13 September 2018). This case concerns what some see as the more juicy bits of property law and others see as a nightmare; that being negligence, illegality and mortgage fraud.A claim was originally brought by Ms Grondona as her solicitors negligently failed to register the transfer of her property together with the discharge of the existing charge and registering a new legal charge. All fairly standard things to be done in a conveyancing transaction.When the case was brought to appeal by the Appellant, they sought to use a defence of illegality – as Ms Grondona had been a participant in a mortgage fraud to deceive the mortgagee.It seems harsh on first glance that this defence was not successful. However, the Appellant had no knowledge of the deception, they were not party to it and they could not therefore seek to use this to escape their negligence. The judgment is therefore a clear reminder that the question to be considered is whether relief should be granted and not whether a transaction is tainted with illegality (as per Lord Toulson in Patel v Mirza [2016] UKSC 42 at [107])

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Q. When is an extension not an extension? A. When it is a garden room a finger width away from the dwelling.

Planning law is known to be a complex area of law and is often difficult to interpret. A recent decision by the Planning Inspectorate (reference: APP/B9506/C/17/3187537) has shown just how important it is to pay attention to the details when considering planning matters.The case concerned permitted development rights under The Town and Country Planning (General Permitted Development) (England) Order 2015 (SI 2015/596) (“GDPO”). This Order effectively grants planning permission in respect of certain developments, which are known as permitted development rights.  One such permitted development is for “buildings within the curtilage of the dwellinghouse” although there are limitations and conditions on what can be built.The owner of the property in this case erected a a steel framed Garden Room which only had a finger width gap between it and the main property. It was originally held that this was in breach of the GDPO.  On appeal however, it was held that there was no breach of the GDPO as:”The GPDO makes a clear distinction between extensions to a dwelling and buildings, etc that are constructed within the curtilage of a dwelling and this is a distinction that would be evident in most circumstances. It does not indicate whether such Class E structures should be a minimum distance from the dwelling although the Technical Guidance refers to buildings attached to a dwelling falling within Class A.”The clear distinction of the Garden Room being constructed as a separate structure (and not therefore an extension to the main property) meant that it could not be in breach of the GDPO and that it was not required to be a minimum distance away from the property, even though a casual observer might perceive the garden room as an extension to the dwelling and not as a free-standing structure and the original enforcement notice for was quashed.

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Land Registry’s digitisation of Local Land Charges extends

Previously where a Local Land Charges search was required by a purchaser of residential property, it was requested from the relevant Local Authority as part of a Local Authority search.Depending on the Local Authority, this can take weeks to arrive and the Land Registry is therefore looking to modernise and use technology to provide quicker and simpler services for home-buyers.  As part of this, anyone requiring a Local Land Charges search will soon need to head to the Land Registry’s online portal to obtain this information – although the bulk of the search (being the Local Authority Search) will still need to be done by the Local Authority.This week Liverpool City Council has been migrated over to the Land Registry, alongside Warwick District Council (who migrated on 11 July 2018).Next up is the City of London Corporation who are due to migrate on 8 October 2018.  Seeing how well the Land Registry deals with requests from this particular area may well determine whether or not this scheme is being considered a success.

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Evicting your tenant? Do so with caution

In the case of Smith v Khan it was held that Mrs Smith had a right to occupy a property by being lawfully married to the tenant, Mr Smith, and that she had been unlawfully evicted when Mr Khan, the landlord, re-entered and changed the locks to the property, preventing her from gaining further access. When determining the level of damages Mrs Smith should be awarded for trespass, the Court said that damages for trespass must compensate the tenant for the letting value of the property for which they have been deprived but also for the anxiety, inconvenience and mental stress involved in the loss of the tenant’s home. Reviewing similar cases (and also noting that Mrs Smith was forced to sleep on a friend’s floor for a number of months following her eviction), it determined that an appropriate daily rate for damages was £130 and that damages should be calculated from the date of the unlawful eviction until the expiry date of the fixed term as, on the facts of the case, the tenant would have been entitled to continue in occupation up until that date. Mrs Smith was awarded total damages of approximately £14,000.This case is a reminder that residential property owners should be extremely careful when taking steps to evict their tenants or any other occupier who might be entitled to possession and to seek legal advice prior to doing so. Failing to follow the correct procedure could result in very serious consequences, including a claim for a rather hefty sum of damages!

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