Property Flashcards

Question

Repayment mortgages def.

Answer 1

Repayment mortgages: borrower makes monthly contributions on mortgage + interest

Answer 2

Interest-only mortgage: Monthly payments of only interest before the whole mortgage is due at a certain time.

Answer 3

Preparation for and exchange of contracts: contract is the agreement to transfer the land at a later stage. Provides parties with certainty and prevents either party from withdrawing from the transaction without liability.

Answer 4

Standard Conditions of Sale (SC) For residential transactions and certain simple commercial transactions Standard Commercial Property Conditions (SCPC) High value commercial transactions + contains more provisions on management of occupational leases

Answer 5

Specified incumbrances: included in the contract and shows all burdens of the property, hence third party rights that will survive the transfer. E.g. restrictive covenants, easements, and obligations to contribute to shared facilities. If they are not specified, the seller is in breach of SC 3.1.1 + SCPS 4.1, whereby the seller sells the property free of all encumbrances that have not been specified. Some solicitors do not include positive covenants as they are not transferred to the next owner, but others include them as they can be mixed with restrictive covenants in the Charges Register.

Answer 6

Contains three parts of the SC and CPC: 1. The particulars of sale (identification of property with registration number or root of title 2. The standard conditions, and 3. The special conditions.

Answer 7

Title guarantee: full title guarantee if they own the whole legal + equitable title (implies that the land is free from encumbrances other than those the seller does not and could not reasonably know about. Limited guarantee if they have limited knowledge and the guarantee is that the seller is not aware of incumbrances.

Answer 8

Pre-printed special conditions: Nr. 3: whether sale includes contents or excludes fixtures Nr. 4:the property is sold with leases or tenancies Nr. 5: only relevant if the time of completion is altered 6: parties should not rely on representations not made in writing 7: a non-owning adult occupier of the property which has agreed to the sale and to vacant possession on completion Special conditions that the parties may require: Appointment of a second trustee Obtain or pay for a restrictive covenant policy Disclose a defect in title Sale with limited or no title guarantee Deposit of less than 10% or if the deposit is held by an agent instead of a stakeholder Payment of VAT Removal of fixtures by seller Indemnity covenant to protect seller from liability (e.g. for positive covenants)

Answer 9

Contract rate: the interest charged if a party is late with completing. Currently 4% above the base lending rate at Barclays.

Answer 10

methods of holding a deposit: 10% of purchase price payable on exchange of contracts. SC 7.4 and SCPS 10.5 if the buyer fails to complete, the seller can keep the deposit. Stakeholder: Under SC 2.5 and SCPC 3.2 a pre-payment of part of the purchase price which is not transferred from the seller's solicitor (stakeholder) til the seller until completion. Exception: the SC 2.2.5 allows the seller to use the deposit as a deposit on a purchase of a house for the seller (chain). Agent: if the seller solicitor holds the deposit as an agent, it can be released to the seller after exchange of the contracts. The seller can use it and there is a risk that the seller does not return the deposit if the sale is not completed.

Answer 11

Risk passes to the buyer in exchange for a contract. Damage to the property between exchange of contract and completion is carried by the buyer and must have insurance in place. S C 5 and SCPC 8: the buyer is under no obligation to insure a freehold property unless agreed otherwise.

Answer 12

Not normally charged in residential property sales For commercial property: payable if the property is less than 3 years old, or the seller has exercised the option to pay VAT. Purchase price is without VAT, which must be added: appropriate for standard rate VAT for commercial buildings where the seller must pay VAT Purchase price inc VAT where VAT cannot be added on top: not appropriate where VAT must be included e.g. for new buildings, as the VAT would have to be carved out and paid to HMRC. Not appropriate where there is an opt out. Purchase price is ex VAT so that VAT can be added in case the law changes before completion. Appropriate for old commercial buildings where there is no input VAT to recover, but does not take the risk with the change in law.

Answer 13

If the lender is pleased with the documents regarding the property, they issue a mortgage offer setting out the terms of the mortgage. Mortgages are legal if made by deed and registered. Even where the same solicitor does not represent both lender and buyer, it is normal to share the results from the title investigation and pre-contract searches and enquiries with the lender. A certificate of title is usually issued to a lender. A more detailed version is issued in commercial transactions, following the City of London Law society’s template. For residential there is on approved by the Law society and UK Finance. The certificate is given immediately prior to the completion of the loan and contracts are not exchanged between buyer and seller before the lender is satisfied.

Answer 14

Steps in preparation for exchange of contract: Buyer’s solicitor sends the buyer a pre-contractual report summing up the results of the pre-contract searches and the investigation of title. Report the results from the investigation of title to the buyer by the buyers solicitor Buyers solicitor reports the same to the lender Ensure deposit is available Check that mortgage is in place and that the client has funds to complete Ensure insurance is in place immediately following exchange Contract is signed Completion date

Answer 15

BOth solicitors obtains clients authority to exchange in writing. Binding contract for sale of property must be made in: writing, incorporate all terms, contained in one documents, signed by all parties

Answer 16

Exchange: in person, by post or over the phone. Phone is most used and three methods is possible: Law society formula A: one solicitor holds both parts of the contracts which are signed. I.a. the other solicitor has sent their clients a signed contract to the other solicitor before exchange. The same day, the solicitor holding both contracts, sends their own party’s contract to the other solicitor by first class mail. The buyer solicitor will the same day send a cheque for the deposit. Law society formula B; each solicitor holds their clients' signed contracts and sends the same part they are holding to the other solicitors by first class post = document exchange. The same day, the buyer's solicitor also sends a cheque for the deposit with the contract. The most used method. Law society formula C: most complex and manly used for residential chain transactions. Exchange is done over the phone and recorded in a file note. consequences of exchange: neither party can break the binding contract without liability. The seller retains the legal interest in the property and holds it on trust for the buyer. The seller is entitled to the physical possession until completion and pays any charges, but the buyer takes over the risks related to the property and must insure it.

Answer 17

As the seller solicitor usually drafts the sales contract, the buyers solicitor usually drafts the transfer deed. Transfer deeds requirements: in writing, clear that it is a deed, signed, witnessed by one person and delivered. Deed is always signed by sellers and can be by buyer if the buyer is entering into an obligation or making a declaration. A deed that clearly states it’s a deed on delivery is presumed to have been executed correctly Transfer deed is usually completed by the buyer's solicitor and sent to the seller for agreement immediately after the exchange of contracts. The transfer deed reflects the term of contract and the title deeds.

Answer 18

Undertaken by the buyer's solicitor as close to the completion date as possible. 4 reasons: 1. Ensure that seller has no further encumbrances to the title 2. Check financial circumstances of borrower if acting for lender 3. Gain priority for the buyer and lender over anyone making an application before the buyer applies to register ownership in the Land Registry 4. If the seller is a company, to ensure that the company has not gone into liquidation. Pre-completion searches for registered land: a search through the Land Registry with form OSR1 (or OSR2 for part of the property) to check any new entries since the last check. After the search, the applicant will have a 30 working days priority period, which protects from any subsequent entries. The application for registration needs to be submitted by 12 in the afternoon on the last day of the 30 working days. If the buyer is financing through a mortgage, the application to the Land registry should be in the mortgagee's name. Pre-completion searches for unregistered land: a land charge search with a K15 form confirms a 15 working days priority period from the date of the search.

Answer 19

Preparation of the transfer deed Pre-completion searches (see above) Practical arrangements for completion: buyer's solicitor sends seller a “completion information form” to be completed by the seller which sets out information about handing over the keys, method of completion, documents handed over at completion and exact payable amount + an undertaking by the seller that the mortgage will be redeemed.

Answer 20

Registered land: apply for a land charges search on behalf of the lender against the buyer using a K16 form to check for bankruptcy. Unregistered land: add the name of the buyer to the land charges search that has already been made against the seller in the pre-completion phase using a K15 form. If the seller is a company, a search should be undertaken to reveal any floating or fixed charges + solvency. No priority period for companies, but a phone search to the Registry of Winding Up Petition at the Companies Register can be undertaken the day before completion. The lender of a buyer will expect to receive before completion: a certificate of title confirming that the property is adequate security, solvency search of the buyer, OS1R form in the name of the lender, executed but not completed mortgage deed.

Answer 21

Methods: In person: buyers solicitor attends the sellers solicitors office. Title documents are checked against the documents previously received and money transferred electronically. Original documents and key is handed over. By post: Law society has a Code for COmpletion per Post where each solicitor undertakes. The seller's solicitor acts as an agent for the buyer's solicitor and does wherever it would have done in person. Upon reception of money, then send original documents and complete the transaction. Effect: the buyer holds the legal title to the property.

Answer 22

The seller's mortgage is discharged and the lender of the seller will either complete a Land registry DS1 form, submit an electronic discharge or an electronic message to the Land Registry that discharges the charge. The seller's solicitor sends TR1 to the buyer's solicitor, who must arrange for SDLT or LTT to be paid within 14 days for SDLT or 30 days for LTT after completion. If the buyer is a company, a new charge is registered in the Company’s house by the lender within 21 days of completion. Failure to meet the deadline renders the charge void against a liquidator or administrator unless the lender obtains a court order.

Answer 23

After SDLT or LTT is paid, the buyers solicitor/lenders solicitor must apply to have their title registered in the Land Registry Registered land: Form AP1 is filled out and must submit certified copy of transfer, certificate of SDLT/LTT and DS1. if there are overriding interests they must be listed in form DS1. If there is a mortgage, the mortgage deed must be sent. If the buyer is a company, the solicitor must confirm that the mortgage deed is the same as the one sent to the Companies House. Unregistered land: application of first registration is made 2 months after sale with FR1. documents needed: Evidence of title, Pre-contractual searches and enquiries Contract Requisitions of title Pre-completion search results Transfer deed Seller’s mortgage SDLT/STT certificate Form DI of any overriding interests.

Answer 24

Remedies for delayed completion: the contract will usually set out the date for completion. If not, completion is 20 working days after the date of the contract. If money is not paid before 1400 at the day of completion, completion is set as the next day. common law damages: measured as in Hadley v Baxdale: putting the claimant in the position they would have been in had the contract been performed correctly. Covers damages naturally flowing from the breach, which are reasonably foreseeable. A seller can claim damages in addition to contractual compensation. contractual compensation: set out in the standard conditions. SC: both buyer and seller can ask for compensation. In SCPC, only the buyer can ask for compensation. The rate is specified in the contract. notice to complete: can only be served after the completion date. Once served, the other party has 10 working days to complete and if they fail the party that served the notice can rescind the contract. If the buyer is in breach the seller can keep the deposit. If the seller is in breach, the deposit must be repaid. Rescission: to make the contract void. Under SC and SCPC, rescission is available if a party has failed to comply with a notice or a fraudulent or negligent misrepresentation by a seller.

Answer 25

Repair: FRI (full repair and insurance leases) protects landlords from incurring expenses that they cannot recover from the tenant. The tenant has the repair obligation of the whole building and is responsible for non-structural parts. Landlord is responsible for structural parts and common areas. If the damage is not covered by the insurance, the tenant is liable to repair the damage under the repair covenant. Case law on what is covered by “repair”: There must be despair/deteriorated from prior condition The property does not have to be in perfect condition, but fit for occupation Renewal or improvements go beyond repairs A tenant can be responsible for repairing an inherited defect of the design or construction if it is the only way or repairing the building.

Answer 26

The tenant could be responsible for insurance or the landlord could obtain insurance and pass the costs on to the tenants as a separate insurance rent. Usual covenants: 1. Landlord’s covenant to ensure insurance 2. Covenant by tenant to pay insurance costs 3. Covenant by the landlord to reinstate the property using the insurance. Could also include an obligation for the landlord to cover any shortfalls that the insurance does not cover 4. If there is no express regulation, rent must be paid even if the property is unusable. The tenant can take out a separate insurance in this regard, but it’s usually limited to 3 years.

Answer 27

Alterations: in the absence of alteration covenants, the tenant can make all alterations that they want. Most landlords include alterations clauses to restrict this and differ between e.g. structural alterations, exterior, affecting “service media” (light, heating, communication), demountable partitioning (using open floor for different rooms). Absolute covenants: would restrict all alterations included in the clause. In the Tenant Act 1927, the tenant can carry out “improvements” even with an absolute covenant after serving a notice and if the landlord does not object within 3 months. The landlord can offer to carry out the work for increased rent, and the tenant has no obligation to accept this. Qualified and fully covenants: consent is typically included in a separate “license to alter” document.

Answer 28

user and planning: landlords choose to restrict use e.g. not for business, restaurant etc. a covenant can be imposed a covenant restricting the use to certain Use Classes under the Town and Country planning Order 1987. The landlord can withhold consent, but cannot increase the rent due to use change as long as there are no structural alterations.

Answer 29

rent and rent review: periodic reassessment of annual rent, typical through: Fixed increase: rent will increase a set amount. Simple, but does not take into account circumstances at the time. Index-link: linked to e.g. Retail Price Index. Altered with inflation, but not the property market specifically Tenant’s receipt: often linked to the tenant’s turnover. Downsides if the tenant’s business falters Open market rent review: adjusted regularly every 3-5 years by reference to the open market rent value. Most common. Considerations in valuation: the property and terms of the lease. Should not take into account the tenants own faulty repairs (could sabotage rent review) or the tenants voluntary improvements (could negatively impact their willingness to improve) Rent review is often just upwards, no discounts. Regular intervals and independent termination.

Answer 30

Different ways of creating a benefit for a third party in a property, such as assignment, subletting, charging (mortgage), sharing occupation or parting for possession.

Answer 31

Assignment: one way to create a benefit for a third party in a property. 3 relevant statutory provisions: 1. Landlord and Tenant act 1927 s. 19(1)a: if there is a covenant not to assign, the statute implies that objection cannot be reasonably withheld 2. Landlord and Tenant act 1927 s. 19(1a): allows for the landlord and tenant to agree on conditions and circumstances where the consent cannot be unreasonably refused. A usual requirement is an AGA (Authorized guarantee agreement). 3. Landlord and Tenant act 1988 s. 1: where there is a covenant on assignment and consent cannot be reasonably withheld, the landlord must within reasonable time give consent or serve written notice why it was not given. Case Law on what is a reasonable excuse to withhold consent to alienation: not satisfactory references, a breach of repair where it is not certain that the assignee could repair, assignee competes with the landlords business, would reduce value, detrimental use, the assignee would require protection under Part II of the Landlord and Tenant Act 1954. An anticipated breach of the covenant could be a reason, but must be assessed based on the certain case. Caselaw on when it has been unreasonable: landlord attempts to obtain personal advantage, minor breach of repair covenant, slight harm to landlord was outweighed by the prejudice to tenant after the property had been on the market for 18 months.

Answer 32

Underletting: Underlease created by the tenant for a shorter term than the head lease. The risk of the new occupier is on the head tenant and not the landlord. The landlord can impose strict controls on the right to sublet and if permitted, landlord's consent is necessary. Statutory limitations Landlord and Tenant act 1927 s. 19(1a): consent may not be unreasonably withheld Landlord and Tenant act 1988 s. 1: where there is a covenant on subletting, consent cannot be reasonably withheld, the landlord must within reasonable time give consent or serve written notice why it was not given. The landlord concerns are normally Tenants forfeiture so that the subtenant becomes the tenant after applying to court for a relief. Both leases expire and the subtenant exercises statutory right to stay on the property under the Landlord and Tenant Act 1954 The head tenant is legally liable, but the physical control of the property is lost.

Answer 33

Code for Leasing Business Premises: voluntary code of practice, last updated in 2007 to introduce fairness and flexibility. New version published by RICS (the Royal Institution for Chartered Surveyors) in 2019, which came into operation on 1 September 2020. Must be observed by all RICS members and they need a good reason to depart from this. Binds surveyors and can lead to negligence claims if not followed, but does not bind the landlord. Mandatory requirements: - Lease negotiations in a constructive and collaborative manner - A party not represented by a RICS member must be advised on the code Transactional terms must be recorded in writing, with specific details: identity and extent of premises, term, amount of rent, frequency of payments and rent review, liability for paying insurance premiums, the ability to assign, underlet, charge, share premises and obligations to repair, alter and permitted uses.

Answer 34

Type of leasehold covenant: Absolute covenant: actions the tenant absolutely can not carry out. Qualified covenant: must obtain landlord's consent before carrying out. Fully qualified: consent cannot be reasonably withheld.

Answer 35

Landlord’s solicitor investigates title to ensure that the client is entitled to grant the lease. A tenant is not entitled to request that the landlord deducts title unless the lease is more than 7 years. If registered, title can be checked in the Land registry. For an underlease, there is no need to see the freehold title if the head lease is registered with absolute leasehold title. If the head lease is unregistered, the undertenant can ask for the head lease and all assignments for the last 15 years. The undertenant can only ask for deduction of the freehold title if the lease is for more than 7 years.

Answer 36

The landlords solicitor should provide the tenants solicitor with: Draft lease agreement (optional) Draft lease/underlease Evidence of freehold/head lease title Copies of planning consents Evidence of a lenders consent to grant the lease/underlease The tenant's solicitor would undertake the same searches as for a freehold purchase.

Answer 37

lease/underlease is prepared in two identical parts and exchanged upon completion. Must be signed by the landlord and tenant at least 5 days before completion. A lease is a legal estate in land and must be created by deed.

Answer 38

In addition to matters relevant to a freehold transaction, the landlord will upon completion receive: Executed lease/underlease Payable premium Payable lease in advance The landlord should give the tenant: executed lease, copies of freehold title deeds if unregistered land and if relevant copies of the landlord's consent

Answer 39

SDLT and LLT are potentially charged on any sum paid + rent. Non-residential property SDLT is calculated the same as for the sale of freehold. Must be paid 14 days after completion. A complex formula is used to calculate the rent aspect based on NVT (net present value): 0-150 000: 0% 150 001 - 5 000 000: 1% Over 5 000 000: 2% For first-time buyer relief, commercial property does not count, but holiday property abroad is included.. LTT: non-residential property is calculated similarly to SDLT. payable 30 days after completion: 0-225 000: 0% 225 000-2 000 000: 1% Over 2 000 000: 2% OBS In Wales, there is NO first-time buyer relief. Must pay LTT from the first pound.

Answer 40

A legal lease for 7+ years can be registered as its own right upon completion, irrespectively of whether the freehold is registered. A legal lease for less than 7 years is not capable of being registered. Registered land: overriding interest Unregistered land: binds the world irrespective of notice.

Answer 41

pre-contract enquiries and searches: same as for freehold + ask for the last day of the insurance, check that the assignor is not in breach of rent by asking for the last pay and if there are any breaches that will be enforced by the landlord.

Answer 42

Usually provided in commercial leases, but must check that the landlord will consent at the pre-contract stage. Landlord might want to check references and solvency. Landlords can require undertaking from the assignors solicitor about costs being covered. If consent is not obtained before or on completion , the assignor could be in breach of agreement. SC: either party can rescind the contract if consent is not obtained. SCPC: if landlords consent is not obtained on completion, completion is postponed until 5 business days after the buyer is notified that consent is OK. The contract can be rescinded if consent takes more than 6 months from the original completion date.

Answer 43

pre-completion formalities: registered lease: search in leasehold title OS1 to ensure priority for 30 business days. Unregistered lease: land charges search to ensure priority for 15 business days. Company search of either party is a company. The landlord's solicitor supplies copies of the lease which must be made by deed if it contains covenants. AGA is created if required. Apportionment of rent (in advance) is usually required.

Answer 44

Usual condition for consent is that the undertenant enters into a direct covenant with the landlord to perform covenants in head lease and underlease. Normally there is no privity of contract between the landlord and undertenant, and the landlord would be unable to sue the undertenant. With a direct covenant, there is a contractual relationship and the landlord can sue the undertenant. Assignment of lease: relationship between the landlord and the assignee depends on whether the lease was entered into before or after 1 January 1999. Before 1 January 1999: assignee is liable under the doctrine of privity of estate for all covenants that touches and concerns the land for as long as the lease vests in the assignee. The landlord will seek to expand the assignees covenant by extending the scope until the end of the lease. After 1 January 1999: an assignee is liable for breach of covenant whilst the lease vests in them, but the assignee is automatically released on an assignment (Landlord and Tenants Act 1995). The landlord must require a guarantee from the assignor instead. For leases after 1 January 1999 can include an AGA (authorized Guarantee agreement) where the assignor guarantees to perform covenants if the assignee does not.

Answer 45

Action in debt: recoverable through the High Court and County court with a limitation of 6 years. Forfeiture: 1. Non-payment of rent: brings the lease to an end and the property reverts back to the landlord. Lease must contain a forfeiture clause. The landlord can forfeit through a peaceful entry or by obtaining a court order. 2. Breach of repair clause: the landlord must serve a notice under the Law of Property Act 1925 where they specify the breach, require a remedy within reasonable time and require payment for the breach. Forfeiture can be done by court-order or peaceful re-entry. Commercial Rent Arrears Recovery: CRAR permits the landlord to enter the property, seize and sell goods. Only possible for commercial premises and on 7 days notice + an enforcement agency must be used. The landlord can only recover rent and e.g. service charge is nor recoverable. Pursue guarantors and/or rent deposit: guarantor is sued in the same way as the tenant. Possible under old lease for old tenants and new lease under an AGA. A rent deposit is usually deposited with the landlord if he has doubts about payment. May be retained if rent is not paid. Specific performance: for a covenant to repair, a specific performance could be available as an equitable remedy. Granted in the previous case as there was no forfeiture clause, damages were not adequate, the order was not to harass the tenant and it was appropriate. Damages: remedy for breach of a repair covenant, but statutory restrictions on what sum the landlord can recover: Landlord and Tenant Act 1927 s. 18: limits the amount to the despair of the landlord’s building. No value. The Leasehold Property (Repair) Act 1938: for leases of 7+ years with more than 3 years left, a notice must be served and the tenant can serve a counter notice within 28 days where the landlord must obtain a leave of absence from court to continue. Self-help/Jervis v Harris clause: the landlord can repair themselves and recover the costs. Most leases contain self-help clauses.

Answer 46

Effluxion of time: automatic end of fixed-term lease after the contract ends Notice to quit: given under a periodic lease. Surrender: the tenant yields the lease and can only be achieved if the landlord and tenant agrees. Merger: when the tenant requires the immediate reversion of the lease. The opposite of a surrender.

Answer 47

renewal lease by the tenant: a tenant could either just remain on the property and wait for a s. 25 notice or serve a s. 26 notice requesting a new tenancy. S. 26 request must state the date of the new tenancy, and the tenants proposal. The time limits of a s. 25 notice applies i.e. between 6-12 months notice. A landlord can oppose a s. 26 request and serve a counter-notice within 2 months after the 26 notice. The tenant must then apply to court for a new lease before a new tenancy as specified by the tenant in the s. 26 notice.

Answer 48

Landlord and Tenant Act 1954 (Part II) – common law method of termination may not apply if the tenancy falls under this Act. Application of 1954 Act: s. 23 states that it covers premises “occupied for business”. There must be a tenancy - does not cover leases. The property must be occupied (through medium or agent is enough) and it is for business purposes. Excluded businesses: tenancy at will, fixed-term tenancies of less than 6 months, fixed term leases that are “contracted out (a written warning must be given to the tenant), ”certain businesses including farms, agricultural and mining" The effect of the Landlord and Tenant Act 1954 is that termination must follow the provisions of the act. Even upon termination, the tenant has a right to apply to the court for a new tenancy. Termination can be done by 1 of 7 methods: 1. Service of a landlord's notice under s. 25 2. Service of the tenant’s request of a new tenancy under s. 26 3. Forfeiture 4. Surrender 5. Periodic tenancy: the tenant gives the landlord a notice to quit 6. Fixed-term lease: tenant serves three months notice 7. Fixed term lease: tenant ceases occupation for business purposes at the end of the lease.

Answer 49

Termination by the landlord: S. 25: landlord must serve a notice to the tenant. Different forms based on whether the landlord wants the property back or to grant a new lease. If a new lease is to be granted, the landlord must indicate the terms. The landlord must state the date for which it wants the tenancy to end and notice cannot be served less than 6 months or more than 12 months before the date specified in the notice. If the landlord is too late serving notice, the tenancy is extended at the same time. If the landlord indicates in the s. 25 notice that it will oppose a new tenancy, the tenant must apply to the county court before expiry of the notice. The tenant can pre-empt the tenant’s application to the court by applying for an order to terminate the lease.

Answer 50

landlord’s grounds of opposition s. 30 A s. 25 notice or counter-notice to a s. 26 request must state the landlords reasons for opposing the renewal of the lease: A Tenants failure to repair B Persistent delay in rent C Substantial breach of other obligations D Landlord has offered alternative accommodation E Tenancy is an underletting of part (rare) F Landlord intends to demolish or restructure G Landlord intents to occupy for its own business or residence A, B, C and E are discretionary and the court will decide whether the tenant will be offered a new lease. D, F and G are mandatory and F is most common. If the landlord is successful with an opposition under s. 30 E, F or G, the tenant will not be granted a new lease, but will be entitled to compensation equivalent to the value of the ease. Exception: the tenant and predecessors of the same business have occupied property for at least 14 years - then the value is 2 x the rateable value. Agreements restricting compensation are void if tenants have occupied for more than 5 years.

Answer 51

“Development”: defined in Town and Country planning Act 1990 (TCPA 1990) s. 55 as carrying out building, engineering, mining and other operations (BEMO) in, on, over and under land, or making of any material change in the use of any buildings or other land. Planning permission is required for any development. Matters that do not constitute “Development” Maintenance, improvements or other alterations of a building that only affects the inside, or do not materially affect the external appearance. A change of use within the same “use class” in TCPA s. 55(2): B2 General industrial B3 Storage and distribution C Residential (includes hotels) E Commercial, business and service (introduces 1 September 2020 and includes e.g. professional services) F Local community and learning Sui generis use: not in the TCPA, but uses that potentially could have adverse effects on their surroundings e.g. pubs. Change to and from a sui generis use always requires planning permission.

Answer 52

Planning law: whether a building can be built, altered, extended + specifies use. Planning matters run with the land, so any breach would be the current owners problem.

Answer 53

Even if planning permission is needed as above, it is not always necessary to apply for an express permission. Sometimes it is automatically granted under the Town and Country planning Order 2015 (Generally permitted Development Order GPDO). Most common exemptions: Dwelling houses under a certain size e.g. small extensions and porches, fences and gates. Minor operations e.g. painting or CCTV Certain changes between use class orders and sui generis rights The effect of GPDO can be excluded by the Secretary of state. Apply for a “Certificate of lawfulness of proposed use or development” to the LPA to ensure that the relevant development does not require planning permission .

Answer 54

Concerns the health and safety of buildings e.g materials and construction methods. May be inspected by a building control officer who can distribute a certification of compliance. Proceedings from local authorities must be brought within 2 years after work was completed.

Answer 55

basis of charge in both England and Wales for: England: SDLT, Wales: Land Transaction Tax LTT.

Answer 56

Enforcement notice: may be issued by LPA on anyone with an interest in the land and has effect 28 days after service. Specifies the alleged breach and steps to be taken. May be appealed Stop notice: has effect 28 days after it is served and activities must end before it takes effect. An enforcement notice is served before a stop notice. The LPA can also serve a temporary stop notice, to stop work for 28 days or even an injunction. The LPA can serve a breach of condition notice, for breach of conditions in a planning permission. Injunction: failing to meet the deadline below means the LPA can’t take any actions. enforcement actions must be taken at least: 4 years after the development was carried out 4 years for change of use to a dwelling house 10 years after the date of breach for all other breaches

Answer 57

STT in Wales has been effective since 1 April 2018 and is basically identical to SDLT. LTT is payable 30 days after completion of the transaction.

Answer 58

SDLT was introduced 1 December 2003 and is a tax on the property transaction. SDLT is due 14 days after completion of the transaction to the HMRC. Ff SDLT is not paid, the property transfer is not registered in the Land Registry. SDLT is payable on land + fixtures but NOT chattels. There are higher rate if the buyer already owns a property or is nor a UK resident

Answer 59

Residential (freehold) property SDLT: Relief for first time buyers of a property up to 500 000 GBP: no SDLT on the first 300 000 GBP and then 5% from 300 001 - 500 000. Rates for buyers that are not first time buyers: Up to 125 000: 0% 125 000 - 250 000: 2% 250 000 - 925 000: 5% 925 000 - 1 500 000: 10% Remainder: 12%

Answer 60

non-residential freehold property SDLT: SDLT rates for non-residential property: Up to 150 000: 0% 150 000 - 250 000: 2% Above 250 000: 5% If VAT is charged, SDLT is payable on the VAT-inclusive sum!

Answer 61

Residential property LTT: No relief for first time buyers LTT rate for residential property: Up to 180 000: 0% 180 000 - 250 000: 3.5% 250 000 - 400 000: 5% 400 000 - 750 000: 7.5% 750 000 - 1 500 000: 10% Remainder: 12%

Answer 62

Most residential property transfers do not involve any payment of VAT. sale of new buildings are zero-rate. Commercial property differs between old and new property: Old property: Sale of greenfield site is subject to optional tax Sale of old freehold building is exempt, subject to optional tax. Grant of a lease is exempt, subject to optional tax New property (within 3 years of completion): Construction services are standard rate at 20% Professional service e.g. architect are standard rate at 20% Sale of new freehold building is standard rate Grant of a lease is exempt, subject to optional tax If having the choice to tax e.g. if a seller buys an old commercial building there is a reason to choose optional tax: it can be offset against any input tax incurred in relation to the building e.g. building work or professional fees. A disadvantage is that the seller has to pay VAT on the purchase price, if the seller only can make a partial recovery through input tax. If the option to tax has been made before the date of the transaction, the VAT counts as a chargeable asset for SDLT/LTT and the seller has to pay tax on tax.

Answer 63

Non-residential property LTT: LTT rate for non-residential property: Up to 225 000: 0% 225 000 - 250 000: 1% 250 000 - 1 000 000: 5% Reminder: 6%

Answer 64

CGT: Charged on gains made on “chargeable assets”. Includes gifts, sale of freehold or leasehold, or sale of interest in co-owned property, or modifications of some easements and covenants Rates: 28% on residential property and 20% on gains from all other assets (e.g. shares).

Answer 65

principal private dwelling-house exemption. Private residential relief PRR: sale of a dwelling house used as someone’s main residence throughout the ownership of the property. If a person has more than one property, they can choose which one they want to use PRR on. Certain periods of absence are OK. if the property is over 0,5 hectare, the excess is chargeable with PRR.

Answer 66

4 years from the date of breach where any building operations have been carried out without planning permission 4 years from an unauthorised change of use (the day the use changed) 6 years from the date of breach of any planning control

Answer 67

The title deeds should include the “root of title”, usually the most recent documents that satisfies all requirements for a good root of title. Older documents can then be ignored, except for if the root of the title refers back to an older document. Requirements of a good root of title: 1. Must show who owns the entire interest (legal and equitable) being sold 2. Contain a recognisable description of the land 3. Does not cast doubt on the seller’s title 4. Is at least 15 years old E.g. a root of title/conveyance with covenants would be insufficient.

Answer 68

Under common law, from the moment the mortgage is executed.