Option 1

You can elect to make a stamp duty payment on completion – at the relevant rate – on the whole value of the property (i.e. the current rate on a £250,000 property is 1 per cent and therefore a payment on completion of £2,500.) This option means that should you purchase further shares in your property, usually known as staircasing, you will not have to make any further stamp duty payments.

Option 2

Your other option is to elect to make a stamp duty payment – again at the relevant rate – on the share you are purchasing (i.e. the current rate on a purchase of a £100,000 share is 0 per cent and therefore no stamp duty would be payable on completion.) This may seem the more attractive option to take but if you have plans to purchase further shares in your property, those transaction(s) may attract stamp duty at the relevant rate in the future.

As we know, the first-time buyer stamp duty tax relief comes to an end on 24 March 2012 and consequently many first-time buyers are hurrying to take advantage of electing option number 1, as they can still seek the relief at 0 per cent up until this date.

It is always essential that you ask your solicitor about all the options open to you, so that you ensure you choose the best option for you!

The statement included further details of the NewBuy Guarantee scheme, which was initially announced as part of the Government’s Housing Strategy, and is expected to become available from Spring 2012. Further details on the scheme are available here.

The NewBuy Guarantee scheme, which has been developed jointly by the Home Builders Federation and Council of Mortgage Lenders, aims to assist buyers to buy a new-build home if they have a deposit of at least 5 per cent. The scheme will allow eligible borrowers to secure up to a 95 per cent Loan-to-Value mortgage on new-build houses and flats from participating builders in England. All mortgage lenders and house builders have been invited to sign up to the scheme. Further details are here.

The Government is supporting the scheme to help those home buyers who are unable to purchase a property because they do not have a large enough deposit.

The scheme applies to new-build residential properties (priced up to £500,000) that are being sold for the first time or for the first time in their current form. The scheme is for primary ownership only and is not available for shared ownership, shared equity purchases, second homes, investors, or buy-to-let. To be eligible for the scheme, purchasers must be UK citizens or have a right to remain indefinitely in the UK.

The Government anticipates that the scheme will help 100,000 households buy a new home.

The new online system will provide conveyancers with instant Buildmark cover information and access to all the associated documentation. This is good news for purchasers of new homes as it should help to speed up the conveyancing process.

Conveyancers will be able to:

1. Check whether a property is covered by Buildmark prior to exchange of contracts;

2. Complete the acceptance form online; and

3. Check and download all of the NHBC documentation, including the Insurance Certificate, policy documents, warranty status, and the CML Cover note.

The new process will allow any amendments to be made directly on to the system, thus avoiding the delays and costs associated with having to issue revised paper-based documents.

The change is good news for both homeowners and housebuilders.

As well as generally speeding up the conveyancing process, there should also be fewer cases where contracts are exchanged for the purchase of new homes where cover is not in place. In the event that there is a problem with the cover (e.g. if cover is not available as the builder or developer is no longer registered with NHBC), then that information will be available to view immediately. Builders and developers will also benefit because there will be no acceptance-related paperwork to store or send.

The note provides an overview of what Build Now, Pay Later is, the advantages it brings to housebuilders, and the terms which government departments will ask developers to bid on when they are disposing of their land.

The Build Now, Pay Later scheme is intended to make it easier for developers to manage their development cash flow, as they do not have to pay upfront for the government-owned land. Housebuilders will pay for the land after they have started work on the new homes, meaning that they can start building immediately.

The scheme has been launched in conjunction with the Government’s decision to release public sector land for housebuilding, with the aim of building 100,000 new homes by 2015. The need for new homes is urgent, as recent figures have revealed that housebuilding is now at its lowest levels since the 1920s (click here for more details.)

In its note, the Government has admitted that Build Now, Pay Later is not appropriate for all sites, and will tend to be more beneficial on larger more complicated sites which will require significant capital investment to unlock.

There are two Build Now, Pay Later models: Phased Payments and Risk Sharing.

The Phased Payments model is where the land value or base price is apportioned across a number of phases with specified dates for when payments will be made. The housebuilder bears less initial risk, as payments are linked to completed or sold phases. The timing of payments and percentage of land value paid on completion of each phase can be varied to suit the risk characteristics of the site.

The Risk Sharing model allows housebuilders to share the risk and reward from the movement in house prices and the subsequent revenue generated. However, the risk of fluctuations in development costs will be borne by the housebuilder.

Increasing housebuilding is one of the Government’s key objectives in its Growth Review, and it is also hoped that the Build Now, Pay Later will create and sustain thousands of jobs in the construction sector.

Following on from the Government’s recent introduction of a new-build indemnity scheme to help purchasers of new-build properties who are struggling to obtain a mortgage, the Council of Mortgage Lenders has said that over the past few months it has received a “steady trickle” of enquiries from local councils who want to be able to offer mortgages to local residents.

But are local councils really able to offer mortgages?

Well, actually yes. Despite what most people may think, local councils are able to offer mortgages without having to register with the Financial Services Authority, which regulates mortgage lending.

And they used to be popular.

During the 1960s, 1970s and early 1980s, thousands of homeowners had mortgages with their local councils. Local councils were able to offer cheap mortgages, mainly because they could borrow money at rates that were only slightly higher than those available to the UK Government; however, by the mid-1980s these loans became less attractive when mortgage finance became more readily available from banks and building societies.

And it also appears that established lenders are prepared to work with local councils in offering mortgages.

In March this year, fifteen local authorities across the UK agreed to put money into a Lloyds TSB scheme – entitled Local Lend a Hand – to increase the deposits of first-time buyers trying to buy a home in their areas; in some cases, first-timers have been able to buy a home with a deposit of as little as 5 per cent.

Borrowers can be rest assured that if they take out a mortgage with their local council and fall into arrears, the local council must uphold the FSA’s Treating Customers Fairly requirements (as any bank or building society would have to.)

Whether the local council mortgage makes a full national comeback remains to be seen, but for homebuyers in certain parts of the country it could be a viable option.

The introduction of a new-build indemnity scheme, aimed at increasing the supply of affordable mortgage finance for new-build homes will be welcomed by cash-strapped first-time buyers with little savings. The scheme will be available to all potential buyers, subject to appropriate mortgage underwriting criteria, except buy-to-let investors and second home owners.

Under the scheme, homebuyers will be able to purchase a new-build house or flat with only a five per cent deposit. Housebuilders and the Government will contribute up to 95 per cent of the cost of the home to an indemnity fund, which will be used to pay out to a lender if a buyer defaults and where there is a shortfall if the property is repossessed.

The scheme is open to all housebuilders and all lenders operating in England. Mortgages will be available under the scheme from March 2012.

According to the Government, the following lenders have agreed in principle to participate in the scheme: Barclays, HSBC, Lloyds Banking Group, Nationwide, RBS, Santander and Yorkshire and Clydesdale Banks.

The Government has also confirmed that more than 25 homebuilders have agreed in principle to participate in the scheme: Barratt Developments, Crest Nicholson, McCarthy and Stone Retirement Lifestyles, Bellway, Fairview New Homes, The Miller Group, Bloor Homes, Galliford Try, Persimmon, Bovis Homes Group, Gladedale Group, Redrow, Taylor Wimpey, Antler Homes, Grainger, Stewart Milne, Aquinna Homes, Jones Homes, Places for People Group, Banner Homes Group, Morris Homes, Strata Homes, CALA Group, Nicholas King Homes, Urban Renaissance Villages Ltd, Croudace Homes Group, Octagon Developments, William Davis, and Heyworth Developments

Also, social housing tenants will encouraged to buy their homes after the Government offered them up to a 50 per cent discount under the Right-to-Buy scheme.

However, as expected, the Government confirmed that the stamp duty land tax relief for first time buyers will end on 24 March 2012, as planned. The loss of this relief is disappointing. Although the Government said that the relief had been “ineffective” in increasing the number of first-time buyers entering the property market, it is highly probable that there would have been fewer first-time buyers if it hadn’t been in place.

Well, the county of Cornwall will shortly launch a scheme of its own.

Their scheme is similar to FirstBuy, but is tailored to Cornwall only. Rather than seeking contributions from developers through section 106 agreements, Cornwall Council will offer the developer the option to sell homes at a discount of up to 40 per cent. This discount will then be passed over to the Council as an equity loan to the purchaser. (First-time buyers would have to take out a mortgage to cover the rest of the cost.) When the home is eventually sold, the Council would be repaid this percentage of the market value by the homeowner. This money will then be used to help other purchasers in the county.

The Council has said that the new scheme will also enable small and local developers to get involved (rather than just volume housebuilders, who are predominantly used in the FirstBuy scheme.)

Any scheme to help first-time buyers and housebuilders should be supported, and Cornwall Council is showing that local authorities can get involved in helping local people.

EPCs provide information on how energy-efficient a building is and make recommendations on how to reduce that building’s energy use and carbon dioxide emissions.

Subject to Parliamentary approval, the Government intends to make the following changes:

1. The duty to commission an energy performance certificate (EPC) before marketing a property will be extended to the sale and rent of residential and non-residential buildings;

2. The current 28-day period within which an EPC should be obtained using “all reasonable efforts” will be reduced to 7 days. (However, there will be an additional 21-day period during which the EPC can be obtained if it has not been secured within the initial 7-day period);

3. The requirement to include an EPC with written particulars will apply to all residential and non-residential buildings, whether offered for sale or rent. It will not be possible to only include the asset rating;

4. The powers of Trading Standards Officers (TSOs) will be increased so that they can force estate agents and letting agents (and not just landlords or building owners) to prove that an EPC has been commissioned and to produce a copy of it for inspection. This will mean, for example, that TSOs will be authorised to require estate/letting agents to produce evidence that an EPC has been commissioned in circumstances where they are marketing a building without one;

5. An air-conditioning inspection report (if required) will have to be lodged on the central EPC register. (This will no longer be voluntary); and

6. Regulation 5 of the Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007 will be amended to make it clear that the provision of the EPC cannot be delayed until shortly before the parties enter into a contract for sale or rent.

These changes were supposed to have been implemented in two stages – on 1 July 2011 and 6 October 2011, so we will have to wait and see whether the Government sticks to its new April 2012 date. It certainly seems strange that the Government is pressing ahead with these changes in spite of their stated intention to reduce the burden of red tape on businesses.

In the paper, the RICS suggests that a home’s sustainability features should be reflected in its market value. Consequently, when assessing a property, residential property valuers will need to be fully aware of both sustainability policy and each building’s “sustainability characteristics”, such as its energy efficiency rating; the materials used in its construction; its energy-efficient features; its proximity to public transport links; and its potential to be adapted to occupiers’ changing needs in the future.

The launch of the paper indicates that sustainability is likely to become an increasingly important factor in residential property valuation.

The guidance applies to high street and online estate agents, property auctioneers, buyers’ agents, and solicitors and online property sites which offer services that count as estate agency work.

The new guidance focuses on two important pieces of legislation: (1) the Consumer Protection from Unfair Trading Regulations 2008, which prohibit traders/estate agents from engaging in commercial practices that are unfair to sellers, buyers, potential sellers and potential buyers of residential property, and (2) the Business Protection from Misleading Marketing Regulations 2008, which prohibit traders/estate agents from using misleading marketing when they advertise services to potential business clients or market commercial property for sale.

The draft guidance seeks to clarify how these two Regulations apply to estate agency work. It contains examples of trading practices that could breach the Regulations, and offers practical steps that businesses can take to comply with the law when they do any of the following:

1. advertise for new business, including through flyers, websites, newspaper advertisements and verbal discussions;

2. provide advice to new clients and take new instructions;

3. market properties, including when property details are put on the Internet;

4. negotiate and make sales; and

5. deal with complaints.

Currently, if you are convicted of committing a criminal offence under the CPRs or BPRs, you could face a fine not exceeding the statutory maximum , which is £5,000 (if convicted in the Magistrates Court), or an unlimited fine and/or imprisonment for up to two years (if convicted on indictment in the Crown Court.)

Also, under the Estate Agents Act 1979, if the OFT deems a business to be unfit to engage in estate agency work, it can issue a prohibition order banning the business from doing so.

The deadline for responding to the consultation is 9 December 2011. After this date, the OFT will publish its final guidance and a summary of the responses received.

The National Housing Federation (NHF) has warned that over the next ten years, home ownership in the UK will fall to its lowest level since the mid-1980s.

The NHF’s prediction follows the publication of the Oxford Economics’ ‘Housing Marketing Analysis’ report in July 2011, which paints a pretty bleak future for the housing market.

Owner occupation rates are predicted to drop to just 63.8 per cent over the next decade – the result of high property prices, strict lending requirements by banks and building societies, and the need for large deposits from borrowers. This, combined with rising rents (forecasted to increase by 19.8 per cent by 2016), long social housing waiting lists (currently standing at 4.5m people) and fewer new homes being built, all suggests a difficult future for a whole generation of people.

So, how can we avoid this bleak future for housing?

With only 67 per cent of the UK population owning their own home, an increase in the construction of new houses is required. In 2011, only 105,000 new homes were built in England – the lowest level since the 1920s – and residential planning permissions are dropping. Thing have got so bad that last week Grant Shapps, the housing minister, said that local authorities should encourage their residents to live on boats! He even said that new moorings could be eligible for the New Homes Bonus.

With so many property organisations calling for more housebuilding, for more unused public land to be made available to housing associations, and for more residential planning permissions, it will be interesting to see whether the Government sticks to its proposed planning reforms, particularly in the face of opposition from anti-growth organisations and, according to a survey by the ConservativeHome website, even a majority of Conservative Party activists.

Through FirstBuy, the Government and housebuilders will jointly offer a 20 per cent equity loan to eligible first-time buyers to help them purchase a new-build property. The first-time buyer will then have to provide a five per cent deposit and obtain a 75 per cent mortgage on the rest of the property. The loans will need be repaid on the resale of the property.

Mr Shapps has now confirmed that over 100 housebuilders will take part in the FirstBuy scheme, by offering their new-build homes for sale to first-time buyers. A full list of these housebuilders is available here (Excel Spreadsheet.) The Government has also confirmed that the Halifax, Nationwide, Barclays, and The Melton Mowbray Building Society will be offering loans on these purchases.

This scheme is to be welcomed by both first-time buyers and housebuilders who have struggled in the recession. It will particularly benefit those buyers who can afford the monthly mortgage payments on a property, but who have been unable to purchase a house because they simply haven’t saved enough money to put down a 10-20 per cent deposit. To find out if you are eligible to take part in the scheme, please click here.

The first homes are expected to become available in September 2011.

1. Assistance for first-time buyers

The Government announced that it will provide £250m to support first-time buyers in purchasing new-build properties. The FirstBuy programme will assist over 10,000 households by providing equity loans of 20 per cent of the cost of relevant properties. These loans will be jointly funded by the Government and housebuilders. The purchaser will have to provide a 5 per cent deposit.

2. Reform of the rules governing bulk purchases of residential property

The Government will use the Finance Bill 2011 to introduce legislation that provides stamp duty land tax (SDLT) relief for residential property purchasers who acquire interests in more than one dwelling from the same seller. This means SDLT charges will be based on the average value of the multiple properties, rather than the value of each individual home. A minimum SDLT rate of 1 per cent will apply.

The Government hopes that this relief will encourage investment in residential property and promote the supply of private rented housing.

3. Withdrawal of disadvantaged area relief

The Government has announced that SDLT and stamp duty relief for land transactions in disadvantaged areas will be abolished after 2012. The final date for abolition will be decided following consultation.

4. First-time buyer SDLT relief

The Government will announce the outcome of its review of first-time buyer SDLT relief in autumn 2011. Currently, first-time buyers can claim a relief from SDLT if the amount they paid for the residential property does not exceed £250,000.

5. Extension of the Support for Mortgage Interest scheme

The Government will extend the Support for Mortgage Interest (SMI) scheme until January 2013. SMI is currently available after 13 weeks at 100 per cent of eligible mortgage interest on mortgages of up to £200,000. This benefit was due to end in January 2012.

If you have any queries about the SDLT changes, particularly those made to bulk house purchasing (which will be welcomed by the property industry), please contact my colleague Shimon Shaw, who specialises in this area, at shimon.shaw@mablaw.com.

But here is some good news.

Stamp duty on property (SDLT) has to be one of the most hated taxes out there.  It is a tax on mobility and, like VAT, is imposed on cash which in most cases has already been taxed.  Not only that but it makes moving house a lot more expensive.  Hence the spread of stamp duty planning in recent years, even to transactions which in the past would never have been considered for this.

So a ray of sunshine in the doom and gloom is welcome.

An SDLT case was heard in the Tax Chamber of the First-tier Tribunal towards the end of last year.  Deputy Judge Charles Hellier heard arguments over a scheme used to avoid SDLT on the £65.1m purchase of a property in London’s Regent Street in October 2006.  The SDLT scheme in question involved a subsale of the property to a partnership resulting in no SDLT being payable.

This was the first occasion a court or tribunal has considered an SDLT scheme and its importance lies in the attitude of tribunal to the technical arguments SDLT schemes rely on.

And the winner was…..the taxpayer.

The judgement has not yet been published but watch this space as this article will be followed by an examination of the tribunal’s approach and a consideration of how this will impact on future schemes.

The PMA 1991, which came into force on 4 April 1993, makes it an offence for estate agents, auctioneers or property developers in the course of their business to make false or misleading statements about a property offered for sale. The Property Misdescriptions (Specified Matters) Order 1992, made under the PMA 1991, lists the 33 specified matters about which false or misleading statements must not be made (these include location or address; aspect, view or outlook; measurements and sizes; physical or structural changes; fixtures and fittings; and treatments, processes, repairs or improvements.)

BIS believes that the protection given to house buyers by the PMA largely overlaps with the protection given by the Consumer Protection from Unfair Trading Regulations 2008 (CPR 2008). The CPR 2008 implemented in the UK the EU Unfair Commercial Practices Directive and prohibits all traders from engaging in unfair commercial (mainly marketing and selling) practices against consumers, and set out the rules that determine when commercial practices are unfair.

BIS feels that this duplication places an unnecessary regulatory burden on businesses without giving any additional protection to consumers, and, consequently, has recommended that the PMA 1991 should now be repealed.

The closing date for responses to the consultation is 5 April 2011. Once the consultation has closed, the Government will consider all the responses received and then decide whether the PMA 1991 will be repealed.

Currently, the highest rate of SDLT payable on residential property is 4 per cent, which is chargeable on all purchases exceeding £500,000.

However, that is about to change.

In March 2010, the former Labour Government announced that a new 5 per cent SDLT rate on purchases of residential property of more than £1m would come into effect from 6 April 2011. Despite a change of government in May 2010, the newly-elected Coalition Government confirmed in its June Budget that the 5 per cent SDLT rate would still be brought in.

Matthew Arnold & Baldwin residential property partner Richard John has spoken to The Watford Observer about the issue. To read this and find out more about the impending change, please click here.

If you have any concerns about the SDLT rise, please contact Richard at richard.john@mablaw.com or on 01923 202020.

If you miss the deadline it could be costly, as paper returns filed after this date could mean a £100 penalty.

An alternative to paper-filing is to file your return online, which benefits from a January deadline.

If you would like assistance in preparing and filing your tax returns, please contact James Odds on 01923 202020 or james.odds@mablaw.com.

Two sisters had each made a will in 1991.  They had made mutual promises to each other and as part of that had agreed that the will of the survivor would not be altered so as to change those gifts.  The surviving sister did, in fact, alter her will in 2003 and the persons who would have been the beneficiaries under the surviving sister’s original will went to court (after her death) to ask the court to give effect to the 1991 will.

Neither of the wills contained any record that they had been made pursuant to an agreement between the sisters but it was apparent from the provisions of the wills that the terms had been carefully discussed and agreed.  The court was asked to apply the doctrine of mutual wills.

The court ruled that for the doctrine of mutual wills to apply there had to be what amounted to a contract between the sisters that both wills would be irrevocable and remain unaltered.  A common intention, expectation or desire was not enough.  The mere execution of mirror or reciprocal wills did not imply any agreement either as to revocation or non-revocation.  The agreement had to be established by clear and satisfactory evidence on the balance of probabilities.

In the light of the evidence, there had been an agreement between the sisters at the time they had made their 1991 wills.  They had made mutual promises to each other and it was part of those promises that the will of the survivor would not be altered so as to change those gifts.

This case, once again, highlights the importance of proper and qualified legal advice when drafting wills.  None of this would have been necessary if the sisters advisers had ascertained their intentions as to revocation, advised as to the effect of making mutual wills and ensured that any agreement they wished to make was clearly and accurately recorded.

If you want to speak to someone about making a will please contact Suki Sandhu or Emma Alford on 01923 202020 or email info@mablaw.com.

If you have a concern about your entitlement under someone else’s will please contact Amanda Melton on 01923 202020 or amanda.melton@mablaw.com.

The CBI argues that decreasing the deficit should be done by controlling spending rather than increasing taxes.   Specific points made by them include:

• The CBI wants to see a broad definition of business assets (which would benefit from tax relief) to prevent disincentives to investment or start-ups, and the tax should be structured to minimise the impact on long-term investment.
• The CBI is encouraged by the Dyson commission’s support for the R&D tax credit and urges the Government to retain it in its current form.
• Changes to tax treatment of pensions, planned to come into force from April next year, are unnecessarily complex and expensive to administer, and in their current form would make it harder for UK businesses to attract and retain global talent.

Undoubtedly, their concerns are echoed across the country.  I have spoken with many clients concerned about their own position if capital gains tax increases on 22 June.  Whilst there are steps which can be taken prior to then, the time for doing so is getting increasingly tight.

If you want to speak to an advisor about CGT increases please call 01923 202020.

The thinking behind this is that the rate is (relatively speaking) low at 5% compared to 17.5% VAT, which is what is already charged on certain types of insurance, such as travel insurance.  We also charge less IPT than some other EU countries.

The other thing which can’t have escaped notice is that premiums are already rapidly increasing and once people have forgotten about the budget they’ll probably blame their insurers.

The only people who are likely to benefit from this are meerkats.

Shortly, these are the facts. Miss Jones, “a peripatetic hairdresser”,  was 26 when she met Mr Kernott in 1980 and 3 years later they were sharing her caravan,  a year before their first child was born in 1984. In 1985 Miss Jones sold her caravan and she and Mr Kernott jointly purchased a house for £30,000.  The purchase was funded by £6,000 of Miss Jones caravan sale proceeds and an interest only  mortgage in their joint names, backed by an endowment policy, also in their joint names. Mr Kernott was to do some repairs and refurbishment at the property, principally an extension, the size and effect of which was apparently to increase the value of the property by 50% on its purchase price.  In law,  although they clearly made different initial  financial contributions, they bought it as joint tenants, without specifying their respective interests, an ommission still depressingly common today. No declaration of trust was drawn up or any form of cohabitation agreement. The judgment makes no mention of whether the parties made wills or if they did what they provided, so it is probably fair to assume that they were “paperwork lite” in their arrangements, as is so often the case.

Miss Jones and Mr Kernott had a second child in 1986. Miss Jones continued as a home hairdresser and Mr Kernott was variously an ice cream salesman or a builder or on benefits. Mr Kernott gave Miss Jones £100 a week as housekeeping and that, with her earnings, met all the household outgoings, including the mortgage and endowment payments. Mr Kernott appears to have bought the extension materials and built it.

In 1993, 13 years after their relationship started and 8 years after their house purchase, Miss Jones and Mr Kernott parted. She stayed in the house with the children. The Court of Appeal don’t tell us where Mr Kernott then went, but by 1996 he was buying a property for himself.  From the time they separated, Mr Kernott paid nothing towards the house and gave nothing to Miss Jones for the children, although he saw them from time to time. Miss Jones redecorated several times over the following years, replaced the flat roof on Mr Kernott’s extension and added a gate and fences to the property.

In 1995, the property owned by Miss Jones and Mr Kernott was put on the market, but didn’t sell. In 1996 the joint names endowment policy was surrendered and divided equally, Mr Kernott using his share as the deposit on his new house. In 2006, once the property was no longer their children’s home, Mr Kernott asked Miss Jones for his share of the value of it. In 2007, Miss Jones launched an application under the Trusts of Land and Appointment of Trustees Act 1996 (often referred to as TLATA), seeking a declaration that she owned the entirety of the property, or that if she didn’t then she had an interest both in this property and the one that Mr Kernott had subsequently bought in his sole name using part of the joint endowment policy proceeds; Miss Jones later abandoned this alternative claim before the trial judge in Southend. In March 2008, Mr Kernott served a notice of severance of joint tenancy, ostensibly converting the joint ownership to a tenancy in common in equal shares. At the conclusion of that trial in April 2008, based on his analysis of their respective financial contributions to the property over the years, HHJ Dedman concluded that Miss Jones was entitled to 90% of the value in the property and Mr Kernott the remaining 10%, a conclusion he felt able to draw from the authorities of the House of Lords in Stack v Dowden (2007) and the Court of Appeal in Oxley v Hiscock (2004) and Goodman v Gallant (1986), the major decisions on beneficial interests in property. At that time the equity in the property was assessed to be £218,300; by comparison, Mr Kernott’s equity in the house he owned in his sole name stood at around £268,000.

Unfortunately for Miss Jones, two out of the three judges hearing Mr Kernott’s appeal in the Court of Appeal, saw it differently. On their analysis, a property bought in joint names, with no express indications to the contrary, is owned equally. On their view there had been no change to that ownership over the years, notwithstanding arguments that one had contributed more financially than the other, one had done more work on it than the other, or one had (and the other hadn’t) occupied it solely for some years.

In the leading judgment of Wall LJ, following Stack v Dowden “the conveyance into joint names…created joint beneficial interests and the parties agreed that when they separated they had equal interests. There has to be something to displace those interests, and I have come to the conclusion that the passage of time is insufficient to do so, even if, in the meantime, [Mr Kernott] has acquired alternative accommodation, and [Miss Jones] has paid all the outgoings.”  Consequently, Miss Jones owes Mr Kernott around £109,000.

Unless and until the Supreme Court see it differently, this remains the approach the Courts are required to apply in such cases. It can be avoided by evidence of an agreement to the contrary, either express or to be inferred. Rather than leave it to a judge to decide, best advice must be put such agreements in place, in writing, and compare periodically the arrangements the documents envisage with what is happening in fact.

Legal costs in dealing with and fighting boundary disputes are notoriously out of line with the monetary value of the issues in dispute and the effect on neighbour relations and stress high. “Principles” take over and costs mount to £1000s before you know it.  The alternative  is for the parties to try to resolve matters by agreeing terms with eachother on the best terms possible for both parties. There might be no winner and no loser, but a solution which both parties can live with without incurring huge costs and without further souring relations.

Alternative dispute resolution can help at the outset once solicitors are involved. Parties coming together on site with a mediator and solicitors can often focus the parties’ minds on the reality of the situation. On site resolution seems the most sensible and cost effective method of dealing with such a dispute rather than lengthy correspondence, compliance with Court procedure, the associated costs and growing animosity.  A day long mediation will be money well spent  if not to resolve matters entirely then to at least narrow down the issues remaining in dispute.  If matters cannot be resolved at such a meeting, then the parties can decide whether or not they wish to litigate and proceed with litigation but should be fully aware of the potential costs liability they may incur. This is not to say neighbours who wish to fight a boundary dispute should not, nor does it trivialise the importance of issues relating to someone’s property. It can be a commercial approach to dealing with what is otherwise an expensive and emotionally exhausting experience.

I met the news of the introduction of HIPs like most conveyancers, with some concern, but I now concede that in most instances, they have assisted the conveyancing process.

My main concern was and still is the reliability of the local search contained within the pack.  Due to time and cost, most HIPs contain a personal search which is obviously not as reliable as a search conducted by the local authority.

There is also a concern that one cannot market a property until he has a market ready HIP.  This can cause delay but some HIP providers can now produce a market ready HIP within 24 hours so this is not as problematic as it may have been to begin with.

The final concern is that due to the fact that a proposed seller must pay for a HIP, there are less sellers placing their properties on the market speculatively in the hope of achieving a price that they simply cannot resist.  On the other hand, this does weed out sellers who are not serious about selling their property.

Having said all of this, I would not like to see HIPs abolished.  The plain fact is, like them or loathe them, they do speed up the conveyancing process and when acting for a mortgage lender in the sale of a property, speed is very important.

Some providers are actually using “exchange ready HIPs” with legal documentation such as the agreement for sale included.  I am not convinced this is necessary or wise as what is the next step?  Will the HIP provider be exchanging contracts soon as well? 

If anything needs to change, I would like to see local authority searches becoming a mandatory part of the HIPs rather than allowing personal searches.  This would improve the quality of the HIPs at least.

Without HIPs, we would basically see a return to the times when many sales fell through before they even reached the halfway stage.

Should they win the next election, the Conservatives should concentrate on improving the HIPs rather than abolishing them.

Landlords of residential properties where the annual rent is more than £25,000 are not currently required to register a tenant’s deposit with a tenancy deposit scheme but they will  need to protect that deposit before 1 October 2010. Failure to do so will result in a Landlord falling foul of the requirement to protect a tenant’s deposit in accordance with the provisions of the Housing Act 2004, leaving them open to a claim by a tenant for failing to register the deposit.

For tenants this change means greater protection as they will be afforded the rights granted to them under the Housing Act 1988. Landlords face potential claims against them for failing to register a tenant’s deposit. The change will of course impact Landlords with expensive properties in London where rents are higher than the rest of the country as well as Landlords of larger properties which are occupied by multiple tenants such as student houses where the rent is more likely to exceed the current threshold.

The changes will increase the number of tenancies coming within the Assured Shorthold Tenancy regime which will standardise procedures for Landlords to gain possession and allow use of the accelerated possession route (only open to Landlords of Assured Shorthold Tenancy Agreements).  Landlords who do not and who are required to register a tenant’s deposit will be unable to get possession of a property on a “no fault” basis until the deposit is registered, causing unnecessary delay.

Landlords – review rental levels register your deposits without delay.

Managing Agents – notify your Landlord clients immediately of the impact of this change and the steps they need to take.

We are already seeing cases in the County Courts regarding non-registration of deposits and no doubt Court offices across the country will see further cases next year arising out of these changes.

Land Registry Direct (“LRD”) is a wonderful website.  In the bad old days before it was available, one had to order official copies by telephone and wait for them to arrive in the post.  Thanks to LRD, the whole conveyancing process became much swifter. 

Ordering official copies, bankruptcy searches and copy documents such as leases became a matter of clicking a few buttons and most of the time, the results were obtained instantaneously.

This wonderful service is now going to be discontinued from 30th April 2010 and replaced by the new Land Registry Portal. 

The new Portal is now live and I have been using it for a few weeks.  I must say, my initial concerns were correct in that it is slower than LRD.  We seem to be pressing more buttons to obtain the same results and whilst that sounds complacent, in the current environment, speed is everything.

I am hopeful however that this is down to teething problems as on the whole, the system is very similar to LRD.  Only time will tell.

We’ve had a great discussion on this already click here and thanks for all contributors.

Q1. What is a first time buyer?
A. A person who has not acquired a freehold or leasehold interest in residential property in the UK (except a lease with less than 21 years to run) or an equivalent interest anywhere in the world.

Shimon’s comment: this is going to be hard for the stamp office to police.

The 21 year point also means that if you bought a lease which had been granted to someone else with 21 years or more on it, you won’t qualify. Alternatively, if the lease is granted to you for a term of 21 years of more then you would qualify.

I would query whether a 15 year lease which was extended so that in practice it lasted 21 years would count. Also – it seems unfair that it someone has a business property that they should be caught but seemingly this would be the case.

Q2. When is the relief available?
A. The relief is available for transactions with an effective date on or after 25th March 2010 but before 25th March 2012.

Shimon’s comment: Despite what most people are saying the effective date is not always completion. If you either pay the majority (90%+) of the price or you take possession before completion then this might also be an effective date.

Q3. How do I claim the relief? A. The relief must be claimed on a land transaction return by entering relief code 28 at box 9.

Shimon’s comment: Your solicitor should deal with this.

Q4. I want to buy a house with my partner but one of us has previously owned a residential property. Can we claim the relief? A. No. All of the buyers, when there are more than one, must be a first time buyer.

Shimon’s comment: this is particularly unfair if you have only been on the title to help out a friend or family member. Also when the house will be yours but, say, Mum and Dad help out with the mortgage (and the bank wants them on the title too).

Q5. I previously bought a house jointly with my spouse/partner. The partnership has broken up so can I be treated as a first time buyer?
A. No. Where the individual has previously acquired an interest in a residential property as a joint tenant or a tenant in common the individual is not a first time buyer.

Shimon’s comment: All property ownership will count to exclude you from the relief – even joint ownership.

Q6. Is the relief available on transfers of interests in a home between partners? A. Such a transfer normally requires a transfer from the existing owner to him/herself and the partner. Even if the partner is a First-time buyer the existing owner is not. So the relief is not available.

Shimon’s comment: Depending on the price paid for stamp duty purposes, this is not always an issue. This is a technical area and you should speak to a specialist.

Q7. Can I get relief if I have previously owned an inherited property?
A. No. In this case a person will previously have acquired a major interest in a residential property.

Shimon’s comment: for stamp duty “acquiring” a property includes when it is given to you or when you inherit it.

Q8. Can I claim the relief if I’m buying on behalf of my parents?
A. No. Relief is not available unless the first time buyer(s) are buying, for themselves, a property that they intend to use as their only or main residence.

Shimon’s comment: this is, again, going to be hard to police. It is possible than on an investigation, the stamp office would want to see hard evidence that this was being used as the main residence.

Q9. Is there an age limit on claiming the relief?
A. No. First time buyers can be of any age.

Shimon’s comment: not much to say to this…umm, minors can’t own property in their own names.

Q10. Is there a price limit on claiming the relief? A. Yes, the sum for the whole of the purchase must not exceed £250,000.

Shimon’s comment: this will include when there are multiple purchases. E.g. if you buy two houses each worth £150k from the same person you’d loose out on the relief. Another technical point this, and you should take advice. The technical note HMRC published specifically said that they wouldn’t penalise you for buying connected properties – e.g. a house with a lease over a parking space. But there will be limits to what they accept.

Q11. Can the relief be claimed on shared ownership transactions? A. The relief can be available but only if a market value election is made. The relief is not available if taxed as a lease. Normal shared ownership rules apply on staircasing.

Shimon’s comment: you will need to ensure that your agreements allow you to do this and your solicitor may need to review this. If you have any questions about this please contact Sarah Wilkins in our Milton Keynes office.

Q12. How does the relief apply to alternative finance arrangements? A. Special rules apply to put this form of finance on a level playing field. Under these schemes relief for first time buyers is available for the first purchase by the financial institution, where the person(s) entering into the arrangements meet(s) the qualifying conditions for relief.

Shimon’s comment: this refers to shariah compliance finance arrangements. Under many of these the bank would actually buy the property. Clearly the bank wouldn’t qualify for the relief, but there will be an exeption from the rule for shariah compliant finance.

Q13. Can I claim the relief retrospectively? A. No. Transactions with an effective date before 25th March 2010 do not qualify.

Shimon’s comment: and the relief will continue until midnight on 24 March 2012.

The BBC have reported that Chancellor Alistair Darling is to announce in the Budget that stamp duty will be scrapped on house purchases up to £250,000 for first-time buyers.

Why the Treasury would drip feed info like this when there is going to be a Budget in a couple of hours, I don’t know.

Update

The Chancellor has confirmed that this measure will be implemented plus stamp duty is incresing to 5% on properties over £1m.

So what is shared equity? You purchase a property and own 100% of it, but you obtain a mortgage for a certain percentage of the equity (e.g. 75%) and the developer and/or Government holds a charge (mortgage) over the remaining share (e.g. 25%); depending on the scheme, you may or may not pay rent on that 25% share. In simple terms, although you own the property outright, your main lender holds a legal charge over the property and, in addition, the developer and/or Government will secure a second charge over the property to secure the repayment of their share when you sell or decide to pay the equity loan off.

So what is shared ownership? You purchase only a share in the property (e.g. 75%) and the local authority, developer or housing association retains the remaining share (e.g. 25%) and you pay rent on that share. In simple terms, you have a share in the property, which is usually purchased with the assistance of a mortgage, but you do not own the property outright. You can purchase further shares in the property later (up to 100%) and this is called ”staircasing”. This increases your share of the property and reduces the share retained by the local authority/developer or housing association, which  would also reduce your rent payments.

If you are still puzzled, please contact me at sarah.wilkins@mablaw.co.uk and let me help you understand the options open to you.

The High Court initially and now the Court of Appeal have ruled that H was entitled to the commission. The test was whether the purchaser had become a purchaser as a result of the introduction by the estate agent. Y had viewed the property four times during the period in which H was the agent and Y had purchased the property as a result of H’s introduction. There was a causal link between the introduction and the ultimate purchase.

Paul Gershlick, editor of www.Upload-IT.com and a Partner at Matthew Arnold & Baldwin LLP, comments: ‘Estate agents will be pleased to see that they have finally had a case decided in their favour, after the Foxtons and Estafnous cases went against them in the last year. Looking at all of these three cases together, it is vital that estate agents get their terms and conditions professionally looked at to make sure that they are fully protected from the situations in those cases, and to avoid them losing their commissions.’