Blog - Emyr Pierce

Oct 19

Transfer of land is a lifetime gift to son

I own a large plot of land in West Wales which I want to share with my son. Do I need to re-register this or will it be seen by the taxman as a gift?

If you wish to transfer the plot into the joint names of yourself and your son, this is effectively a lifetime gift of one half of the value of the plot. Provided you live for seven years from the date of the gift, then the value of this gift will not be taken into account in the overall value of your Estate for Inheritance Tax purposes on your death.

However, your son will need to be aware of the possible charge to Capital Gains Tax in the event of the value of his one half share in the plot increasing substantially in future years.

In view of the fact that it is a lifetime gift, a transfer into your joint names will not attract Stamp Duty Land Tax even if the value of the one half of the plot exceeds £175,000. The gift by way of Transfer will then be registered by HM Land Registry in your joint names.

Oct 19

Apologise to seller – and walk away

My partner and I have made an offer on a house which has been accepted and we would due to exchange contracts next week. He has now said it is too soon for us to live together but I can’t afford to buy on my own. Can we walk away from this, or is it too late?

Fortunately, it is not too late as you may withdraw from any transaction prior to contracts being unconditionally exchanged. Despite you being virtually on the point of exchanging contracts, it is possible for either party to withdraw from the transaction. You are therefore free to withdraw without any obligation to indemnify the seller for any of his abortive costs or for inconvenience caused.

A late withdrawal like this often infuriates the innocent party as they have no recourse to make any claim for the recovery of their abortive costs. All you can do is apologise to the seller for your late withdrawal, which is due to a change in your personal circumstances which are clearly beyond your control.

Oct 19

Removing your ex from the house deeds

My wife and I have divorced and finally reached a financial settlement which includes me paying her off a share of our home. How do I remove her name from the house deeds?

If as a result of the financial settlement you have remortgaged the property to help raise the money to pay your ex-wife her share of the home, then the position is relatively simple, as during the process of remortgaging, the property will be transferred from your joint names into your sole name. The former joint mortgage will be repaid out of your new mortgage funds and the property ending up in your sole name.

It is essential that if you are paying, in addition to repayment of your joint mortgage, an additional capital sum to your ex-wife, that the consideration shown in the Transfer into your sole name is the total of the capital amount payable to your ex wife plus her one half share of the existing mortgage debt, which you are, effectively, absorbing.

If the combined total of this exceeds £175,000 then Stamp Duty Land Tax will be payable – unless the settlement is made the subject of a formal Court Order. However, if there were no additional capital payment to be made and you were simply absorbing the existing joint mortgage, then this could be done by way of a Transfer of Equity into your sole name, provided of course the existing Lender was happy to release your ex-wife from the joint mortgage and to transfer the mortgage into your sole name.

If the existing Lender is not prepared to do this, then you may be faced with having to remortgage with another Lender, taking out a new loan in your sole name which would complete simultaneously with the transfer of the property into your sole name.

Oct 19

Next of kin must be told of Attorney powers

I have been helping an elderly neighbour with his property/financial affairs over the last few years and he now wants to appoint me as his Attorney in a Lasting Power of Attorney. Should I let his relatives know what is being proposed?

It is a requirement when granting a Lasting Power of Attorney that the document is registered with the Office of the Public Guardian and it is a specific requirement that the Donor’s next of kin are notified. This enables the next of kin to lodge any objections should they object to what is being proposed.

It is, therefore, no longer possible for Lasting Powers of Attorney to exist without the immediate next of kin being notified of the Donor’s intention to register the same with the Office of the Public Guardian.

Oct 19

Church bells may toll for country house-hunters

I am buying a house close to the Parish Church in a lovely Welsh Village. My solicitor tells me I may be asked at some stage to pay for repairs to the church. Is he joking?

Your solicitor is referring to the potential liability of occupiers to contribute towards the cost of repairs to the chancel of the local Parish Church. This has arisen as a result of a high profile case involving the Church of England.

The Church in Wales have formally responded to enquiries on this issue by stating that Chancel Repair Liability in Wales was not brought to an end on disestablishment. The Representative Body holds a certain amount of information, but it is insufficiently complete for them to be able to give a definite reply to any enquiry on potential liability and they advise that anyone having to address this issue may wish to consider whether it is more cost effective to simply seek insurance cover for a potential liability.

Solicitors have for some years advised clients that the likelihood of any contribution is extremely remote and that the decision was a Church of England one in any event and that the issue has not arisen in Wales. However, solicitors now have to carry out a Chancel search in all purchase transactions which may reveal that the property is located within the historical boundary of a tithe district within a parish which may continue to have a potential repair liability.

Unfortunately, there is no legislation clarifying the position and buyers are, therefore, left to decide for themselves as to how remote the likelihood of any liability is likely to be.

Oct 18

Buying a Freehold – does it make sense?

I am buying a Leasehold terraced property which currently has 75 years left on its lease. Would it make sense to buy the Freehold, or would that be a waste of money?

If you are looking to sell a Leasehold property with less than 70 years to run then it is possible your buyer’s mortgage company may insist on either the lease term being extended, or that the property is Freehold. You will, therefore, need to consider the possibility of either buying the Freehold or extending the Lease term once it falls below 65-70 years.

Buying the Freehold at an early stage has its benefits as the cost is only likely to increase. However, before parting with hundreds of pounds, you must appreciate that the only benefit to you will be the saving of a nominal annual payment in ground rent and the ability to insure with a company of your own choice.

The benefit, therefore, of buying the Freehold will usually be closely related to the remaining number of years of the Lease term. Provided you have owned the property for at least two years you are entitled to purchase the Freehold interest as of right under the Leasehold Reform Act 1967, but most freeholders will agree to transfer the Freehold interest without having to follow the strict procedure laid down by that legislation.

You should ask your Freeholder how much it might cost and, if necessary, take the advice of a Surveyor on any quote received.

Jul 25

Do I need a HIP to sell to a member of the family?

We are hoping to sell our house to my wife’s cousin who is moving to the area to work. Is it true that we won’t need a HIP as we are selling to a member of the family?

A HIP is now required in the event of a property being offered for sale to the general public.

However, in the event of a privately-negotiated sale no HIP is required – whether or not this is a sale to a member of your family, provided it has not been marketed in any way.

Marketing includes a sign in your garden or window advising that the property is for sale. You will, however, still require an Energy Performance Certificate.

Should you have placed your property on the market only for a member of your family to end up buying it, then a HIP will be required as you cannot market your property without one.

* Emyr Pierce is Managing Partner of Emyr Pierce Solicitors in Rhiwbina, Cardiff, Western Mail Conveyancer of the Year, specialising in Domestic and Commercial Property. Contact www.emyrpierce.co.uk or email law@emyrpierce.co.uk

Jul 25

Shall I tell the mortgage company I rent a room?

Our son has just returned from abroad and will be living at home and paying a small rent to us. Do I need to tell my mortgage company about this?

It is a condition of all mortgages that if you have anyone living at the property, other than the Borrowers, who is over the age of 17 and who resides at the property as his or her main residence, you are obliged to notify your mortgage company immediately as they will require that individual to sign a form effectively postponing that individual’s right to occupy the property in favour of the mortgage company’s rights under the mortgage.

The reason for this is that the Borrowers will have entered into a binding legal contract with the Lender whereby, in return for the money borrowed, the Borrowers charge the property in favour of the mortgage company. This contract is personal to the mortgage company and Borrowers.

In a case 20 years ago it was established that any person other than the Borrowers over the age of 17 who occupy the property as their main residence have the right to occupy that property – a right that ranks in priority to any other interest which a third party may have in the property, such as a mortgage company.

This decision was far reaching and resulted in all mortgage companies addressing the problem by requiring a formal Deed from the occupier whereby the occupier postpones his or her interest in the property.

Failure to obtain such a form would result in your son being entitled to remain living in the property in the event of you falling into arrears on your mortgage and being re-possessed.

You would, however, be liable for any loss suffered by the mortgage company due to your breach of your mortgage conditions.

Jul 25

What is a Certificate of Title?

I am buying my first home and have been told my mortgage company is waiting for the Certificate of Title. What is this and could it cause a hold up?

The solicitor acting on your behalf in the purchase of your new home will, usually, also act on behalf of your lender providing you with the mortgage funds required for your purchase.

Your solicitor will need to satisfy very strict and extensive conditions and requirements which all lenders require from solicitors and conveyancers. This obliges your solicitor to report to your Lender any issues arising out of any pre contract investigations, either in respect of the title of the property, or your own personal circumstances, insofar as these differ from the position reflected in your mortgage offer, the most common variation being a change in the purchase price.

Only when your solicitor is satisfied on all aspects will he be prepared to submit to your Lender his report on the title of the property, otherwise known as the Certificate of Title.

This is the form which confirms to the Lender that all matters relating to the property are acceptable, that there are no onerous covenants or lack of rights of access or services to the property, and that, in the opinion of the solicitor, the property has a good and marketable title. The certificate will also specify the completion date on which the funds are required.

Jul 18

Will part exchanging save me Stamp Duty?

I am hoping to part exchange my house for a new one. I have heard that this is a good way of saving stamp duty. Is this true?

Unfortunately it is not true. Some years ago Stamp Duty, as it was then, was only payable on the “Equality of Exchange”. This was the difference between the sale and the purchase prices and proved popular in the last recession when property developers were finding it difficult to sell new properties and the Stamp Duty savings were a popular attraction of part exchange schemes.

The new regulations governing Stamp Duty Land Tax (SDLT), as it is now, has removed this major benefit in the case of part exchange transactions. Stamp Duty Land Tax is payable on the value of the asset being acquired – regardless of whether it is being part exchanged for an existing asset.

Accordingly, SDLT will be payable on properties where the price exceeds £175,000.00 and not on the “Equality of Exchange” between the two part exchange values.