Emyr Pierce

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Lasting Power of Attorney – What is it? Why do you need it?

Appointing a loved one or close friend as your ‘Attorney’ provides them with the legal authority to act on your behalf, whether dealing with your financial affairs or making decisions about your care and welfare.

When an unforeseen accident occurs or your health begins to fail – either physically or mentally – the Attorney is there to step in and pay the bills, collect the pension, ensure you get washed and fed as well as deal with  a whole range of other situations.

Whilst it may not be pleasant to think about, none of us know what’s around the corner, and acting now can save a lot of distress and inconvenience if something does happen to you.

Today, so many of us live fast-moving, hard-working, lives, and, as such, we are seeing a lot more people develop health issues which leave many of those affected physically or mentally incapable of carrying out normal everyday tasks.

As long as you are of sound mind and are over 18, you can execute a Lasting Power of Attorney which has to be registered with the Office of the Public Guardian first before it can be validly used.

I would recommend that everyone over the age of 40 should have a Lasting Power of Attorney – just in case the unthinkable happens.

 

  1. Which type? There are two types and you will need to consider which type of Lasting Power of Attorney you wish to make. A Health and Welfare LPA, as it states, deals with issues involving care and welfare. Tasks can range from taking you to the shops, arranging doctor visits, or arranging for you to move into a care home if you are no longer able to live at home. The second is a Property and Financial Affairs LPA which will authorise your Attorney to pay your bills, manage your bank accounts or possibly sell your home should you be unable to live there any longer and care for yourself.

 

  1. Who do I Appoint? It is important to take time to decide who you wish to appoint as your Attorney. It could a close friend, family member or a professional, such as a solicitor. You can either choose just one person, or several, whom you think will have your best interests at heart.

 

  1. Register your Lasting Power of Attorney with the Office of the Public Guardian – This is compulsory before an LPA can be used. Be warned that this whole process can take up to three months, so don’t leave it too late.

 

At Emyr Pierce Solicitors, our estates and administration team provide a comprehensive range of elderly client services from drawing up lasting powers of attorney, applications to the Office of the Public Guardian for the appointment of a deputy, advice on asset management to minimise inheritance tax and long term care fees and registration of enduring powers of attorney.

For an immediate quotation or discuss your concerns with a specialist, please telephone us on 029 20 616002 Monday to Friday 9am to 6pm and on Saturday 10am to 4pm or visit www.emyrpierce.co.uk or email us at law@emyrpierce.co.uk.

Cut in Interest Rates

Interest rates cut after brexit

The Bank of England has cut the benchmark base rate from 0.5% to 0.25% after more than seven years of no change. This is clearly a direct attempt to boost the UK economy in the wake of the ‘Brexit’ vote on 24 June.

There is no question that the immediate effect of the referendum vote has had a dramatic impact on the financial markets and the Bank of England is clearly stepping in now, rather than next month as was originally anticipated, to make this cut.

This is usually an indication that the value of the British Pound, share prices and decision making on the part of potential house purchasers have all taken a substantial hit over the past few weeks.

We have found that particularly in the South East of England buyers have withdrawn from on-going transactions concerned that the fall in the value of the Pound and the adverse impact on financial markets could result in a fall in house prices. With house prices raging ever upwards in London and the South East in particular any drop in prices will have a substantial impact in those areas.

Arguably in Wales, the impact should be somewhat smaller but this does not detract from a general nervousness on the part of purchasers who clearly do not want to pay over the odds for properties which in 12 months’ time could be worth substantially less.

Information coming through indicates that the construction industry have identified a sharp slowdown in production recording its worst month in seven years for June 2016.

What effect of the Brexit vote have we seen locally?

The reality is very little, but the signs are that the nervousness and the inevitable impact by way of falling house prices, will make mortgage companies more cautious, valuers will be cautious when valuing properties for mortgage purposes and potential buyers will be extra cautious in their pursuit of new properties.

One major effect of a reduction in price of property will be the hit to investors who have increasingly been investing in the property market rather than savings due to low interest rates. This further reduction in interest rates will put greater pressure on investors to look elsewhere for a reasonable return on their money resulting in purchasers being available in the market place but unwilling to offer the prices currently being asked, leading sadly to the inevitable fall in house prices which has now been forecast for the coming 12 months.
On the other hand, the news is not all bad as the cost of mortgages will fall for the time being.

Whilst a number of first time buyers have fixed rate products and therefore will not benefit from a further reduction in interest rates, those who have tracker mortgages will gain as the interest rate on their product follow the movements in the Bank Base Rate. Those borrowers looking for new mortgages may find that the fixed rate products offered by the financial institutions will also become more competitive as lower fixed rates may be offered, but again this will depend entirely on the confidence that the banks and building societies may have with regard to future interest rates.

The uncertainty following the ‘Brexit’ vote may well result in the banks and building societies electing to err on the cautious as ever and not pass on the reduction in the Bank Base Rate to new borrowers as they fear that such a short-term incentive on the part of the Bank of England may not prove successful in the long term with interest rates having to rise should the country face greater financial hardship as a result of the vote.

Have a question? Contact the Cardiff conveyancing team >

What effect will the Brexit Vote have on the Housing Market?

Property Conveyancing Cardiff

With the announcement that the supply of homes in the UK market fell at its sharpest rate to date with buyer demand hitting an eight year low following the ‘Brexit’ vote, it appears that a fall in house prices is being anticipated. The RICS expect prices to fall in the next few months.

While this may be attractive to potential first time buyers, it will most certainly be bad news for property investors and existing home owners.

The fall in supply to the market is down to potential sellers uncertain if now is the right time to sell following the recent referendum result. The dramatic ‘Brexit’ result, combined simultaneous with political uncertainty and instability with leadership changes in both leading political parties, has left the housing market in somewhat of a turmoil.

The Government has moved quickly to try and stabilise matters with a prompt election of a replacement Prime Minister, but the rocky road ahead is an unknown one for both politicians and investors alike.

The housing market has always found its own “norm” within a matter of months, but the fear is that an inevitable fall in house prices will in turn reduce the supply of properties for sale as potential sellers elect to stay put and wait to see what happens.

This is often the case when there are dramatic changes in either economic policy, Stamp Duty or other taxes, or changes in interest rates, but this current position is a little unusual as we have a drop in interest rates combined with uncertainty in the financial market place and predictions of an inevitable fall in house prices.

Have a question? Speak to the team >

The Ins and Outs of Repossession

In an ideal world, when signing a new lease for a commercial property you would hope that everything goes smoothly through to when the lease expires and it’s time for renewing. Unfortunately for some, this is not always the case.

If you are a tenant, business can be quiet which could result in a missed payment, or if you are a landlord, you could find your tenant has changed part of the premises and breached the lease contract.

In both cases repossession could be the result. However, as simple as it is to say what the outcome could be, the process of repossession is far from straightforward.

Here, Emyr Pierce details the process and issues of commercial property repossession.

What is repossession?

In short, repossession is the end of a tenancy before the term of lease expires. This could happen from the reasons mentioned above.

There are two ways a property can be repossessed. The first option is to forfeit the lease, which can be done under common law and is known as ‘peaceful repossession’. This means no court proceedings, whilst the second option would mean going to court to obtain an Order of Possession.

Peaceful Repossession

In most commercial property contracts there will be a clause that states a landlord can re-enter the property and take possession if the contract is breached. If this is the case and the landlord wants to take the ‘peaceful’ route then notice must be given to make the public and tenant aware that the property is being repossessed.

Peaceful repossessions usually take place outside of work hours to ensure no one is in the property. This usually involves changing the locks and doing an inventory check

If done properly, a peaceful repossession is an efficient way of dealing with tenants and there will be no court costs to pay.

Order of Possession

If in the case where the tenant is a difficult, a landlord can go to county court to gain an Order of Possession. This can also be the safest route as it follows proper court proceedings.

A landlord who wishes to instigate repossession can serve a Section 146 notice. The notice must specify the breach of contract, whether or not it can be remedied, and state any compensation requirements.

Once the notice has been issued, the landlord must give a window of opportunity to remedy the breach, if it is remediable. If the leaseholder fails to do so then court proceedings will follow.

Tenant’s Rights

Though there are different options for landlords, it is important to note the tenant’s rights as well. If an Order for Possession is filed, the tenant has the right to file for relief and in some cases, these can be granted if the tenant has paid the backdated rent or remedied the situation.

Another point to note, whether you are a tenant or a landlord, is if breach of contract was noticed but the tenant continued paying as normal, the landlord’s right may then be waived and the case will be in the tenants favour.

Repossession can be a complicated matter that involves many factors, which is why it is important to look for independent legal advice from a commercial property specialist to make clear of the situation.

What do I do if I wish to bring my Commercial Lease to an end – or do not wish to renew?

Be it an expanding business or changes to income, there are many reasons you may wish to end your commercial lease or decide not to renew.

Can I end my tenancy early?

It depends both on your landlord, and the terms that you agreed to in your lease; tenants are advised to consult a solicitor. Ways in which you may be able to opt out of a tenancy earlier include:

  1. Your landlord accepts the termination of the lease.
  2. You find someone else to take over your lease. You should note that your landlord is within their rights to ask you to be the guarantor for the new tenant, meaning that continuing liability to the landlord is a prospect.
  3. Your lease includes a ‘break clause’ which would allow you to end your lease early.
  4. You are able to sublet, although you will still be liable for the rent.

What happens if I do not wish to renew my commercial lease?

The first thing to do is check whether your lease states that you are subject to The Landlord and Tenant Act 1954. If your lease is ‘outside The Act’ then your lease will not automatically be renewed anyway and you therefore you just need to tell your landlord that you do not plan on staying. If you are ‘inside The Act’ then you have two options:

  1. On the contractual expiry day vacate the property and the lease will come to an end.
  2. You can serve a section 27(1) notice on the landlord, giving a minimum of three months’ notice, expiring at the lease end, that you are intending to vacate. However, if you do this and then do not leave, you will become a trespasser.

Note that you, as a tenant, have no obligation to inform your landlord that you are intending to vacate. If your landlord asks you whether you plan on staying, his only option is to begin proceedings for the grant of a new lease.

 

What if I want to end my lease shortly after the renewal date?

You must give a minimum of three months’ notice and serve a section 27(2) to the landlord. Please note that previous rules where the notice had to end on a quarter day no longer apply and so the notice can end on any day; but there are rules for apportioning any rent that has been paid in advance.

Tenants in Arrears

During a lease contract, some commercial landlords will come across a tenant who misses a rental payment.

Prior to 2014, a landlord was able to exercise distress if a tenant was in arrears. This meant a landlord was able to quickly seize tenant’s goods without having to give prior notice. Usually, as a bailiff would just turn up and seize goods, this would encourage the tenant to pay the arrears without the goods having to be sold.

Due to objections to landlords exercising distress, it was replaced by Commercial Rent Arrears Recovery (CRAR).

CRAR is more complex in comparison to exercising distress as one of the requirements includes having to serve prior notice before goods are seized.

Below, Emyr Pierce answers the most frequently asked questions when it comes to CRAR.

Which tenancies are covered by CRAR?

CRAR only applies to tenants of commercial properties. Mixed-use (commercial and residential) properties are not included unless they are under separate leases.

What is covered in CRAR?

CRAR only recovers rent with interest and VAT. Unlike distress, CRAR does not cover service charge, maintenance, insurance or other supplementary charges.

How much can be seized?

The first £1,350 worth of tenant’s goods is exempt from CRAR. All items above the limit, including computers and vehicles, can be seized, unless they are leased items.

Does notice have to be given?

Yes, with CRAR a ‘notice of enforcement’ is required and a landlord is obligated to give at least seven days’ notice, excluding Sundays Bank Holidays, Good Friday and Christmas.

The ‘notice of enforcement’ gives tenants the opportunity to pay the arrears to prevent the ‘enforcement agent’ turning up, however this is also one of the disadvantages of CRAR as landlords believe tenants can move goods away so they cannot be seized. If a landlord believes this, they can apply to court for a shorter notice period but this is more costly as it involves more administration.

What is the general procedure?

After notice is given, CRAR can then be executed by a certified enforcement agent. The agent does not require a warrant provided he does not use force. The agent can then enter the premises anytime between 6am and 9pm, 7 days a week, or any other time provided it is within the tenant’s business hours.

Once the enforcement agent is on the premises, the goods must then be secured and removed from the premises (or vice versa), or the tenant and agent can sign a ‘controlled goods agreement’. This mean tenants retain custody of goods, acknowledges the agent is taking control, and agrees not to remove or dispose before the debt is paid.

Once seized goods are obtained and secured, the enforcement agent must give seven days’ notice. Goods will then be sold at an auction for the best price than can be reasonably obtained.

Other Important Information

  • It is important to note that if the route of CRAR is taken, a landlord waives their right to repossession.
  • If a tenants is are going through administration or liquidation, a statutory moratorium prevents the use of CRAR.

CRAR is a good option for landlords to take if a tenant falls into arrears and wants to recover pay. It is always advised to seek independent legal advice from a commercial property specialist to help understand the issue and to find out what the best options are.

Rent Review: What You Need to Know

With house prices at an all-time high, renting is fast becoming a more popular and cost effective way to occupy a commercial property.  That being said, you need to be aware of rent reviews and how they can affect you and your business.

 

What is a rent review and what is their purpose?

A rent review is the mechanism which enables rent prices to alter in accordance to the market level at the review date. The reviews typically happen every three to five years, but be sure to check the terms of your lease as the time frame can vary.

How will I know if a rent review is activated?

Usually you will be notified by your landlord who will quote the new figure for the upcoming rent period. If the tenant deems this unreasonable, they must say so in writing as soon as possible and can ask what the grounds for the increase is based upon. It is important that you highlight any queries as soon as possible as there are often strict deadlines to adhere to which, when missed, may result in the tenant having to pay the new price without being able to dispute it.

What is the review based on?

The determining factors should be specified in the lease agreement. Usually, the new rent value is based upon open market rental value which is basically the rent the landlord could reasonably expect to receive for the premises if it were leased to a third party. It will be affected by the general rent levels of similar properties in the area and if your lease allows you to use the premises for a variety of purposes, the open market rental value will be calculated as if it is being used for its most valuable purpose.

What if I can’t afford the new level of rent?

The first step is to try and negotiate with your landlord. If a resolution cannot be found then the lease usually stipulates the involvement of a third party, such as a chartered surveyor, to resolve the disagreement.

If this doesn’t work, check if your lease includes a ‘break clause’ which allows you to surrender the property to the landlord. You may also be able to sell the lease to someone else or sublet part of the premises. Failing that, landlords will often find a compromise rather than chase you for money.

Top tips:

Read your contract! It may sound basic but make sure you read the fine print and find out if and when you will be subject to a rent review. Typically, rent reviews are done every three to five years for long-term leases but there may not be any rent reviews for short-term leases.

Trust the experts – it is someone’s job to deal with these things and they will be able to advise you towards the best solution.

Pay attention to deadlines – you don’t want to miss you time slot to negotiate or dispute a rent review

Document it – once the review has been settled, make sure you have signed documentation to prove that the review has been agreed and formalised.

Should the Lease be ‘Inside or Outside The Act?’

‘The Act’- the Act being referred to is The Landlord and Tenant Act 1954 which gives business tenants automatic renewal when a lease expires.

When agreeing to terms for a new lease, be aware whether the lease is inside or outside The Act or you could be in for a nasty surprise.

Inside The Act

Having your commercial lease inside the act will offer you, as a tenant, protection. It means that when your lease has expired your landlord cannot ask you to leave which, along with the inconvenience, could subsequently have a negative impact on your business. Moreover, when negotiating a commercial lease, if the landlord is adamant he will only accept a tenancy outside of the act (meaning you would have no automatic renewal rights as a tenant) you should consider whether the possibility of being forced to leave would be worth it or if you could secure a longer lease term with the landlord.

Outside The Act

The main benefit to the landlord of a lease which is outside of the act is the freedom they will have to do with the building as they please when the lease is over.  The landlord may wish to renegotiate the terms of a new lease with the existing tenant or with a new tenant or may even wish to take possession of the building for their own purposes, which would be a violation of the 1954 Landlord and Tenant Act if the lease was inside the act.

Are there any exceptions whereby my landlord could end my lease even if I am inside the act?

As with most contracts, there are exceptions. As a tenant, you may be in breach of your lease if your rent is in arrears or the premises are in a state of disrepair. The landlord may use this chance to repossess the premises for their own use or to take time to develop and improve the site. Even with these exceptions, tenants and landlords should be aware that the landlord needs to follow a set notice procedure and cannot suddenly evict the tenant if they are inside the act.

Taking up a new Commercial lease – the pitfalls

For many, signing a new lease can be an unnerving experience, particularly if it is the first time you’ve rented a commercial property.

Often an exciting but daunting time, it’s important to really understand the lease before you sign, and to be aware of the main pitfalls that can sometimes cause problems for tenants further down the line.

Here, Emyr Pierce highlights the main points to consider when leasing a commercial property:

How long are you likely to remain in the property?

Planning ahead is essential when it comes to any business, and the same should apply when taking on a new commercial property. If your business plan involves upsizing or relocating, it doesn’t make sense to sign a long-term contract that will tie you in for years to come.

Can you transfer or sell the lease?

Many tenants wrongly assume that they can assign their lease onto someone else during their lease term. Most often, leases actually prohibit assignment, and even if they don’t, you will usually still be responsible for the new tenant and how they comply with the lease. There may possibly be the option to underlet, but this can be restricted also on many leases.

Will the rent change during the lease term?

Tenants should be aware that periodic rent reviews are commonplace during commercial property leases. More often than not, this means that the rent charges will increase. Keep an eye out for rent reviews that seem overly frequent; a good solicitor can ensure this doesn’t happen.

Who is responsible for repairs?

The vast majority of commercial leases are set up so that it is the tenant’s responsibility to pay for and organise any repairs to the property, and to organise insuring of the premises. Each lease can vary considerably, so what would be the tenants responsibility on one lease, might not be on another. Ensure that the terms and conditions are fully understood before signing anything.

How easy it to terminate the lease?

Break rights exist in many leases, but not in all. Even where a break right exists, tenants must realise that the landlord may share just as many rights in terminating the lease as the tenant does. Tenants must ensure that all details relating to the ability to break the lease are completely understood and fit in with their long-term plans

Commercial leases might sound like a bit of a minefield, and in some cases, they are, but with the right advice, it can be an easy and enjoyable process. Deciding on business premises can be a tricky process in itself, so make sure you aren’t caught out on minute details when it comes to signing the deal. It is always advised that you seek the advice of a commercial property specialist as to ensure that you don’t leave yourself open to litigation further down the line should disputes arise.

Can I claim against survey oversight?

I have just discovered that the house I bought three years ago has subsidence. We had a full survey carried out before we bought and this was not spotted. I am insured but will have to pay a hefty excess for the repairs. Can I make a claim against anyone for this oversight?

YOU need to obtain an independent report from a Building Surveyor or Structural Engineer to establish whether or not the problem existed at the time you bought. A building surveyor will advise as to whether or not your surveyor should have identified any tell-tale signs that should have been picked up in an ordinary homebuyers or structural survey. If the Report is favourable, then you may have a claim against your surveyor for professional negligence. You should seek the advice of a solicitor specialising in professional negligence. You should also investigate the possibility of the problem being covered by your building’s insurance policy as this may be an easier and more direct way of recovering the cost of the remedial works. In the event of a successful insurance claim, you may still have the right to claim any uninsured losses direct from your surveyor, such as any excess, should you be able to prove negligence. As with all such litigation the cost of pursuing it must be weighed up against the overall cost of the works.