Emy Pierce Solicitors Archives

Jan 27

Can I run my business from home?

I am planning to launch my own business and want to run it from home to save on business costs. Are there any rules about running a business from home in a residential area?

The main concern would be a restrictive covenant which often exists in the case of residential property preventing the property from being used for any business use. Older covenants give exceptions for professional use such as that of doctors, accountants and solicitors. Increasingly people are working from home these days and many people work from home while receiving instructions via the Internet.

This would not constitute a breach of covenant as the whole intention of the covenant is to prevent a residential property being used for any industrial or business use, such as repairing people’s cars on your drive or running a carpet business from your garage which doubles up as some form of warehouse!

My advice to clients is that if the anticipated business use is either unknown to your neighbours or does not in any way impact on their enjoyment of their adjoining properties for residential use then your use is unlikely to amount to a breach of the covenant.

For example, an Area Salesman who receives instructions via the Internet would technically run his business from home but this would have no bearing on the residential use or the enjoyment of any adjoining occupier and would certainly not amount to a nuisance or in my view a breach of such a covenant, unlike someone who was operating as a music teacher teaching his pupils to play the trombone from his home which would probably cause a nuisance and annoyance to his neighbours and make them more likely to object and draw this to the attention of those who have the benefit of such covenant – such as the original developer or previous estate land owner.

* Emyr Pierce is Managing Director 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

Jan 27

Why are there Prohibition Orders against the property I’m purchasing?

I am purchasing a property but my solicitors have advised me that the Local Authority Search has revealed there are Prohibition Orders registered against the property. What does this mean?

Occasionally, searches will reveal Enforcement Notices registered against properties. This will relate to Planning Conditions having been breached or the Local Authority declaring the property unfit for habitation.

A Prohibition Order is a little more serious. This prevents the property from being used for a particular purpose until conditions set down by the Council are satisfied – for example the inability to use a property or part of a property, for residential purposes because certain alterations, usually unauthorised, are a risk to the health of any occupier.

You need to consult with the Local Authority to establish what is required to satisfy these Orders as the cost of satisfying these requirements need to be included in your anticipated budget.

One other important point to note is that such entries revealed by the local authority search may have been satisfied but the entries remain on the Local Land Charges Register. If an entry is therefore revealed by the search your lawyer will need to enquire of the local authority as to whether the Notice remains valid or whether it has been satisfied.

Jan 27

What happens in a jointly owned home if one person sells their half of the property?

Three years ago my mother (who is now 79) put my name on the deeds to her bungalow so that we owned it in joint names. If mum needed to go into residential care would she have to sell it to fund her care and what happens to my half?

There is excellent guidance available on the Age Concern website with regard to whether or not such a gift into joint names three years prior to entering into residential care would amount to a dissipation of assets.

In other words would it be a transaction that could be questioned by the Local Authority whereby it could be argued that your mother deliberately transferred the property into your joint names in an attempt to avoid having to pay Care costs. If it was deemed that this was the case, then the gift three years previously would be capable of being overturned and the property could be sold with a view to funding your mother’s Care.

If you lived there with her prior to, and since, the date of transfer into your joint names then obviously there would be an argument for saying that your mother was doing so to protect your position as you had lived there for some time and presumably contributed towards its maintenance, repair and outgoings.

I would strongly advise anyone considering these matters to consult carefully the websites of Age Concern and other organisations where invaluable and useful information can be obtained on this complex subject or take formal advice from a lawyer specialising in this field.

Jan 27

If my partner is a student, am I entitled to Council Tax discount?

My partner and I have a joint tenancy agreement on our flat and are both named on the Council Tax bill. He is a full-time student and exempt from paying Council Tax. Should I be entitled to a single person’s discount?

You are entitled to a single occupier discount. Your partner will need to provide a certificate to the local authority confirming he is a full-time student, at which point you will become entitled to the discount which is 25 per cent of your Council Tax bill. You will only be entitled to that discount while your partner remains a full-time student and once he completes his course and leaves full-time education he will need to inform the Council of his new situation.

Jan 27

I changed my mind about buying a new house – can I get my deposit back?

I have made a commitment to buy a new property from a national developer. I have changed my mind and do not wish to complete. Will I be entitled to the repayment of my deposit?

Sometimes a prospective buyer will commit to buying a new plot from a developer, although the anticipated completion date of the plot can often be up to 12 to 18 months later. All developers now require prospective buyers to make a commitment to purchase at the earliest opportunity and, in most cases, within 28 days of paying a reservation fee on their plot.

While these deadlines are often extended to accommodate delays in the receipt of mortgage offers and other issues, the builder will proceed with the prospective buyer provided he is satisfied that the buyer is making genuine attempts to reach as early an exchange of contracts as is practicable.

The danger is that the projected completion dates for these new build properties can be up to 18 months in the future.

On exchange of contracts a contractual commitment is made on the part of both parties whereby the buyer is obliged to complete within 14 days of the developer notifying the buyer’s solicitors that the property is structurally complete. If the buyer wishes to withdraw following exchange of contracts, the buyer is strongly advised to contact the developer immediately.

The developer may sympathise with the buyers’ predicament and agree to cancel the contract and return the deposit. However, there is no obligation to do so and the risk is the developer will keep any deposit already paid.

Worse, the developer may hold you to the terms of the contract and insist you see it through. This would mean that you would have to complete when the building was structurally complete and then to immediately re-sell.

These are the dangers of committing to a purchase so far in advance. Personal circumstances can change.

Dec 6

Why must I pay Stamp Duty to re-mortgage my property?

I own a property valued at £410,000.00 in my sole name. I have recently married and am in the process of re-mortgaging my property to get a better deal. To secure the best deal I need my wife’s salary to be taken into account by the Lender and I intend to transfer the property into our joint names as this will be a requirement of any mortgage in our joint names. My existing mortgage is £295,000.00 and I am looking to borrow precisely the same amount from the new Lender. I am astounded to find out that my Solicitors have advised that Stamp Duty will be payable on the transfer into our joint names, why is this?

Stamp Duty Land Tax is payable on any consideration payable for an interest in land.While no money is actually changing hands in this example, there is a substantial consideration being made by your new wife.

At the present time the property is in your sole name with your being solely liable for the existing mortgage. What is being proposed is that the new mortgage, albeit for the same amount, will be the responsibility of both of you and in respect of which the property is being transferred into your joint names.

In other words, your wife is receiving one half of your property in return for her becoming liable for one half of the mortgage debt (despite the fact that you will both be jointly and severally liable for the debt in any event). In this instance there is effectively a consideration made by your wife of one half of the mortgage debt in return for her receiving a one half interest in your property.

Sadly, in your case, as your mortgage is substantial, one half of the mortgage debt amounts to £147,500, which is in excess of the Stamp Duty threshold of £125,000 and, accordingly, a Stamp Duty charge of 1% of the consideration (£1,475.00) will be payable.

May 10

Terminating Tenancy Agreements

In my Tenancy Agreement there is a clause stating that if I wish to terminate the agreement and move out, I will still have to pay my landlord until a new tenant is found. Is this lawful?

All new Tenancy Agreements for a term not exceeding 12 months, but for a minimum period of six months, are now deemed to be Assured Shorthold Tenancies. This means you are committing to a fixed term of a minimum of six months and a maximum of 12 months. Should you wish to terminate the agreement before the end of the fixed term you will usually have to pay rent for the balance of the term of the Tenancy Agreement. If you continue to occupy beyond the fixed term period then the agreement will usually contain terms on which either party can give notice to the other. Provided these notice periods are adhered to then you will be free to leave. Any Tenancy Agreement with a term stating you are required to continue to pay rent until an alternative tenant is found is not only unusual, but would probably be considered to be an Unfair Contract Term. The position should be easily resolved by talking to your solicitor.

• Emyr Pierce is Managing Partner of Emyr Pierce Solicitors in Rhiwbina, Cardiff, Western Mail Conveyancer of the Year, specialising in Domestic and Commercial Property.