property Archives - Emyr Pierce

Aug 10

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.

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May 12

Do I need to tell buyers about my house’s history?

I have decided to sell my house which was the scene of a violent and tragic incident before I moved in 12 years ago and which attracted a lot of media attention at the time. Is this something I need to declare to potential buyers?

There is an obligation on all sellers to disclose all information about the property which is within their knowledge. This has been the subject of extensive case law which has established that substantial damages may be awarded to victims of misrepresentation where this can be shown to have an adverse effect on the valuation of the property, or its saleability.

While sellers may choose to rely on the concept of “caveat emptor” or “let the buyer beware”, it is now an established principle that sellers are obliged to disclose all relevant details relating to the property which are within their knowledge. This can range from the existence of any structural issues such as dry rot or damp, to a long-standing neighbour dispute.

Damages were assessed at £67,000.00 in 2008 following a failure on the part of a seller to disclose the existence of an ongoing dispute with a neighbour. Please also note that your Solicitor is also under a duty to disclose information of which he is aware and may have to refuse to accept instructions from a client who is is unwilling for such information to be disclosed.

May 8

Is the fence mine or my neighbours?

I have just moved into a new property, but how do I know if a fence is mine or the neighbours? I’ve looked among the title deeds and there is nothing obvious marked on any conveyancing plans.

The majority of properties do not actually have the ownership of boundaries designated. It is also a myth, contrary to some belief, that it is not always the left or right hand boundary that belongs to the property. The ownership will usually be shown on the original Conveyance, Lease or Transfer plan by inward ‘T-marks’. These will depend on where the development starts, and the property on the end can often be responsible for all the boundaries. If you back on to nothing then the rear boundary will always be yours.

If a property is split into two, the responsibility for maintaining and repairing the new dividing boundary will usually be allocated to the owner of the property being sold off as this is determined by the person selling off that part. In the event of there being no plan which identifies the ownership of boundaries, as in the majority of cases, then the boundaries separating each property are deemed to be shared or “party” boundaries. Those boundaries which do not adjoin another property (such as the rear boundary backing on to a lane or the front low wall of a terraced property) will always be the responsibility of that property.

May 8

Is my neighbour allowed to keep a goat in his garden?

My next-door neighbour has just bought a goat which he plans to keep in the back garden to keep his weeds down. Is he allowed to do this in a residential community?

Some occupiers do have somewhat unusual pets such as sheep and pigs and keeping such animals as pets does have its risks. The majority of properties are subject to restrictive covenants affecting their use. The most popular being the ‘residential dwelling house only’ restriction. But a close second is the covenant not to cause a nuisance or annoyance to adjoining occupiers.

While in the case of older properties there is rarely a covenant against keeping non-domestic animals as pets, newer properties, particularly on new developments, are usually subject to such a restriction. It would, therefore, come down to a question of nuisance to your neighbours, and there could of course be other Public Health Act issues (such as smell) with which you would need to be aware.

Again, these would only become an issue in the event of a complaint in which case it is anticipated that such a complaint would, in the main, be justified! On the other hand for many years a much-loved resident of my local community in Rhiwbina, Cardiff, was a pet sheep. He was a favourite with the locals – but clearly didn’t eat any of the plants in their gardens!

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.

* 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

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.

Nov 8

What will happen to my parents’ Estate if they go into residential care?

My wife and I are considering selling our home and moving into my elderly parents’ house to look after them. My parents’ Will leaves their Estate to me and my sister but we would buy her share of the house on the death of my parents. How safe are we though if one or both of my parents has to go into residential care and the only asset they have is the house?

If you moved into your parents’ home it would be sensible for your parents to transfer the property into the joint names of themselves and yourselves as this would take advantage of an exemption available to your parents in that they have transferred one-half of their interest in the property to those who also occupy the same.

This could safeguard against the whole of the property being taken to pay for future care fees, as only the half which your parents retained would remain in their ownership and would technically represent the half to which your sister would otherwise have been entitled in the event of your parents’ death.

Should your parents move into care in the meantime then it may be that only the remaining half share in their name would be assessed as evidence could be supplied to show the reason why the property had been transferred into your joint names.

Should your parents die without having to go into care then you would have to buy out the remaining half of the property from your sister as, technically, the half remaining in your parents’ names would pass to your sister on their death as you had already received your share during your parents’ lifetime.

Nov 8

I’m told I have overvalued my house – can I proceed with the sale?

I have agreed a price for my house with a buyer and thought the sale was going ahead as planned – only to be told that my buyer’s building society surveyor has valued the property at £10,000 under the price we have shaken hands on. Can I insist on my buyer proceeding with the sale?

Surveyors vary rarely undervalue properties but this can arise where the property is of such a unique nature that you are willing to pay over the odds to secure the house of your dreams or the valuer believes the condition of the property in its unimproved state does not justify the price you are prepared to pay.

In this case, the valuation may be below what the buyer has offered to pay. This does not preclude the buyer from proceeding unless he is dependent on securing a mortgage for a high percentage of the purchase price.

Should your house be undervalued by £10,000 by the surveyor and the buyer wishes to borrow 90% of the purchase price, then he will only be able to borrow 90% of the reduced valuation as specified by the valuer. This may result in him being unable to proceed as he is unable to secure sufficient mortgage funds to purchase the property.

If, however, he is borrowing a lower percentage of the purchase price and he is willing to pay over the odds for the property, then this is entirely his prerogative but you cannot insist on him proceeding as of course until contracts are actually exchanged.

Nov 8

Should I sign a pre-nup before living in my husband’s house?

I am getting married in five months and we plan to live in a house which was bought for my future husband by his parents. They are suggesting we sign a pre-nuptial agreement to ensure their investment remains in their family in case we separate. Is this something I should agree to?

Prenuptial Agreements are a little mercenary and can cause suspicion from the outset which is not always good for one’s relationship! It may be better to simply view it from a basic property ownership point of view as if you were not getting married at all. In those circumstances there are two issues which arise.

If it was a genuine gift to their son then it may be important for Inheritance Tax purposes for this gift to continue in time – particularly if they gifted the property say 5 years ago – as once a period of 7 years has expired since the gift the value of the gift falls outside the Estate of the in-laws in the event of their death. This may, therefore, have substantial tax savings.

The only way that they can ensure that you agree from the outset that you have no intention of claiming any interest in this property is to enter into such a pre-nuptial agreement recording this intention. Your rights as a wife may still afford you certain rights of occupation etc that may benefit you – regardless of any such agreement and you need to seek specialist advice before doing anything at all.

Alternatively, your in-laws could take a charge over the property for the full value of the purchase price, which means they retain an interest in the whole amount that they advanced to enable the property to be bought. However, this will imply that the purchase monies were not a gift from your in-laws.

If they at some time in the future (after you have been married for some considerable time) wish to release that charge for no consideration then at that time it would amount to a gift and the 7 year rule would start to run from that date. Should you separate then the in-laws’ investment is preserved as they still have a charge on the property.