property Archives - Page 2 of 4

Oct 25

When does property become subject of the lifetime gift exemption?

If my father gifted his house to me, how long would he need to live for to ensure the taxman could not claim back taxes between the gift date and death?

A lifetime gift more than seven years before the death of the donor will usually be the subject of the lifetime gift exemption. If this was a gift of money or any other asset, once the seven years had elapsed from the date of the gift then the asset would no longer form part of your father’s Estate in the event of his subsequent death.

However, with houses it is slightly more complicated in that you must beware of the “Reservation of Benefit Rule” whereby the Revenue will regard your father as having reserved an interest in the asset which he has given away, as he will continue to live in the property, without paying any commercial rent to you, the new owner.

In such circumstances the effect of the Reservation of Benefit Rule is that the Revenue will regard your father as having reserved an interest in the asset which he had previously gifted to you, the consequence of which will be that, for tax purposes, the Revenue will include the value of the property at the date of your father’s death in the overall value of his Estate.

Should your father’s Estate, inclusive of the value of the house, be below the Inheritance Tax threshold, then his gift will not have any adverse effect on the tax position as even if the value of the property is written back into his Estate, it will not be of sufficient value to result in any Inheritance Tax being payable.

If, on the other hand, the property is of substantial value, what may appear to be a substantial saving in Inheritance Tax as a result of the gift may not necessarily be available despite his lifetime gift should such gift fall foul of the “Reservation of Benefit Rule” .

* 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

Oct 1

How can I evict a tenant from a property I own?

How can I evict a tenant from a property I own in Brecon? He is not paying his rent and not allowing the Estate Agent to show people around the property.

Presuming your tenant is occupying the property under the terms of an Assured Shorthold Tenancy for a fixed period of at least six months and not more than 12 months, then Possession Proceedings can be started against him if he is two months in arrears with his rent and is clearly in breach of other covenants such as refusing access to your Selling Agent to market the property provided of course your tenancy agreement covers this point.

The process can take some weeks but you must follow the procedure strictly in order to avoid falling foul of the Anti Eviction Laws.

A Notice of Intending to Issue Possession Proceedings is initially served on the tenant and an application then submitted to the Court. The procedure can effectively give the tenant a further six weeks before he has to vacate, which then leaves you with the ultimate problem of having to pursue the tenant for outstanding rent.

Consult a solicitor immediately to ensure the procedure is started without further delay.

Oct 1

How can I get on the property ladder?

I am a first time buyer, but I have very little deposit to put down and, of course, the Lenders have stopped all 100% mortgages. Does that mean I have no chance of getting on the property Ladder?

Unfortunately, it does – unless you can find wealthy parents who are willing to lend you the balance of your 10% deposit, as most lenders will not lend more than 90% in the current market.

Any such loan or gift from your parents or any other third party will need to be disclosed to the Lender during the application process, and if your parents, for example, wanted to protect their investment by way of a second charge on the property, the majority of Lenders will not agree to this.

An alternative is to look at the availability of any shared ownership properties by enquiring of Housing Associations or the Local Authority, as this is another way of getting a foot on the property ladder in cases where you only own that proportion of the property that you can afford, with the balance being retained in the ownership of the Housing Association.

Most new build developments have, as a matter of policy, a certain number of units of such Social Housing as a condition of the initial development as required by the Local Planning Authority to provide first time buyers in the community with such an opportunity.

Sep 23

What is a Flying Freehold, and are there disadvantages to it?

The property which I am looking at has a Flying Freehold. What does it mean and are there disadvantages to it?

A Flying Freehold exists where part of a freehold property overhangs a freehold property owned by a third party.

While somewhat rare these days, such circumstances would arise where the first floor bedroom of one house overhangs either a lounge or kitchen on the ground floor of another property – or the first floor bedroom of the first house overhangs a pathway or alleyway between two houses belonging to the second house. More particularly, the situation can arise where an old country mansion has been converted into three or four separate units.

As these older properties were not necessarily constructed with first floor rooms precisely the same size as those on the ground floor if first and ground floor rooms are of inconsistent size it is possible that the first floor of one unit can overhang the ground floor of an adjacent unit.

The crucial issue in a definition of “Flying Freehold” is the word “Freehold”.

Those who live in flats will not see any difficulty in the concept of a first floor flat overhanging a ground floor flat in separate ownership. The crucial difference is that with a flat this will be Leasehold and the individual Leases of each flat will contain the various rights of support etc, which enables one property to exist above another in separate ownership.

Where one freehold property overhangs another, these rights of support will not be intrinsic in the legal titles to either property – hence the term “Flying Freehold”.

Sep 16

Do I need planning permission to replace my house’s brick built extension with a conservatory?

We are currently carrying out a lot of work on our house and want to demolish the single storey brick built extension to the side of the property replacing it with a conservatory. Do I have to get Planning Permission to do this?

In most cases you will not need to apply for Planning Permission to knock down your house/business premises or any of its outbuildings unless the Council has made an Article 4 Direction restricting the demolition or alterations you could normally carry out under Permitted Development rules.

If you decide to demolish a building it does not automatically follow that you will get Planning Permission to build any replacement structure or to change the use of the site. Where demolition of any kind of a residential property is proposed, the Council may wish to agree the details of how you intend to carry out the demolition and how you propose to restore the site afterwards.

Adding a conservatory to your house is considered to be Permitted Development not needing an application for Planning Permission subject to certain limits and conditions.

Demolition is dealt with under the Building Act 1984 and generally requires six weeks’ notice to be given to the Local Authority Building Control before demolition begins.

Aug 19

Is buying a Freehold a waste of money?

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 is it 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.

* 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

Aug 19

Is a Will valid if it is not signed?

My wife’s uncle has recently died. He intended to leave a Will and had left a piece of paper in his writing desk with details of what he wanted to happen to his Estate, but while the draft was dated it was not signed. He was childless and his parents and siblings are deceased. Would this draft act as his Will?

No. For a Will to be valid it must be signed by the deceased, who must sign in the presence of two independent witnesses, who themselves must also sign in the presence of the Testator (person making the Will) and both witnesses must state his or her name, address and occupation. The Will must then be dated with the date of signature of all parties.

A Will must also appoint individuals to administer the Estate, called Executors. The piece of paper in this case may represent an expression of wishes and, while dated, it was not signed and therefore has no validity whatsoever.

In the absence of a valid Will, the person making the Will will be deemed to have died Intestate and the order in which beneficiaries are entitled to share his Estate would be in accordance with the Intestacy Rules. On the basis that the deceased was widowed and his parents and siblings had predeceased him, and he had no children, this would result in nephews and nieces being entitled to the Estate.

Accordingly, your wife, as a niece of the deceased, may well be entitled to a share in her late uncle’s Estate.

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.

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.