Bournemouth Solicitors

CONVEYANCING GUIDE FROM BOURNEMOUTH SOLICITORS

How can Variations of leases help?

The Landlord and the tenant can agree to amend leases to make the lease compliant with up-to-date requirements. The alterations are made by way of a deed of variation which is then registered at the Land Registry.

What are the rules for private residences and Capital Gains Tax relief?

Normally, the house or flat in which you live is exempt from Capital Gains Tax when you sell it. The property must have been your only or main residence during the period of ownership. During the last 36 months of ownership, the property is always regarded as your main residence even if you don’t live there. You can also be absent for periods totalling three years and for any period throughout which you worked abroad. In addition, if you had any work which required you to live in job-related accommodation, this is also discounted for Capital Gains Tax purposes. Any periods of absence in excess of the periods allowed result in the relevant proportion of your sale profit being charged to Capital Gains Tax.

If a specific part of your house is set aside for business purposes, then that proportion of your profits on the sale of the house will be taxable. However, if you don’t have any rooms used exclusively for business purposes, you will not normally be liable to any Capital Gains Tax if you sell your house.

If you own 2 properties, within 2 years of buying the second one you will need to send a letter (called an ‘election’) in which you disclose to the taxman which of these properties you wish to treat as your private residence for Capital Gains Tax purposes as otherwise, the Inland Revenue will decide for you, generally to your disadvantage.

Top tips for buying a property at auction

Preparation is key

It is always worth asking why the property is on sale at an auction in the first place. Has the property been repossessed by a mortgage lender? It is generally safer to buy a property that is being repossessed or from a local authority as you have more comfort as to the reasons for sale. Always instruct a conveyancing solicitor to review the legal documentation prior to auction.

Get a survey done

Some auction properties require significant amounts of building work or have a history of structural problems that will take money to fix ( which may be the very reason why they are being sold at auction ) . So get a survey done before you even think about bidding.

Get the auction pack

This will include the title deeds, local authority and drainage searches and Property Information Questionnaire . In the case of a leasehold property the auction pack should also include a copy of the lease, management information and a sellers leasehold information form.

Inspect the property

Solicitors generally do not visit properties, and there may well be hidden physical defects or other issues which only a visit and close inspection will reveal.

Have finance in place

If your bid is successful you will need to pay the 10% deposit on the day of the auction, and mosr auction contracts require completion to take place 28 days after exchange, which is a tight timescale. It is generally essential that you have guaranteed finance in place to pay the balance sale price, stamp duty, legal and associated costs.

I have a relative, over 18, who is not buying the property with me but my Lender insists on Deed of Postponement. What is this?

If an adult permanently resides at the property with you, but is not on the legal title and has not signed the mortgage deed, it will be difficult, under general law for the Lender to evict him if you default  on the mortgage. The Lender, therefore, requires such an non-owning occupier to sign a Deed of Postponement to state that he or she is aware that you purchased the property with the aid of a mortgage and that should you fail to make the repayments and you are evicted, he or she will leave the property with you and have no legal right over and above the Lenders right.

A Lender will not give a mortgage advance until a Deed of Postponement has been signed by a non-owning adult occupier. All Lenders are keen to ensure that any occupier receives independent legal advice on this particular issue.

What is included in a draft contract package ?

The pack will normally include:

• copies of the Land Registry entries (or if the title is unregistered, a set of copies of previous deeds showing a chain of ownership going back the necessary number of years.)
• the Seller’s Property Information Form
• if the property is a leasehold flat, a copy of the lease, and a Leasehold Information Form giving more information about leasehold matters, together with up-to-date information from the freeholder or managing agents
• the Fixtures, Fittings & Contents List

Lease Extension – How long does the lease extension process take?

If you are looking to sell your flat and want to quickly extend your lease through a formal Claim under the 1993 Leasehold Reform, Housing and Urban Development Act, you will be disappointed – the process is neither quick or easy, and can take up to 18 months if the issue is fully contested. The good news is that most extensions are ultimately agreed by consent as the parameters available to the freeholder for negotiating are limited, and a reasonable tactical offer can often result in extension by consent. In any event, you can start the formal claim process and then assign (transfer) your rights to the buyer, who then does not have to wait for the 2 year ownership qualification period.

Will I still have to pay ground rent after extending a lease ?

The ground rent should be reduced to a peppercorn meaning that no ground rent should be payable for the whole of the term (e.g. the 90 years plus the present unexpired term)