Colman Coyle, Hawksford and Russo-British Chamber of Commerce to host a hybrid event on investing in buy-to-let property in the UK

Colman Coyle, Hawksford and Russo-British Chamber of Commerce to host a hybrid event on investing in buy-to-let property in the UK

Colman Coyle are delighted to host a joint event along with Hawksford and Russo-British Chamber of Commerce in relation to foreign investors looking at buy-to-let property in the UK.

The panel of speakers from Colman Coyle include Oksana Howard (Corporate and International), Patrick Green (Private Client) and Sayrha Elahi (Property) and will be a good opportunity for attendees to learn more about the buy-to-let property market in London and the UK.

The event will take place on Tuesday 14 September 2021 at The Clermont Hotel in Charing Cross, and it will also be broadcasted via Zoom.

If you wish to find out further information or register your attendance (either in person or remotely) please sign up through the RBCC website here: https://bit.ly/3j5EVEa

Colman Coyle act for a significant number of foreign investors in the UK. If you have any questions on how we can assist or would like to discuss this event, please contact Oksana Howard on +44 (0)20 7704 3446 or oksana.howard@colmancoyle.com.

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Rights of first refusal: new leases granted by landlord before a collective enfranchisement claim were exempt disposals

Rights of first refusal: new leases granted by landlord before a collective enfranchisement claim were exempt disposals

In York House (Chelsea) Ltd v Thompson and another [2019] EWHC 2203 (Ch), the High Court held that the grant of new leases of various parts of a block of flats for no premium and at a peppercorn rent, by the husband and wife freehold owners to one or other of themselves, was an exempt disposal.

In order to preserve the development value in various parts of the premises and also to frustrate a prospective collective enfranchisement claim by the tenants, the landlords granted fourteen leases to one or other of themselves of various corridors, airspace, courtyards and other parts of a block of forty-two flats in Chelsea. No premium was paid, and the rent was a peppercorn in each case. 

Section 5 notices offering the tenants a right of first refusal under the Landlord and Tenant Act 1987 were not served.

A number of tenants subsequently initiated a claim for collective enfranchisement to acquire the freehold of the block and sought an order that the Leases be transferred to them.

There were a number of issues, including whether the leases fell within the exemptions for transfers by joint owners or gifts to a family member.

The High Court held that the granting of the leases constituted a gift to a member of the landlord’s family and were not a relevant disposal, therefore being exempt from the procedural requirements under the Landlord and Tenant Act 1987. Section 5 notices had not been necessary and the tenants could not compel a transfer of the leases to themselves. The motivation behind the grant of the leases was not relevant.

Where a collective enfranchisement claim is possible or expected, landlords are keen to try to ringfence development opportunities for their own future benefit. This decision shows that it is possible to take certain measures without triggering the right of first refusal.

It is important for landlords to remember however that any such leases may still nevertheless be liable to acquisition by the tenants as part of a collective enfranchisement claim (see, for example, LM Homes Ltd and others v Queen Court Freehold Company Ltd [2018] UKUT 367 (LC) from my blog here)

If you require advice on collective enfranchisement, please do not hesitate to contact our Enfranchisement Department and we will be happy to help.

Simon Tennant

Sayrha Elahi

Associate Solicitor

Tenants are entitled to acquire leases of basement, airspace and subsoil as part of a collective enfranchisement claim

Tenants are entitled to acquire leases of basement, airspace and subsoil as part of a collective enfranchisement claim

A recent tribunal decision highlights the challenges faced in ring fencing the possibility of development of basements, airspace and subsoil when there is a claim for collective enfranchisement under the Leasehold Reform, Housing and Urban Development Act 1993 (“LRHUDA 1993”).

In the case of LM Homes Ltd and others v Queen Court Freehold Company Ltd [2018] UKUT 367 (LC) (20 December 2018) the claim related to a block of 45 flats. Terms had been agreed with the nominee purchaser (the leaseholders’ representative) for the acquisition of the freehold and other intermediate interests and various transfers had been completed.

The landlord had previously granted separate 999 year leases of the basement, airspace and subsoil, allowing development of each of these areas if planning permission was obtained. The tenants of the basement, airspace and subsoil disputed the nominee purchaser’s entitlement to acquire their leases as part of the claim, however the Tribunal found in favour of the nominee purchaser. There was an appeal.

A collective enfranchisement claim is initiated by service of a notice under section 13 of LHRUDA 1993. The nominee purchaser’s notice continues in force “until a binding contract is entered into in pursuance of the notice”. Binding contracts had been entered into by the completion of various transfers pursuant to the notice and it was argued that the notice therefore no longer had any effect. The Upper Tribunal disagreed, holding that a binding contract includes both the singular and the plural and that LRHUDA 1993 clearly contemplates that more than one contract might be required to complete the acquisition of all the interests to which a nominee purchaser may be entitled.

It was further held that a nominee purchaser has the right to acquire any lease whose demise includes common parts of the relevant premises where the acquisition of the interest is reasonably necessary for the proper management or maintenance of those common parts. It was concluded that the basement, subsoil and airspace leases all satisfied this test.

The basement constituted common parts, as it contained a boiler which served the flats. The subsoil formed part of the exterior of the building, as did the airspace above meaning both also fell within the definition of common parts. As development of these areas would significantly hinder the tenants’ ability to maintain these areas, the nominee purchaser was entitled to acquire them.

This decision will be welcomed by tenants, as it follows the wide interpretation given to common parts and recognises the tenants’ need for control of all parts of the relevant premises for effective management, but also demonstrates to landlords and investors the difficulties involved in trying to ring fence parts of a property for future development where there is a possibility of the tenants bringing a claim for collective enfranchisement.

We understand that the case is going to further appeal.

If you require advice on collective enfranchisement, please do not hesitate to contact our Enfranchisement Department and we will be happy to help. 

Simon Tennant

Sayrha Elahi

Associate Solicitor

Stamp Duty Land Tax Surcharge Consultation Begins

Stamp Duty Land Tax Surcharge Consultation Begins

In the October 2018 Budget, the government announced it would consult on the introduction of an SDLT surcharge on non-UK residents purchasing residential properties in England and Northern Ireland. The consultation is now open.

Any foreign investor in UK property who is unable to prove that they have been a resident in the UK for at least 183 days prior to their purchase will be charged an additional 1% on top of the relevant SDLT due on the property. This includes the enhanced rates payable on second and investment property.

The surcharge will apply to purchases of residential property made by non-UK resident individuals and non-natural persons including companies, trusts and partnerships.

The rules will also be applicable to joint purchasers where one of them is a non-UK resident.

A refund will be available to foreign buyers that can prove they have been a resident in the UK for 183 consecutive days following the purchase date, however.

The consultation period ends on 6 May 2019.

Simon Tennant

Sayrha Elahi

Associate Solicitor

Autumn Budget 2017: Chancellor Philip Hammond abolishes Stamp Duty for First Time Buyers

Autumn Budget 2017: Chancellor Philip Hammond abolishes Stamp Duty for First Time Buyers

Stamp duty will be abolished from 22 November 2017 for first time buyers buying a home valued up to £300,000 and on the first £300,000 of purchases up to £500,000. This means that no stamp duty will be payable if the purchase price is less than £300,000.

Buyers wanting to purchase their first home valued up to £500,000 will not pay stamp duty on the first £300,000 and will pay 5% on the amount above the £300,000 threshold.

Purchasers of a home costing more than £500,000 will not benefit from any change and will pay stamp duty under the existing system.

Stamp duty is usually not payable on properties worth less than £125,000 but rises considerably after this threshold and it is envisaged that nearly all first time buyers will benefit from the changes, including almost 80% of buyers in London.

Who is a first time buyer?

A first time buyer is defined as someone who has never owned a freehold or leasehold property and who is purchasing their only or main residence.

If you have owned residential property anywhere in the world, whether bought or inherited, you will not be considered a first time buyer.

As relief is only available to first time buyers who are buying a property that they intend to use as their only or main residence, it follows that buy to let purchasers of their first property will not benefit from the changes.

All purchasers in a joint purchase must be first time buyers. So, if your spouse or partner already owns a residential property, you will not be eligible for the relief.

What if you are a first time buyer and exchanged contracts on your purchase before the changes were announced?

The requirement to pay stamp duty is triggered when you complete the purchase of your property. If you exchanged contracts before 22 November but not yet completed, then you will be charged under the new first time buyer stamp duty system. It does not matter if your transaction was agreed before this date.

Unfortunately if you are first time buyer but completed just before 22 November, you will not be able to claim relief or a refund. The relief is only available for purchases that complete on or after 22 November 2017.

Simon Tennant

Sayrha Elahi

Associate Solicitor

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