Credible alternative
LNB News 26/05/2009 24
Published date: 25 May 2009
Author: Lucy Wolley Dod, Adele Gray and Lidia Kamleh
Journal name: Estates Gazette
Journal date: 2 May 2009
Journal citation: Estates Gazette, 2 May 2009, 96
Jurisdiction: England; Scotland; Northern Ireland; Wales
Abstract: Estates Gazette, 2 May 2009: How Islamic finance can help UK investors fund real estate ventures.
Summary: Explains the basic principles of Islamic finance, which is attracting increasing interest as the real estate market explores new sources of funding and liquidity. The Islamic finance industry has experienced phenomenal growth in the past decade and this trend is set to continue with a predicted 1000 sharia-compliant funds under management globally by 2010 with a total value of $1 trillion. The UK, with more than $18bn in sharia-compliant assets is vying to become the global centre for international Islamic banking.
Protecting lenders' interests
LNB News 05/06/2009 3
Published date: 3 June 2009
Author: Jane Allan
Journal name: Estates Gazette
Journal date: 23 May 2009
Journal citation: Estates Gazette, 23 May 2009, 98
Jurisdiction: England; Wales
Abstract: Estates Gazette, 23 May 2009: Insurance arrangements in real estate transactions raise a number of issues that need to be carefully considered.
Summary: Advises lenders ensure that insurance policies on properties they are funding are satisfactory. Many standard provisions in a loan agreement are unnecessary if composite insurance is available. Introduces some of the insurance issues arising in real estate finance transactions and also aims to simplify the lender's requirements so as to provide greater understanding of the insurance terminology contained in loan agreements.
More frequent revaluations needed
LNB News 05/06/2009 5
Published date: 3 June 2009
Author: Charles Partridge
Journal name: Estates Gazette
Journal date: 23 May 2009
Journal citation: Estates Gazette, 23 May 2009, 94
Jurisdiction: England; Wales
Abstract: Estates Gazette, 23 May 2009: Rating revaluations have polarised opinion.
Summary: Argues that despite the current market conditions, the 2010 revaluation should not be postponed. When Sir Terry Leahy addressed the British Council of Shopping Centres in November 2008, he pressed for the 2010 rating revaluation to be postponed. He pointed out that the antecedent valuation date at which values were set did not reflect the changing nature of the property market.
Not all rights can be taken for granted
LNB News 08/06/2009 16
Published date: 8 June 2009
Author: Sandi Murdoch
Journal name: Estates Gazette
Journal date: 30 May 2009
Journal citation: Estates Gazette, 30 May 2009, 101
Jurisdiction: England; Wales
Related cases: Waterman v Boyle [2009] EWCA Civ 115, [2009] All ER (D) 285 (Feb)
Abstract: Estates Gazette, 30 May 2009: How case demonstrates that the right to park on private access roads cannot be assumed.
Summary: Looks at a recent Court of Appeal case which demonstrated how a right of access will imply a right to park only in exceptional circumstances. By the time the case of Waterman v Boyle came before the Court of Appeal the legal claims had narrowed to three. The first concerned the location of the boundary at the rear of the properties, the second related to parking rights at the front and the third issue was whether the construction amounted to an interference with the respondents' right of access to their garage.
Is this an appealing prospect?
LNB News 08/06/2009 17
Published date: 8 June 2009
Author: Martin Edwards and John Martin
Journal name: Estates Gazette
Journal date: 30 May 2009
Journal citation: Estates Gazette, 30 May 2009, 100
Jurisdiction: England; Wales
Abstract: Estates Gazette, 30 May 2009: How will practitioners be affected by major changes to the planning appeals process?
Summary: Suggests that practitioners need to familiarise themselves with recent changes to the planning appeals process. On 6 April 2009, major changes to the planning appeals process came into force which are designed to make it more proportionate, customer-orientated and efficient. In line with these changes, Circular 03/2009 was issued by the Department for Communities and Local Government covering 'costs awards in appeals and other planning proceedings'.
Growing green shoots
LNB News 21/05/2009 31
Published date: 21 May 2009
Jurisdiction: UK
Related digests: LNB News 28/04/2009 21
Abstract: Farmers got the answer they wanted in the Budget on Agricultural Property Relief. Julie Hutchison, head of estate planning at Standard Life, explains the background to Neasa MacErlean
Analysis: Tax advisers to the farming sector will be heaving a sigh of relief after seeing the Budget announcement that the government is extending the application of Agricultural Property Relief (APR) throughout the European Economic Area (EEA). The relief is highly valuable to farmers, giving them relief from Inheritance Tax at rates of 100 or 50%.
Under pressure from the European Commission not to restrict APR just to the UK, the government had the practical choice of broadening it to cover all of the EEA or to drop it altogether. Either route would have satisfied the principle the Commission was upholding: equal treatment throughout the whole zone. Although most farmers themselves were probably not fully aware of the depth of the debate, the subject had become a major campaigning issue for lobbying groups in January this year when the Commission put the UK government on notice that its policy had to change.
Julie Hutchison is pleased that the government has taken this path (which also applies to Woodlands Relief), and also that it will be easy to implement. The change "will be quite straightforward," she says. It came in with immediate effect from Budget day, 22 April. And for those farmers who have bought farming land and farm houses in the EEA, it makes life easier for them in that they can rely on APR rather than trying to use Business Property Relief (an option which could, in practice, force them to set up company or joint venture structures rather than simply owning the property directly). She says: "It makes it a more genuine option to own the land rather than coming up with another arrangement," she says.
It was probably the lobbying power of the farming community in the run-up to a general election that swung the issue in the government, according to Hutchison. Although Business Property Relief could have been used instead in some cases by farmers to protect their assets from inheritance tax, some families might not have been able to use it. Hutchison believes that IHT would have been applied in many more cases, and that farms would have to have been sold to meet the 40% tax (which applies to taxable assets above the current threshold, per person, of £325,000). In 2005/06 there were 1977 claims for APR. She says: "This is an interesting example of how European law is a key consideration in our tax system now. The response of the government has been a pragmatic one which favours the tax payer."
In a parallel issue, the government decided to end the furnished holiday letting rules from April 2010 because it again had to choose between extending them to all property in the EEA or to end them. Until April 2010, people carrying out such lettings can claim for properties across Europe (and they can make an arrears claim back to 2006/07 so long as they get the claim in before the end of July). But Patrick King of MacIntryre Hudson thinks there could be a backlash over this from the rural community, long-time providers of furnished holiday lettings. He says: "While the Government has lectured rural communities on the need to diversify their income streams, it is now punishing one of the most common means of doing this available. It is certainly difficult to see from what angle this proposal is fair, or helps the communities that the government purports to champion."
RTE company enfranchisement concept was 'misguided'
LNB News 12/06/2009 48
Published date: 12 June 2009
Jurisdiction: UK
Related legislation: Leasehold Reform Housing and Urban Development Act 1993; Commonhold and Leasehold Reform Act 2002.
Abstract: The government plans to repeal a 2002 provision necessitating lessees establish a company in order to buy freehold on their flats
Analysis: The government's plan to repeal a 2002 provision necessitating lessees establish a company in order to buy freehold on their flats is good news for tenants, says Andy Szebeni, representing the Association of Leasehold Enfranchisement Practitioners (ALEP). Greg Bousfield reports. "This will remove an extra layer of administration, potential delays and costs in a process that is already not exactly cheap," he says.
The provision, part of amendments to the Commonhold and Leasehold Reform Act 2002 was never actually implemented as a statutory instrument. It was to be used in conjunction with the right to enfranchise provided by the Leasehold Reform Housing and Urban Development Act 1993. This allows the enforced sale of the freehold of the building, to the nominee purchaser of a group of leaseholders of the flats who represent at least half of the flats in the building.
However, in some cases qualifying leaseholders have been deliberately excluded by their neighbours. The government sought to address this problem in the 2002 Act by requiring collective enfranchisement be exercised through a Right to Enfranchise (RTE) company to replace the existing process.
But the government now believes that the mandatory RTE company does not put in place an efficient mechanism for resolving what it sees as the central conflict: disputes between lessees over the apportionment of costs arising from the enfranchisement. The most likely mechanism would be via Land Tribunal rulings or some other arbitration process, or the possibility that objectors would take the civil right created by RTE to the courts. The government feels this would all create more problems than it would solve and is now consulting on repealing the provision.
The RTE concept was in any case misguided in relation to how enfranchisement functions, Szebeni says.
"You need 50% or more of lessees need to get together to force the freeholder to sell the freehold to them, so you still need half the block or more to buy the freehold."
"It is therefore theoretically possible for half of the flat owners to be cut out of this process. However they would not necessarily be disadvantaged because those participants still have the right to enfranchise. So they can ask to buy their share of freehold from the new company which happens to be owned by their neighbours."
"And leasehold evaluation tribunals would enforce any reasonable attempt of a non-participant lessee to buy into the new nominal purchasing company formed by their neighbours.
"
Fairness considerations were part of the reason for introducing RTE clause, he adds.
"This 200 changes were part of the government's 1997 manifesto to enable flat owners to have more of say in their affairs."
But Angus Fanshaw, Director of Valuations at Douglas & Gordon says that in fifteen years of practice, he has never seen a building where one group of lessees has tried to exclude another. "And of course it's much easier to have one group trying to get freehold rather than the situation the RTE company concept would create of two groups competing with each other," he says.
The Department of Communities and Local Government's consultation of repealing the Commonhold and Leasehold Reform Act 2002, sections 121-123 ends on 3 August 2009.
LNB News 26/05/2009 24
Published date: 25 May 2009
Author: Lucy Wolley Dod, Adele Gray and Lidia Kamleh
Journal name: Estates Gazette
Journal date: 2 May 2009
Journal citation: Estates Gazette, 2 May 2009, 96
Jurisdiction: England; Scotland; Northern Ireland; Wales
Abstract: Estates Gazette, 2 May 2009: How Islamic finance can help UK investors fund real estate ventures.
Summary: Explains the basic principles of Islamic finance, which is attracting increasing interest as the real estate market explores new sources of funding and liquidity. The Islamic finance industry has experienced phenomenal growth in the past decade and this trend is set to continue with a predicted 1000 sharia-compliant funds under management globally by 2010 with a total value of $1 trillion. The UK, with more than $18bn in sharia-compliant assets is vying to become the global centre for international Islamic banking.
Protecting lenders' interests
LNB News 05/06/2009 3
Published date: 3 June 2009
Author: Jane Allan
Journal name: Estates Gazette
Journal date: 23 May 2009
Journal citation: Estates Gazette, 23 May 2009, 98
Jurisdiction: England; Wales
Abstract: Estates Gazette, 23 May 2009: Insurance arrangements in real estate transactions raise a number of issues that need to be carefully considered.
Summary: Advises lenders ensure that insurance policies on properties they are funding are satisfactory. Many standard provisions in a loan agreement are unnecessary if composite insurance is available. Introduces some of the insurance issues arising in real estate finance transactions and also aims to simplify the lender's requirements so as to provide greater understanding of the insurance terminology contained in loan agreements.
More frequent revaluations needed
LNB News 05/06/2009 5
Published date: 3 June 2009
Author: Charles Partridge
Journal name: Estates Gazette
Journal date: 23 May 2009
Journal citation: Estates Gazette, 23 May 2009, 94
Jurisdiction: England; Wales
Abstract: Estates Gazette, 23 May 2009: Rating revaluations have polarised opinion.
Summary: Argues that despite the current market conditions, the 2010 revaluation should not be postponed. When Sir Terry Leahy addressed the British Council of Shopping Centres in November 2008, he pressed for the 2010 rating revaluation to be postponed. He pointed out that the antecedent valuation date at which values were set did not reflect the changing nature of the property market.
Not all rights can be taken for granted
LNB News 08/06/2009 16
Published date: 8 June 2009
Author: Sandi Murdoch
Journal name: Estates Gazette
Journal date: 30 May 2009
Journal citation: Estates Gazette, 30 May 2009, 101
Jurisdiction: England; Wales
Related cases: Waterman v Boyle [2009] EWCA Civ 115, [2009] All ER (D) 285 (Feb)
Abstract: Estates Gazette, 30 May 2009: How case demonstrates that the right to park on private access roads cannot be assumed.
Summary: Looks at a recent Court of Appeal case which demonstrated how a right of access will imply a right to park only in exceptional circumstances. By the time the case of Waterman v Boyle came before the Court of Appeal the legal claims had narrowed to three. The first concerned the location of the boundary at the rear of the properties, the second related to parking rights at the front and the third issue was whether the construction amounted to an interference with the respondents' right of access to their garage.
Is this an appealing prospect?
LNB News 08/06/2009 17
Published date: 8 June 2009
Author: Martin Edwards and John Martin
Journal name: Estates Gazette
Journal date: 30 May 2009
Journal citation: Estates Gazette, 30 May 2009, 100
Jurisdiction: England; Wales
Abstract: Estates Gazette, 30 May 2009: How will practitioners be affected by major changes to the planning appeals process?
Summary: Suggests that practitioners need to familiarise themselves with recent changes to the planning appeals process. On 6 April 2009, major changes to the planning appeals process came into force which are designed to make it more proportionate, customer-orientated and efficient. In line with these changes, Circular 03/2009 was issued by the Department for Communities and Local Government covering 'costs awards in appeals and other planning proceedings'.
Growing green shoots
LNB News 21/05/2009 31
Published date: 21 May 2009
Jurisdiction: UK
Related digests: LNB News 28/04/2009 21
Abstract: Farmers got the answer they wanted in the Budget on Agricultural Property Relief. Julie Hutchison, head of estate planning at Standard Life, explains the background to Neasa MacErlean
Analysis: Tax advisers to the farming sector will be heaving a sigh of relief after seeing the Budget announcement that the government is extending the application of Agricultural Property Relief (APR) throughout the European Economic Area (EEA). The relief is highly valuable to farmers, giving them relief from Inheritance Tax at rates of 100 or 50%.
Under pressure from the European Commission not to restrict APR just to the UK, the government had the practical choice of broadening it to cover all of the EEA or to drop it altogether. Either route would have satisfied the principle the Commission was upholding: equal treatment throughout the whole zone. Although most farmers themselves were probably not fully aware of the depth of the debate, the subject had become a major campaigning issue for lobbying groups in January this year when the Commission put the UK government on notice that its policy had to change.
Julie Hutchison is pleased that the government has taken this path (which also applies to Woodlands Relief), and also that it will be easy to implement. The change "will be quite straightforward," she says. It came in with immediate effect from Budget day, 22 April. And for those farmers who have bought farming land and farm houses in the EEA, it makes life easier for them in that they can rely on APR rather than trying to use Business Property Relief (an option which could, in practice, force them to set up company or joint venture structures rather than simply owning the property directly). She says: "It makes it a more genuine option to own the land rather than coming up with another arrangement," she says.
It was probably the lobbying power of the farming community in the run-up to a general election that swung the issue in the government, according to Hutchison. Although Business Property Relief could have been used instead in some cases by farmers to protect their assets from inheritance tax, some families might not have been able to use it. Hutchison believes that IHT would have been applied in many more cases, and that farms would have to have been sold to meet the 40% tax (which applies to taxable assets above the current threshold, per person, of £325,000). In 2005/06 there were 1977 claims for APR. She says: "This is an interesting example of how European law is a key consideration in our tax system now. The response of the government has been a pragmatic one which favours the tax payer."
In a parallel issue, the government decided to end the furnished holiday letting rules from April 2010 because it again had to choose between extending them to all property in the EEA or to end them. Until April 2010, people carrying out such lettings can claim for properties across Europe (and they can make an arrears claim back to 2006/07 so long as they get the claim in before the end of July). But Patrick King of MacIntryre Hudson thinks there could be a backlash over this from the rural community, long-time providers of furnished holiday lettings. He says: "While the Government has lectured rural communities on the need to diversify their income streams, it is now punishing one of the most common means of doing this available. It is certainly difficult to see from what angle this proposal is fair, or helps the communities that the government purports to champion."
RTE company enfranchisement concept was 'misguided'
LNB News 12/06/2009 48
Published date: 12 June 2009
Jurisdiction: UK
Related legislation: Leasehold Reform Housing and Urban Development Act 1993; Commonhold and Leasehold Reform Act 2002.
Abstract: The government plans to repeal a 2002 provision necessitating lessees establish a company in order to buy freehold on their flats
Analysis: The government's plan to repeal a 2002 provision necessitating lessees establish a company in order to buy freehold on their flats is good news for tenants, says Andy Szebeni, representing the Association of Leasehold Enfranchisement Practitioners (ALEP). Greg Bousfield reports. "This will remove an extra layer of administration, potential delays and costs in a process that is already not exactly cheap," he says.
The provision, part of amendments to the Commonhold and Leasehold Reform Act 2002 was never actually implemented as a statutory instrument. It was to be used in conjunction with the right to enfranchise provided by the Leasehold Reform Housing and Urban Development Act 1993. This allows the enforced sale of the freehold of the building, to the nominee purchaser of a group of leaseholders of the flats who represent at least half of the flats in the building.
However, in some cases qualifying leaseholders have been deliberately excluded by their neighbours. The government sought to address this problem in the 2002 Act by requiring collective enfranchisement be exercised through a Right to Enfranchise (RTE) company to replace the existing process.
But the government now believes that the mandatory RTE company does not put in place an efficient mechanism for resolving what it sees as the central conflict: disputes between lessees over the apportionment of costs arising from the enfranchisement. The most likely mechanism would be via Land Tribunal rulings or some other arbitration process, or the possibility that objectors would take the civil right created by RTE to the courts. The government feels this would all create more problems than it would solve and is now consulting on repealing the provision.
The RTE concept was in any case misguided in relation to how enfranchisement functions, Szebeni says.
"You need 50% or more of lessees need to get together to force the freeholder to sell the freehold to them, so you still need half the block or more to buy the freehold."
"It is therefore theoretically possible for half of the flat owners to be cut out of this process. However they would not necessarily be disadvantaged because those participants still have the right to enfranchise. So they can ask to buy their share of freehold from the new company which happens to be owned by their neighbours."
"And leasehold evaluation tribunals would enforce any reasonable attempt of a non-participant lessee to buy into the new nominal purchasing company formed by their neighbours.
"
Fairness considerations were part of the reason for introducing RTE clause, he adds.
"This 200 changes were part of the government's 1997 manifesto to enable flat owners to have more of say in their affairs."
But Angus Fanshaw, Director of Valuations at Douglas & Gordon says that in fifteen years of practice, he has never seen a building where one group of lessees has tried to exclude another. "And of course it's much easier to have one group trying to get freehold rather than the situation the RTE company concept would create of two groups competing with each other," he says.
The Department of Communities and Local Government's consultation of repealing the Commonhold and Leasehold Reform Act 2002, sections 121-123 ends on 3 August 2009.