Section 5B of the Landlord and Tenant Act 1987 – a land of opportunity?

I hosted a talk by Gary Murphy of auctioneers ALLSOP at the recent ALEP conference on 10th October 2016.
The topics that  we were discussing was whether the fact that the tenants have served an acceptance and nomination notice under the provisions of the Landlord and Tenant Act 1987 has an impact on the to price achieved at auction. This being in a situation where the landlord has served a notice indicating a that the property will go to auction in accordance with Section 5B of the Landlord and Tenant Act 1987.
Perhaps unsurprisingly, the results of Gary’s anecdotal poll of auction clients reveals that large number will not bid in such a situation leading to slightly depressed prices in the room. 
Gary has written an article that has now appeared in the Estates Gazette. 
This caused me to wonder on two counts. Firstly, is not worth bidding on such lots as a buyer? After all, if the tenants do not proceed then you would be buying at a discount and, Secondly, as tenant isn’t this a golden opportunity – after all, is if the property is sold then chances are you will be buying slightly below market value.
There are a number of Barriers to the tenants succeeding in practice – firstly, they may need to be very organized (ready to complete in 28 days) and if there are lots of flats this may be hard / impossible to achieve. Also it can be hard to motivate people when the valuation outcomes are uncertain (remember no-one has put a number on the proposed price – unlike a under section 5A of the Landlord and Tenant Act 1987) – However, in the right circumstances auction disposals following a notice under Section 5B of the Landlord and Tenant Act 1987 present a significant opportunity. 

Mark Chick 

Mark Chick is a solicitor dealing with leasehold issues. This note (being very general in its nature) is not a complete statement of the law in this area.  It is therefore not a substitute for legal advice from a suitably qualified professional and should not be relied upon as such. No liability can therefore be accepted for any actions based on reliance upon it.

If you require legal advice please visit www.bishopandsewell.co.uk or email leasehold@bishopandsewell.co.uk


 

Tribunal fees for enfranchisement cases – as of 18th July 2016

Readers of this column may be aware that the government previously looked to introduce fees for applications made to the first tier tribunal for Enfranchisment matters.

There was a lot of debate about this and I and other ALEP colleagues were involved in making representations – particularly because the initial fees proposed were £2000 per case! 
Fortunately, because of the intervention the likely fees were reduced – to a much more manage able (and less deterring) £100 on application and £200 when a hearing date is set.
This may not be the end of the story however, as it is likely that the subject will be revisited in the future at which point, government may be tempted to set fees which escalate depending on the value of the case.
We learnt yesterday from the FTT that fees will be introduced with effect from 18th July 2016 (probably). If you are involved in a case and are going to need to apply it may be worth doing so before this date to avoid the additional application fee.

 

Links to the relevant SI for those that are interested appear below:

 Statutory Instrument

Schedule of fees
Mark Chick

Mark Chick is a solicitor dealing with leasehold issues. This note (being very general in its nature) is not a complete statement of the law in this area.  It is therefore not a substitute for legal advice from a suitably qualified professional and should not be relied upon as such. No liability can therefore be accepted for any actions based on reliance upon it.

If you require legal advice please visit www.bishopandsewell.co.uk 

or email leasehold@bishopandsewell.co.uk

 

Buying your freehold – the basics

This is a short video explaining the basic points to consider if you are thinking about buying your freehold. It covers whether your building will qualify or not, qualifying leases and and some other preliminary points to think about. I hope you find it useful.

If you would like to know more then by all means contact me to discuss.

Mark Chick is a solicitor dealing with leasehold issues. This note (being very general in its nature) is not a complete statement of the law in this area. It is therefore not a substitute for legal advice from a suitably qualified professional and should not be relied upon as such. No liability can therefore be accepted for any actions based on reliance upon it.
If you require legal advice please visit www.bishopandsewell.co.uk or email leasehold@bishopandsewell.co.uk

Am I going to pay tax on a lease extension as a landlord?

I am a freeholder.  The flat owner is going to pay me a premium to extend his lease. Am I going to pay any tax on that?

The answer to this is that ‘it depends.’

Assuming that there will be a capital gain on the disposal when the lease is granted then the answer is probably ‘yes’.  

The exception may be a situation where a Notice is served under the legislation and you are able to ‘roll over’ the gain because you plan to reinvest in another qualifying asset (ie property) this suits owners of freeholds who act as investor.  

If you own an individual freehold or happen to have a leasehold property attached to your freehold property you will receive a lease extension premium then these considerations are unlikely to apply and it is likely that you will have a capital gain to declare on the ‘disposal’ i.e. the sale of the lease to the tenant.

Different considerations apply if you are a freehold company (owned by the flat owners) and you are granting yourselves lease extensions. 

Expert advice should be taken as to your tax status which is likely to depend on your own status – (for instance there may be certain exemptions or allowable expenditure that you can take advantage of). For further advice you will need to consult a professional practice with a tax department or an accountant or other tax advisor.

Mark Chick

Mark Chick is a solicitor dealing with leasehold issues. This note (being very general in its nature) is not a complete statement of the law in this area.  It is therefore not a substitute for legal advice from a suitably qualified professional and should not be relied upon as such. No liability can therefore be accepted for any actions based on reliance upon it.

If you require legal advice please visit www.bishopandsewell.co.uk or email leasehold@bishopandsewell.co.uk Or privateclient@bishopandsewell.co.uk to discuss tax issues