what's in the news

It seems that regrettably the Government has no intention of bringing relief to many in the business community with a re-think of the former Labour Government’s planned rise in the threshold for empty rates relief.

In Parliament on 17th January 2011 Robert Neill, the Secretary of State for Communities and Local Government, was asked what assessment his Department has made of the likely effect of the reduction of the empty property rates threshold on the business sector?

In a written answer Mr Neill replied that although the Government recognises the problems caused by the previous Government’s reforms of empty property rates, any action would need to be balanced against the costs involved (estimated at £400 million to continue with the temporary empty rates measure) particularly in the light of the current fragile economic climate. The Coalition has no immediate plans to reverse the reforms and the empty property rate threshold will revert to £2,600 (from £2,200) from 1 April 2011.

For further information please visit Pitmans Real Estate website or contact our team direct.

Katharine Marshall
Director – Commercial Property
T: +44 (0)118 957 0206
E: kmarshall@pitmans.com

Please note that the above is a summary only and is not intended to be fully comprehensive. Pitmans accepts no liability for any reliance placed on this article.

Restrictive covenants in favour of and in the name of a previous owner (the ‘Vendor’, now deceased) of land were held by the High Court in Churchill v Temple [2010] All ER (D) 170 (Dec) not to be enforceable by the current owners of the land.  The death of the Vendor meant that the covenant could not be enforced by a subsequent owner.

In this case, Churchill purchased property which was subject to restrictive covenants in favour of the Vendor contained in a 1967 conveyance of the property to Churchill’s predecessor in title.  The covenants included an obligation to obtain the consent of the Vendor to the construction of a dwelling or any structural alteration or addition.

The Vendor subsequently sold its property, which was later acquired by Temple.  The Vendor is now deceased.  Churchill wished to demolish the house currently on his property and replace it and so sought directions from the Court as to the validity of the restrictive covenants.

The Court held that the term “Vendor” in the restrictive covenant only included the original vendor and not his successors in title.  Further, the original parties to the conveyance containing the covenants were assumed to have taken into account any reasonably foreseeable contingencies, having considered the position of the parties. 

In this case the Court took into account the amount of time that had passed and the fact that neither party to this dispute was a party to the original conveyance containing the restrictive covenants.

The Court held that the Vendor would have wished to preserve the value of his property but would not have intended an indefinite restriction.  The restrictive covenant was therefore discharged by the death of the Vendor.

Each decision relating to covenants of this kind will depend on its own facts, but this case provides a welcome indication for owners of property subject to this type of covenant.

For further information please visit Pitmans Real Estate website or contact our team direct.

Mark Holloway
Solicitor – Commercial Property
T: +44 (0)118 957 0352
E: mholloway@pitmans.com

Yes, really.  In Nicholas Prestige Homes v Neal (2010) the Court of Appeal has confirmed that a contract concluded by email was binding. How did such a seemingly obvious point come to be taken and what can we learn from this case? There appear to be three key messages.

First, the Court upheld the rule that the claimant firm of estate agents were not entitled to a commission on a sale of a property which had been arranged by another firm of agents. The claimant firm had not introduced the purchaser to the purchase. However, because they were sole agents at the time they were entitled to damages equivalent to their commission because they lost the “certain” chance of earning it. 

Secondly, the seller represented herself in the County Court and the Court of Appeal. Whilst they bent over backwards to give her the benefit of the doubt, she could not avoid the almost inevitable conclusion that she was bound by the terms of the contract she had made.

The third key message, therefore, is that it is easy to bind yourself into an agreement by email. This is how it happened. After a site visit the claimant estate agents sent Mrs Neal an email which said they would be joint agents until 31 December 2006 and that from 1 January 2007 they would have sole selling rights. Two sets of terms for the different agency arrangements were attached. The claimant chased up with a phone call and Mrs Neal replied by email saying: “That’s fine, look forward to some viewings.” The Court of Appeal highlighted two issues that were crucial to the outcome: 

(i) whether it mattered that Mrs Neal had not fully read the email or the attachments (it did not) and;

(ii) that her acceptance was a reply to the original email such that there was no possibility of arguing that her message “that’s fine” related to anything different.

Conclusion:

The case would have been remarkable had the Court not found that a contract existed. It does highlight the ease with which contracts can be formed by email and the danger of not reading things properly. It was no defence to say that the emails or attachments had not been read or did not reflect what was intended.  Once accepted, the terms were binding. Oh, and we would say this, had Mrs Neal taken advice and not acted in person she might well have avoided two court hearings, adverse costs orders and have had a good chance of reaching a more favourable negotiated settlement.

Tim Clark
Partner
+44 (0)118 957 0264
tclark@pitmans.com
http://www.pitmans.com/dispute-resolution/

Recently, The Thames Valley Business Magazine and Pitmans Solicitors gathered a group of local experts to consider the property investment market.  Below John Burbedge reproduces selected observations from the roundtable discussion.

The Roundtable message came loud and clear: Mortgages need to be made more readily available, particularly for first-time-buyers (FTB’s), to get the residential housing market moving, and with it the property sector in general.

The lack of lending was risking a ‘stifling’ of the market, claimed developed Mark Clayton.  “There is a danger that people just won’t move- and therefore the estate agents will not be paid, the lawyers will not be paid, the removal men will not be paid, the home furnishers on the high street will not be paid…and even the Government will not receive stamp duty (SDLT) or VAT on any other associated service, damaging the public purse.  People will stop spending on certain items and there will be casualties in the market place.”

In addition to higher deposits being required within costly mortgage funding and legal and moving costs, a stamp duty increase in April 2011 was adding to the financial difficulties of buying a home.  For many, without the Bank of Mum & Dad, it would be virtually impossible to move.

Mark Stuckey revealed: “The age of the average FTB without a deposit is 37.”

Anthony Henry-Lyons agreed: “The log-jam in UK property, and devolving from that incidental commercial and retail development, is not being able to get mortgages.”

“The market is all about the circle.  First-time-buyers get on it, then they upgrade and they move on, and on again and the circle keeps moving on.  But if you can’t get on the circle…”

With irony, he noted that FSA chairman Lord Turner is recommending greater mortgage and credit controls.  “How will we get mortgages to work?”

Read more about the: Pitmans Property Round Table Thames Valley Business Magazine Nov 2010 

For further information about Pitmans property expertise, or to speak to a member of the Pitmans Real Estate team please visit the website.

The possibility of an infringement of rights to light are an important factor to be considered by all developers.  The right to light of a building arises after twenty years uninterrupted enjoyment of light without the consent of a third party.  If a right to light is infringed, an injunction can be granted or damages awarded.

The recent judgement of the High Court in HKRUK II (CHC) Ltd v Heaney [2010] EWHC 2245 stands as a clear warning to all developers.  An injunction was granted against a developer who infringed a neighbour’s right to light despite the fact the development was completed and the owner of the building claiming the infringement (the dominant property) failed to take action for 18 months.

The developer wanted to build a seven storey building, which was two storeys higher than the previous building on the development site.  The developer knew that rights to light existed in favour of the dominant property and took steps to try and resolve the issue; however negotiations stalled.  Once building works were completed the developer sought a declaration confirming the building was free from any rights to light which resulted in a counterclaim of an infringement of a right to light.  The owner of the dominant property, a Grade II Listed Victorian house, had spent in the region of £3 million restoring the building.

It was agreed the dominant property had a right to light which had been infringed and so a remedy was due.  However the dispute lay in what would be an adequate remedy – damages or an injunction.

The judge looked at guidelines set out in an earlier case as to whether damages would be an adequate remedy.  For damages to be adequate, the injury must not be significant; be capable of being estimated in money; a small sum of money must be an adequate compensation and it would be oppressive to the infringer to grant an injunction.  The judge decided the injury to the defendant was not a small injury taking into account the money spent by the defendant in restoring the property and the fact that the infringement affected some of the most important rooms of the house.  It was also ruled that it would not be oppressive to grant the injunction, as the interference was more than trivial; the developer knew about the infringement but was driven by a desire for profit, as it could have amended the building plans but chose not to.  Therefore damages were not an adequate remedy.

The outcome of the case has meant that the developer now has to alter the building.  It is estimated that the total cost for the alterations is between £1m and £2m in addition to the fees it has incurred.  It is understood that the developer is seeking leave to appeal from the Court of Appeal. 

As a result of the judgement in Heaney, developers now face a threat of an injunction if they infringe a right to light regardless of whether development has been completed.  A claimant’s failure to act within a reasonable amount of time will not prevent them from obtaining an injunction.  Therefore a prudent developer should take steps to rectify any infringement of a right to light from the outset, whether by altering the plans or by coming to an agreement with the owner of the right to light.

Please note that the above is a summary only of the above case and its implications and is not intended to be fully comprehensive. Each matter will depend on its own particular circumstances and we therefore recommend that legal advice is sought on each occasion.

For further information relating to Real Estate, please visit the Pitmans Real Estate website or contact our team direct.

Sally Sharp
ssharp@pitmans.com
+44 (0) 118 957 0362

On 22 June 2010 George Osborne delivered his first Budget under the new coalition government.  Below is a summary of the property-related measures we believe our website’s users may find of interest:

Value Added Tax – arguably the most important change – the rate will increase to 20% from 4 January 2011.  There is no rise in VAT on new build properties.

Capital Gains Tax – this increased to 28% for higher-rate taxpayers with immediate effect (23/06/10).

Income Tax – the personal allowance will increase to £7,475 from April 2011.

Insurance Premium Tax – the current standard 5% rate will increase to 6% and the higher rate from 17.5% to 20%, both from 4th January 2011

Home Information Packs – Although not strictly part of the Budget, the requirement for a seller to obtain a Home Information Pack (HIP) prior to the marketing of their property has been suspended with immediate effect from 21 May 2010.  The Energy Performance Certificate (EPC) will still be necessary.  Sellers will still be required to commission, but won’t need to have received an EPC before marketing their property.

Stamp Duty - again an earlier change introduced back in the March 2010 Budget but a reminder that from 6th April 2011 there will be a new 5% band of SDLT on all purchases of property worth over £1 million.  That March Budget also introduced a first-time buyer relief where the consideration is below £250,000 for a 2 year period between 25/03/10 and 25/03/12.

Business Rates – the Government has announced their intention to introduce legislation to cancel back-dated business rates bills eligible for the 8-year schedule of payments scheme for newly assessed properties that were split from a larger ratable property.  It is thought the Government also intends to repay those who have already met their back-dated liabilities.  The level of small business rate relief will temporarily increase for 1 year from 1st October 2010 giving full relief for eligible businesses occupying premises with a ratable value of up to £6000 and tapering relief to £12,000 (March 2010 Budget).

Council Tax – the Government has announced it will work with local authorities to “freeze” tax for 2011/2012.  Details have yet to be clarified.

Furnished Holiday Lets – the current favourable tax regime will not be repealed as was expected but rather the Government proposes to consult during the year to change the rules to ensure they comply with EU requirements and are fiscally responsible.  The likely changes will be to the eligibility thresholds and the circumstances for which relief for loses can be claimed but again the detail must be examined carefully once available.

Regional Development Agencies – will be abolished to be replaced by Local Enterprise Partnerships where demanded by business and locally-elected leaders.  A White Paper this Summer will consider options for business rate and council tax incentives that would allow local re-investment into communities and the introduction of a simplified planning consents process in specific areas targeted for business growth.

Major Transport Schemes – the upgrade of the Tyne & Wear Metro, extension of the Manchester Metrolink, redevelopment of Birmingham New Street station and improvements to the rail lines to Sheffield and between Leeds and Liverpool were all confirmed.  High Speed 1 (the Channel Tunnel rail link) will be sold.

A “Green Deal” will be launched for households through legislation in the Energy Security and Green Economy Bill to allow individuals to invest in home energy efficiency improvements paid for through savings in energy bills.

Landfill Tax – the standard rate will increase by £8 per tonne each year from 1st April 201 until at least 2014 and there will be a minimum rate of £80 per tonne from April 2014 until at least 2020.

Please note that the above is a summary only and is not intended to be fully comprehensive.  We recommend that specific legal advice is sought on any particular issue.

For further information relating to Property & Real Estate services, please visit the Pitmans Real Estate website or contact our team direct.

Katharine Marshall
Director
+44 (0) 118 957 0206