| Winckworth Sherwood |
Newsletter |
 |
|
1. Homes and Communities Agency (HCA) 2. How green is your building? 3. VAT consequences for house builders who opt for short terms rents. 4. Can you rely on an oral agreement? 5. OFT recommends sale and rent back transactions should be regulated by the FSA. |
|
| |
|
| Feedback |
We welcome all feedback on our publications. If you would like to suggest a topic for a future edition or ask for more information on a subject covered here please fill out the box to the right.
This e-bulletin is not intended to be an exhaustive statement of the law and should not be relied on as legal advice to be applied to any particular set of circumstances. Instead, it is intended to act as a brief introductory view of some of the legal considerations relevant to the subjects in question.
1
bb133eleftEditable text goes here
Editable Title Facilisis, dignissim ve Eniam dolore dignissim, vulputate augue esse quis consequat, vero, dolor iriure te. Ut iusto hendrerit, te vero ut ad te diam adipiscing facilisis facilisis. Eum ut laoreet facilisis laoreet, autem et augue facilisi lobortis ut ut accumsan vero eu aliquip praesent consequat blandit aliquip. Tincidunt iriure veniam dolore sit delenit vero aliquam dignissim et. Facilisis, dignissim ve Eniam dolore dignissim, vulputate augue esse quis consequat, vero, dolor iriure te. Ut iusto hendrerit, te vero ut ad te diam adipiscing facilisis facilisis. Eum ut laoreet facilisis laoreet, autem et augue facilisi lobortis ut ut accumsan vero eu aliquip praesent consequat blandit aliquip. Tincidunt iriure veniam dolore sit delenit vero aliquam dignissim et. | |
|
| Editable Full Width Title Goes Here. Facilisis, dignissim ve Eniam. |
| Eniam dolore dignissim, vulputate augue esse quis consequat, vero, dolor iriure te. Eniam dolore dignissim, vulputate augue esse quis consequat, vero, dolor iriure te. Hendrerit eu consectetuer ut ad, lobortis vulputate aliquam. Ut dignissim, qui dolor. Dignissim minim qui. Dolore aliquip at diam duis nostrud ex, tation, wisi, erat luptatum tation adipiscing, in. Consectetuer delenit nisl consequat accumsan tincidunt. Suscipit ullamcorper te nisl eros facilisis lobortis, nisl nonummy molestie qui vel duis. Eniam dolore dignissim, vulputate augue esse quis consequat, vero, dolor iriure te. Eniam dolore dignissim, vulputate augue esse quis consequat, vero, dolor iriure te. Hendrerit eu consectetuer ut ad, lobortis vulputate aliquam. Ut dignissim, qui dolor. Dignissim minim qui. Dolore aliquip at diam duis nostrud ex, tation, wisi, erat luptatum tation adipiscing, in. Consectetuer delenit nisl consequat accumsan tincidunt. Suscipit ullamcorper te nisl eros facilisis lobortis, nisl nonummy molestie qui vel duis. |
| Editable Full Width Title Goes Here. Facilisis, dignissim ve Eniam. Eniam dolore dignissim, vulputate augue esse quis consequat, vero, dolor iriure te. Eniam dolore dignissim, vulputate augue esse quis consequat, vero, dolor iriure te. Hendrerit eu consectetuer ut ad, lobortis vulputate aliquam. Ut dignissim, qui dolor. Dignissim minim qui. Dolore aliquip at diam duis nostrud ex, tation, wisi, erat luptatum tation adipiscing, in. Consectetuer delenit nisl consequat accumsan tincidunt. Suscipit ullamcorper te nisl eros facilisis lobortis, nisl nonummy molestie qui vel duis. Eniam dolore dignissim, vulputate augue esse quis consequat, vero, dolor iriure te. Eniam dolore dignissim, vulputate augue esse quis consequat, vero, dolor iriure te. Hendrerit eu consectetuer ut ad, lobortis vulputate aliquam. Ut dignissim, qui dolor. Dignissim minim qui. Dolore aliquip at diam duis nostrud ex, tation, wisi, erat luptatum tation adipiscing, in. Consectetuer delenit nisl consequat accumsan tincidunt. Suscipit ullamcorper te nisl eros facilisis lobortis, nisl nonummy molestie qui vel duis. |
| Feedback |
Page2
| Winckworth Sherwood |
Newsletter |
|
|
| |
|
| Feedback |
This e-bulletin is not intended to be an exhaustive statement of the law and should not be relied on as legal advice to be applied to any particular set of circumstances. Instead, it is intended to act as a brief introductory view of some of the legal considerations relevant to the subjects in question.
how green3| Winckworth Sherwood |
Newsletter |
|
|
675c53leftCan you rely on an oral agreement?
| |
|
| Feedback |
This e-bulletin is not intended to be an exhaustive statement of the law and should not be relied on as legal advice to be applied to any particular set of circumstances. Instead, it is intended to act as a brief introductory view of some of the legal considerations relevant to the subjects in question.
oral agreement4
| Winckworth Sherwood |
Newsletter |
|
|
| |
|
| Feedback |
This e-bulletin is not intended to be an exhaustive statement of the law and should not be relied on as legal advice to be applied to any particular set of circumstances. Instead, it is intended to act as a brief introductory view of some of the legal considerations relevant to the subjects in question.
| Winckworth Sherwood |
Newsletter |
|
| Section 1 Feugiat consequat vero. Section 2 Feugiat consequat vero. Section 3 Feugiat consequat vero. |
|
bb133eleftEditable text goes here
Editable Title Facilisis, dignissim ve Eniam dolore dignissim, vulputate augue esse quis consequat, vero, dolor iriure te. Ut iusto hendrerit, te vero ut ad te diam adipiscing facilisis facilisis. Eum ut laoreet facilisis laoreet, autem et augue facilisi lobortis ut ut accumsan vero eu aliquip praesent consequat blandit aliquip. Tincidunt iriure veniam dolore sit delenit vero aliquam dignissim et. Facilisis, dignissim ve Eniam dolore dignissim, vulputate augue esse quis consequat, vero, dolor iriure te. Ut iusto hendrerit, te vero ut ad te diam adipiscing facilisis facilisis. Eum ut laoreet facilisis laoreet, autem et augue facilisi lobortis ut ut accumsan vero eu aliquip praesent consequat blandit aliquip. Tincidunt iriure veniam dolore sit delenit vero aliquam dignissim et. | |
|
| Editable Full Width Title Goes Here. Facilisis, dignissim ve Eniam. |
| Eniam dolore dignissim, vulputate augue esse quis consequat, vero, dolor iriure te. Eniam dolore dignissim, vulputate augue esse quis consequat, vero, dolor iriure te. Hendrerit eu consectetuer ut ad, lobortis vulputate aliquam. Ut dignissim, qui dolor. Dignissim minim qui. Dolore aliquip at diam duis nostrud ex, tation, wisi, erat luptatum tation adipiscing, in. Consectetuer delenit nisl consequat accumsan tincidunt. Suscipit ullamcorper te nisl eros facilisis lobortis, nisl nonummy molestie qui vel duis. Eniam dolore dignissim, vulputate augue esse quis consequat, vero, dolor iriure te. Eniam dolore dignissim, vulputate augue esse quis consequat, vero, dolor iriure te. Hendrerit eu consectetuer ut ad, lobortis vulputate aliquam. Ut dignissim, qui dolor. Dignissim minim qui. Dolore aliquip at diam duis nostrud ex, tation, wisi, erat luptatum tation adipiscing, in. Consectetuer delenit nisl consequat accumsan tincidunt. Suscipit ullamcorper te nisl eros facilisis lobortis, nisl nonummy molestie qui vel duis. |
| Editable Full Width Title Goes Here. Facilisis, dignissim ve Eniam. Eniam dolore dignissim, vulputate augue esse quis consequat, vero, dolor iriure te. Eniam dolore dignissim, vulputate augue esse quis consequat, vero, dolor iriure te. Hendrerit eu consectetuer ut ad, lobortis vulputate aliquam. Ut dignissim, qui dolor. Dignissim minim qui. Dolore aliquip at diam duis nostrud ex, tation, wisi, erat luptatum tation adipiscing, in. Consectetuer delenit nisl consequat accumsan tincidunt. Suscipit ullamcorper te nisl eros facilisis lobortis, nisl nonummy molestie qui vel duis. Eniam dolore dignissim, vulputate augue esse quis consequat, vero, dolor iriure te. Eniam dolore dignissim, vulputate augue esse quis consequat, vero, dolor iriure te. Hendrerit eu consectetuer ut ad, lobortis vulputate aliquam. Ut dignissim, qui dolor. Dignissim minim qui. Dolore aliquip at diam duis nostrud ex, tation, wisi, erat luptatum tation adipiscing, in. Consectetuer delenit nisl consequat accumsan tincidunt. Suscipit ullamcorper te nisl eros facilisis lobortis, nisl nonummy molestie qui vel duis. |
| Feedback |
Page6
| Winckworth Sherwood |
Newsletter |
|
|
| |
|
| Feedback |
This e-bulletin is not intended to be an exhaustive statement of the law and should not be relied on as legal advice to be applied to any particular set of circumstances. Instead, it is intended to act as a brief introductory view of some of the legal considerations relevant to the subjects in question.
| Winckworth Sherwood |
Newsletter |
|
|
| |
|
| Feedback |
This e-bulletin is not intended to be an exhaustive statement of the law and should not be relied on as legal advice to be applied to any particular set of circumstances. Instead, it is intended to act as a brief introductory view of some of the legal considerations relevant to the subjects in question.
Dear Frankie,
Welcome to the first edition of E-Gen the newsletter covering legal tips, topics and issues in Regeneration and Development. The main subjects that will be covered in this regular newsletter will be:
Landlord and tenant, Regeneration, Housing finance and Development.
Articles in this edition:
1. Homes and Communities Agency (HCA)
2. How green is your building?
3. VAT consequences for house builders who opt for short terms rents.
4. Can you rely on an oral agreement?
5. OFT recommends sale and rent back transactions should be regulated by the FSA.
Homes and Communities Agency (HCA)
The Housing and Regeneration Act 2008, amongst other things, alters the regulatory framework in relation to the provision of Affordable Housing.
The Act abolishes the Housing Corporation and transfers its functions either to the Homes and Communities Agency (HCA) or the Tenants Services Authority (TSA).
The entirety of English Partnerships has been merged into HCA and HCA is to have grant and other financial powers and the TSA is to regulate the providers of social housing.
The HCA's objectives are to (1) improve the supply and quality of housing; (2) secure regeneration including regeneration of infrastructure; (3) support the regeneration or development of communities; and (4) contribute to sustainable development and good design.
The HCA has been given a wide range of powers which include providing land and housing, regenerating and developing land, provide infrastructure, acquire land by private treaty or by using compulsory purchase powers or form or acquire companies. The HCA can also act as a local planning authority for designated areas.
The HCA has wide financial powers and the powers are no longer limited to social housing providers. Its powers include powers to make grants, loans, guarantees, indemnities and investments as well as incurring expenditure on behalf of others. The financial powers are a significant change from the previous regime with the Housing Corporation as under that regime Housing Associations were in effect the only permitted recipients of Housing Association Grant and its successor, Social Housing Grant. Under the HCA Housing Associations are going to be competing with other organisations including housebuilders and other commercial organisations. There are special provisions about social housing, expressly "low cost rental accommodation". However those special provisions do not apply to low cost home ownership so housebuilders can be expected to provide shared ownership units themselves.
For further information on this topic please contact Roger Fitton - rfitton@wslaw.co.uk
How green is your building?
Introduction
The onset of the credit crunch has pushed the environment to the back burner but the promotion of environmental initiatives and legislation is still paramount in the mind of the government and of the European Union not least through the introduction of energy performance certificates and the zero carbon homes initiative.
The Australian government has already introduced "green leases" which revise the terms of a standard commercial lease to encourage a more environmentally friendly focus.
The green lease has only recently been brought to the UK market although there is an increasing demand for green leases from environmentally conscious landlords, investors and tenants.
Essentially the government is pressing on property owners and landlords the importance of implementing energy saving measures in order to reduce the carbon footprint of a particular building.
The Green Lease
The green lease contains a plethora of additional rights and responsibilities for landlords and tenant to: -
(a) reduce carbon emissions of occupied buildings
(b) encourage the use of energy saving initiatives i.e. recycling waste and using sustainable materials in internal renovations
(c) prohibit or limit actions that may reduce the energy efficiency of the occupied building
The extent of the "greenness" of the lease can be adjusted depending on how conscious the parties are. Many of the non-contentious changes should be incorporated into all leases.
One such provision that can be revised (without too much dispute) is the tenant's alteration covenants. Where a tenant requires the landlord's consent to undertake works to the premises then the landlord should insist that these works are carried out in the most environmentally friendly manner.
As the environment becomes a more important issue the provisions incorporated in the lease will also become green friendly with more onerous and costly green objectives.
Such examples are setting energy targets for tenants ensuring that over the term of the lease certain remedial works are undertaken reducing the property's carbon footprint.
A landlord may consider incorporating dispute resolution clauses in the lease and/or financial penalties i.e. the cost incurred by the landlord to undertake the "green" works on behalf of the tenant.
A landlord may also consider granting a tenant rent/service charge rebates for taking steps to improve the energy efficiency of the building. Alternatively at a rent review a tenant may seek a reduction in the rent increase on the basis that the property is less energy efficient than similar properties in the current market.
Benefits to the Landlord of a Green Lease
There are a number of reasons why a landlord should consider improving the energy efficiency of their property and these are as follows.
1. The introduction of the energy performance certificate shows that environmental friendly initiatives are at the forefront of government policy. There is a possibility in the future that properties which are environmentally unfriendly or energy inefficient may become less saleable. Where the tenant has the choice of two properties of similar size and quality it is plausible that a perspective tenant will choose the property which impacts on the environment the least.
2. It is accepted that there is a diminishing amount of raw materials and as a consequence the price of those resources are increasing. This is passed down to landlords and tenants in the form of increased energy costs. If a landlord were to make the property more energy efficient this will have a positive effect on the overheads of a potential tenant and therefore making the property a more attractive proposition.
3. A landlord who makes environmental efficiency a centrepiece of their tenancy agreements will no doubt improve the landlord's corporate image. Demonstrating a greater social responsibility by adopting greener provisions will have a positive impact with the public generally.
4. There is also the financial benefit to landlords in reducing the carbon emissions through carbon emission trading schemes such as DEFRA's carbon reduction commitment. A landlord would work in tandem with his tenants to encourage the reduction of carbon emissions with both parties gaining financial value from trading the carbon credits.
The Future
With the government introducing environmental initiatives targeted to reduce the carbon footprint the inefficiency of the country's existing property stock will be firmly in the government's radar.
Although there are currently no legal or financial penalties for failing to improve the energy efficiency of buildings it is possible that a "green" tax could be proposed in the future.
Insurance premiums or property valuations of environmentally unfriendly buildings could be adversely affected reducing the appeal of the property to a buyer or tenant.
The green lease could prompt improvements in the energy efficiency of the current stock of buildings reducing the future cost to landlords, investors and the environment.
For further information please contact Huseyin Huseyin - hhuseyin@wslaw.co.uk
VAT consequences for house builders who opt for short terms rents.
All house builders who are considering letting out new dwellings on a temporary basis while the housing market recovers are being warned to check that their VAT position is not affected. House builders are able to recover all input tax they have incurred in connection with a development and sell dwellings without adding VAT. Temporary letting of the new dwellings may result in an adjustment of the sum of input tax recovered. This adjustment arises as soon as the actual or intended use of a property has changed from the use against which input tax was recovered i.e. from selling the dwellings to temporary lets.
Brief 54/08 issued by HMRC on 28 October 2008 identified an arrangement which does not break tax rules and would mean that the adjustments mentioned above would not be required. The structure of the arrangement involves the house builder making a zero-rated sale of the dwellings to a connected company which is not a member of the same VAT group as the house builder. The sale must be prior to any temporary letting. The connected company would then rent out the dwellings until the time is right for them to be sold. The result being that the deduction of VAT associated with the original development would be secured. Please note that HMRC stated that it would not challenge such an arrangement so long as VAT deductions do not go beyond the VAT that would normally be deducted in relation to the supply of new dwellings.
A copy of the HMRC Brief 54/08 can be found at:
www.hmrc.gov.uk/briefs/vat/brief5408.htm
Change of VAT rate
As you will be aware, the standard rate of VAT has been reduced from 17.5% to 15% for the period 1st December 2008 until 31st December 2009. Now is a useful to time to be refreshed on the 'tax point rules' in order to determine the date the supply is made for the purpose of charging VAT.
There are two types of tax point, a 'basic' and 'actual'. The timing of these two tax points is important in determining whether the new 15% rate can be applied to certain supplies made or invoiced up to 30 November 2008.
Basic tax point e.g. when goods are delivered or when physical performance of a service has been completed
Actual tax point e.g. the delivery of a VAT invoice before the basic tax point or the tax point where a VAT invoice is issued no later than 14 days after the basic tax point.
The actual tax point will usually override the basic tax point.
Example
A supplier delivers goods to a developer on 28th November 2008. The supplier issues a VAT invoice on 5th December 2008. The tax point occurs on 5th December so the VAT rate applicable is 15%. However, if the VAT invoice was issued on 20th December (more than 14 days after the basic tax point) the tax point will have occurred on 28th November and the VAT rate applied 17.5%.
Please note that there is special optional procedure that applies where there has been a change of VAT rate. Where a VAT invoice has been issued prior to 30 November 2008 but the goods are to be delivered on or after 1st December 2008 then the basic tax point, being the delivery of the goods, can be treated as the tax point without being overridden by the actual tax point in the VAT invoice, so long as:
(a) a credit note is issued by the supplier within 45 days of the date
that the rate changes;
(b) the special optional procedure is evidenced by an election (such
election cannot be applied to self-billing arrangements)
For further information please contact Sarah Birchley - sbirchley@wslaw.co.uk
Can you rely on an oral agreement?
It is established law that contracts for the sale of an interest in land must be in writing if they are to be enforceable (Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989). Occasionally, however Courts have shown themselves willing to work around the formality of a written contract to remedy the situation where they consider the landowner to have acted in bad faith but there are very high thresholds to overcome as the following case illustrates
In the recent case of Yeoman's Rowe Management Limited v Cobbe the House of Lords had to consider the extent to which the Courts should recognise exceptions to that rule. The case involved an oral agreement between Mr Cobbe and Yeoman's Rowe Management Company Limited ("the Company") to the effect that once Mr Cobbe obtained planning permission to demolish the existing building and erect a terrace of six houses, the land would then be sold to Mr Cobbe by the Company for an upfront payment of £12million.
Planning permission was duly granted, but the Company claimed that the oral agreement had lapsed as planning permission had not been obtained by an alleged longstop date and sought to renegotiate the price.
Mr Cobbe insisted that the financial terms of an oral agreement had to be complied with. He sought a declaration through the courts that the Company held the land on trust for itself and him and that the Company was prevented from denying that Mr Cobbe had interest in the property. He agreed that the agreement was not in writing but argued that parties had regarded themselves as "bound" by the terms of an oral agreement.
The Courts considered that various remedies are available to rectify bad faith. One of those remedies is called "proprietary estoppel". For such a claim to arise the claimant- Mr Cobbe in this case- must establish the following elements:
1. The landowner must expressly or by implication have given the claimant an assurance which results in the claimant believing that it has some right over the landowner's land and;
2. The claimant must demonstrate that it has relied on this belief to its detriment and the landowner must be aware of this; and
3. The landowner has tried to deny the existence of the right.
If the claimant does so, the Court will look at the circumstances surrounding the case and consider the intentions of the parties and decide whether it should "step in" prevent the landowner asserting its legal right to the land and declare the terms of a contract.
The House of Lords held that in this case the test for establishing proprietary estoppel was not met.
The Court placed reliance on the fact that the oral agreement, which had been reached in principle, did not cover everything that would have been expected to be dealt with in a formal written contract.
For example the final contract could be expected to have included an obligation on Mr Cobbe to progress the development in accordance with certain time periods and deal with some sort of security for the overage which was payable to the Company.
Mr Cobbe's expectation was therefore dependent on a successful negotiation of the additional terms, and as such the oral agreement alleged was not sufficiently certain to provide the basis for a proprietary estoppel.
The House of Lord's decision rested on the fact that Mr Cobbe's expectation was dependent on the course of future contractual negotiations and the conclusion of a formal written contract and the fact that the court would be unable to infer the missing terms.
The House of Lord did however allow personal remedies against the Company and awarded Mr Cobbe a sum based on the value of Mr Cobbe's services to the Company
Lesson to learn
The House of Lords was of the view that the doctrine of "proprietary estoppel" had in the past been over used as a way of providing justice when the court was faced with litigants who had been acting in bad faith but who had "justice" on their side.
Although the courts may be less inclined to use equitable remedies to rectify one party's bad faith it is not impossible for them to do so.
The Yeoman's case highlights the importance of always recording agreed terms and re-negotiated terms in writing and serves as a warning to anyone who proceed without proper documentation in place.
For further information on this topic please contact Francesca Maran - fmaran@wslaw.co.uk
OFT recommends sale and rent back transactions should be regulated by the FSA.
The OFT released a report into sale and rent back transactions in October 2008. These transactions are often used where a homeowner who is at risk of defaulting on their mortgage sells the property to a company at a discounted rate (often less than 70% of market value) who then allow them to stay on as tenants.
They are also used where a homeowner wishes to relinquish ownership of their property but wishes to remain in occupation or where they wish to release the equity in their home due to some other reason such as relationship breakdown.
The report states that there are upwards of 1,000 firms together with an unknown number of non-professional landlords that carry out such transactions and who have conducted about 50,000 to date.
These firms range from individual buy-to-let investors who advertise in shop windows and leaflet individual dwellings to large companies who place adverts in the back of tabloid newspapers and on satellite television.
The report accuses some firms of:
• Quoting inflated valuations of properties on top of the "discount" for a fast sale;
• Exploiting people in difficult situations by dropping the purchase price offered just before sellers are due in court for repossession hearings or levying unexpected charges at a late stage in the process;
• Confusing customers over the security they will have as tenants. Some offer guarantees when the only promise is for a six or twelve month assured shorthold tenancy;
• Vastly increasing the rent payable once the initial tenancy has expired and evicting the tenants if they cannot pay;
• Not warning customers that they may be ineligible for Housing Benefit if they go ahead with the transactions;
• Not warning tenants they could lose their homes if the new landlord defaults on mortgage repayments;
The OFT recommends that this practice is regulated by the FSA to drive out the rogue operators and ensure greater transparency and better advice from the practitioners.
The report can be found at www.oft.gov.uk/news/press/2008/118-08
In the wake of the report, the Treasury is consulting on how best to regulate the industry, with responsibility set to be handed to the FSA as recommended.
In the current economic climate, these sorts of transactions are set to become more common due to home owners being unable to keep up mortgage repayments.
This may start to become a problem for developers if it happens on a large scale within developments as it could lead to properties being left empty for long periods if the new landlord becomes insolvent or evicts the former owner and is unable to find a new tenant. It could also lead to a large turnover of occupiers in the properties concerned.
However, it may be that developers start to offer such services themselves to occupiers who find themselves in financial difficulties. The properties could then either be sold on to a third party at market rate, with the developers making a profit on the difference between the discounted price and the market price or continue to rent it to the occupier with provisions in place for them to buy it back at a future date at the market rate.
Use of sale and rent back provisions in this way could ensure that occupancy rates of developments remain high and that developers still have some form of control over who occupies the properties.
In any case, the increase in these transactions is something for developers to be wary of, especially where they are aware that companies have been leafleting or advertising to residents, to ensure that the negative aspects do not adversely affect their developments.
For further information on this topic please contact Leo Stephens - lstephens@wslaw.co.uk
Page