Author: Gavin Wall
The Ground Rent Act: A Game-Changer in Property Rights
The Leasehold Reform (Ground Rent) Act marks a significant milestone in the evolution of property rights within the realm of leasehold properties in the United Kingdom. Enacted in response to mounting concerns and controversies surrounding escalating ground rents and leasehold terms, this legislation aims to reform the system, protect leaseholders, and provide a more equitable landscape for homeowners.
Understanding the Issue
The issue at the heart of this act revolves around onerous ground rents within leasehold agreements. Traditionally, leasehold arrangements have been common in the UK, particularly in the context of flats and apartments. Under this system, homeowners only own the property for the length of the lease, which can be as long as 999 years in some cases but often falls between 99 and 125 years. The land itself remains under the ownership of the freeholder, to whom ground rent is paid.
However, over time, some developers introduced clauses that exponentially increased ground rents, rendering them unaffordable and causing financial distress for leaseholders. The Leasehold Reform (Ground Rent) Act addresses this issue by placing limitations on ground rent escalation, thereby safeguarding leaseholders from unfair and exploitative terms.
Key Provisions of the Act
Limiting Ground Rent Escalation
A pivotal aspect of the act is the imposition of restrictions on ground rent escalation in new leasehold agreements. It prohibits the creation of leasehold contracts with ground rents that double more frequently than once every 20 years. Additionally, it mandates that ground rents for new leases must be set at a nominal amount, effectively eliminating the burdensome and skyrocketing charges faced by leaseholders.
Empowering Leaseholders
The legislation also grants leaseholders increased power and freedom concerning their properties. For instance, it offers leaseholders the right to extend their lease term by 990 years and eliminate ground rent altogether through a statutory process. This provision empowers leaseholders, granting them greater control over their properties and providing long-term stability in their homeownership.
Compulsory Redress for Leaseholders
Under the Leasehold Reform (Ground Rent) Act, leaseholders affected by onerous ground rents are granted access to legal recourse. They can seek redress through the First-tier Tribunal, enabling them to challenge unfair terms and seek amendments to their lease agreements. This mechanism serves as a means of protection for leaseholders adversely impacted by exploitative ground rent clauses.
Impact on the Property Market
The introduction of this legislation has brought about a seismic shift in the property market landscape. Developers, previously inclined toward establishing leasehold agreements with escalating ground rents, are now compelled to reconsider their practices. The focus has shifted towards the development of more equitable and sustainable property ownership structures, prioritizing the rights and interests of homeowners.
Additionally, the act has bolstered consumer confidence among prospective buyers, particularly those wary of entering into leasehold agreements characterized by exorbitant ground rents. It has paved the way for a more transparent and fairer property market, encouraging trust and fostering a conducive environment for homeownership.
Challenges and Future Considerations
While the Leasehold Reform (Ground Rent) Act represents a significant stride in rectifying issues plaguing leasehold properties, challenges persist. One such challenge involves the impact of this legislation on existing leasehold agreements. Addressing the concerns of leaseholders locked in unfavorable contracts prior to the enactment of the act remains a critical aspect that necessitates further attention and resolution.
Furthermore, the implementation of this act necessitates ongoing monitoring and assessment to ensure its efficacy in safeguarding the rights of leaseholders. Amendments or additional measures might be required to address emerging loopholes or unforeseen issues that may arise over time.
Conclusion
The Leasehold Reform (Ground Rent) Act stands as a pivotal measure aimed at rectifying the imbalance in leasehold agreements, specifically concerning ground rents. By curbing exploitative practices and empowering leaseholders with greater control over their properties, this legislation heralds a new era of fairness and equity within the UK property market. Its impact extends beyond legalities, fostering a renewed sense of trust and stability for homeowners navigating the complexities of leasehold arrangements. As the real estate landscape continues to evolve, the implications and effectiveness of this act will undoubtedly shape the future trajectory of property ownership, laying the groundwork for a more equitable and secure environment for leaseholders across the nation
Why use a local solicitor?
Why Choose Baines Bagguley Penhale as your Local Solicitors?
Baines Bagguley Penhale is a dependable law firm located in Morecambe Bay, assisting clients in Milnthorpe and nearby regions. Our talented group of solicitors has expertise in areas such as Divorce and Family Law, Conveyancing and Property Sales and Purchases, Wills, Probate, Powers of Attorney, Commercial Property Transactions, and Dispute Resolution. When choosing a nearby lawyer like Baines Bagguley Penhale, you can get service made just for what you need.
Expertise in Divorce and Family Law for Clients in Bentham
Divorce and Family Law can be very complicated and make people feel many emotions, so it is important to have a smart lawyer helping you. Baines Bagguley Penhale has good name for dealing with issues like divorce, who gets the children, money support for spouse, and other such matters in Bentham area and even further away. Our team knows family issues are very delicate and will work hard to get the best result for our Bentham clients.
Conveyancing and Property Sales and Purchases in Carnforth
When you buy or sell property in Carnforth, it is very important to have a solicitor help make the legal steps easy. At Baines Bagguley Penhale, our team for conveyancing has much experience dealing with property deals. They make sure all legal things are done right and keep your interests safe. If you are buying for the first time or have invested before, you can rely on us to give trustworthy advice and help.
Wills, Probate, and Powers of Attorney Services in Garstang
Thinking ahead for the future is very important, and having a reliable solicitor to assist with wills, probate, and powers of attorney can make you feel at ease. Baines Bagguley Penhale provides complete estate planning services in Garstang. They help ensure that your desires are respected and your family is looked after properly. Our lawyers will spend time to know your special situation and give custom advice to guard your possessions and legacy.
Commercial Property Transactions and Dispute Resolution in Heysham
For businesses in Heysham, it is very important to have a dependable solicitor who knows well about commercial property deals and solving disputes. Baines Bagguley Penhale has a group of experienced solicitors skilled in managing complicated commercial property issues like leases, buying properties, and selling them. Also, our dispute resolution team can assist in solving any disagreements that come up, letting you concentrate on managing your Heysham business well.
Personalised Service for Clients in Kirkby Lonsdale and Beyond
At Baines Bagguley Penhale, we feel proud to give our clients in Kirkby Lonsdale and other places service that is very personal. As a local lawyer, we work hard to create good relationships with our clients and really know what they need and want specifically. Our team will cooperate with you to give useful advice and help, making sure you get the best legal representation possible.
Trusted Legal Support in Lancashire, Lancaster, and Morecambe
No matter if you live in Lancashire, Lancaster, or Morecambe, Baines Bagguley Penhale is ready to give trusted legal help for any needs you have. Our team of lawyers has lots of experience and skill in many different areas of law. This means we can provide complete legal services that fit exactly what you need. When it comes to things like property deals or family law issues, you can count on us for helpful answers and a calm feeling.
Picking a nearby solicitor such as Baines Bagguley Penhale can really impact your legal issues. With our knowledge, customized service, and dedication to our clients, you can rely on us for steady legal help in Milnthorpe, Bentham, Carnforth, Garstang, Heysham, Kirkby Lonsdale,Lancashire,Lancaster Morecambe Kendal,and more areas also. Please reach out to us today if you want to know more about how we can help with your legal needs.
For further information or to discuss your local legal issues please contact us.
Inheritance tax- how does it work?
Inheritance tax is the tax charged by the government when a person dies. This is calculated on the value of a person’s estate which includes anything that they own known as assets. For example property, bank accounts, savings, investments, shareholding. Also includes any liabilities they may owe. For example credit card bills, mortgage, debts, utility bills. The information in this article relates to the rules governing England and Wales. If a person was living in Scotland or Ireland or a foreign country then it is important to seek legal advice from an solicitor in the locality.
Nil rate band
The government gives every person a nil rate band of £325,000. This means that if an estate in total is under £325,000 then there is no inheritance tax to pay. If an estate is over £325,000 then any value over the £325,000 is charged at 40%. Yet, there are other exemptions to consider before can conclude that there is an inheritance tax liability.
Spousal exemption
If you have a spouse or civil partner then any part of your estate that goes to them is exempt from inheritance tax. This is a spousal exemption and is relevant for anything up to a value of £1 million.
Transfer of nil rate band
If you were to leave your whole estate to your spouse or civil partner then they can use your nil rate band on their death together with their own nil rate band. This would give them an allowance of £650,000 before inheritance tax is due. Thus, if both you and your spouse/civil partner’s assets together are under £650,000 in total. Then there will be no inheritance tax issue for either of your estate.
Residence nil rate band
Another more recently introduced option is a residence nil rate band. This is an extra allowance for if you own a property or a share in a property which is given to direct descendants on your death. Direct descendants are a child, grandchild or other lineal descendant of the deceased. and can also include a spouse or civil partner of a lineal descendant. A child can include a step-child, adopted child, a child fostered at any time by the deceased and a child appointed as a guardian or special guardian when they were under 18. Direct descendants do not include nephews, nieces, siblings or other relatives not listed. The extra allowance received varies from year to year. It will increase in line with Consumer Prices Index (CPI) from 2021 to 2022 onwards. The allowances at present are as follows:-
- £150,000 in 2019 to 2020
- £175,000 in 2020 to 2021
Transfer of residence nil rate band
You can also transfer the residence nil rate band in the same way as can transfer the nil rate band. So any unused residence nil rate band can used by a spouse or civil partner on their death.
If you are still concerned that there might be an inheritance tax issue. There are also reliefs for specific assets like business property or agricultural property.
Business Property Relief
Business Property Relief reduces the value of business or its assets for inheritance tax purposes. You can 100% business relief a business or interest in a business or shares in a company not listed on the stock exchange. There is a 50% relief if you have shares controlling more that 50% of the voting rights in a listed company. Also, 50% relief if there is land, buildings or machinery owned by the deceased and used in a business. Which the deceased was a partner or controlled the business. Also, if land, buildings or machinery used in the business and was held in a trust that it has the right to benefit. This relief will only apply if the deceased owned the business or asset for at least 2 years before they died.
Agricultural Property Relief
Agricultural Property Relief is for land or pasture that is used to grow crops or to rear animals. There is 100% relief if the person who owned the land farmed it themselves. Also, there is 100% relief if the land was used by someone else on a short-term grazing licence or let under a tenancy that began on or after 1st September 1995. For any other agricultural property there would be a 50% relief available.
Charity Exemption
One final option would be if you wish to leave a gift in your Will to charity then this would also be exempt from inheritance tax. This would apply whether it was a set amount of money or a share or percentage of your estate. Also, if you have an inheritance tax liability and have left 10% or more of your estate to charity. Then the amount of your estate which is liable for inheritance tax will be charged at 36% rather than the usual 40%.
We would always recommend that everyone takes professional advice when estate planning.
Our team at Baines Bagguley Penhale has the relevant expertise and experience to provide you with appropriate advice.
For further information please visit our website at www.bbpsolicitors.co.uk or contact us for further information on 01524 401010.
The Importance of the Role of Executors
The role of executors is to deal with the administration of an estate. This can be overwhelming for the people appointed as they may not taken on this role before and they have to get to grips with someone else’s affairs at a time when they are also grieving the loss of a loved one.
Acting as an executor is sometimes straightforward, however, it can very quickly become confusing, convoluted and time-consuming.
The executors’ duties can vary depending how complex the estate is but generally their first duties and responsibilities will be to: –
- Register the death with the local registry office.
- Organise the funeral, which will of course involve notifying family and friends.
- Safeguard any property- ensuring that all the keys are held and the property is secure. Consider changing the locks, especially if it is unclear exactly who has access.
- Safeguard assets- ensuring that all bank accounts are suspended so that payments cannot go out without the executors knowing. Retrieve valuable items if the property is to be left unoccupied.
- Locate and hold all credit and debit cards, passbooks and chequebooks.
- Notify the insurance company if the property is unoccupied and arrange alternative cover if necessary.
- Ensure that any computers, mobile phones and other devices are secured along with passwords, passcodes etc.
Some of these tasks could well be time consuming but they are essential in ensuring the administration starts off on the right footing.
We then move to the second stage which involves the ‘paperwork’ and more technical issues.
- Notify all asset holders – banks, building societies, pension providers, investment and insurance companies. of the death and request date of death values.
- Gather all information and prepare the application for a Grant of Representation – a Grant of Probate or a Grant of Letters of Administration.
- Assess the value of the Estate and determine whether a formal return for Inheritance Tax is required.
- Prepare the formal application for Probate and make arrangements to settle any Inheritance Tax.
- Pay any inheritance tax liability to HMRC.
- Obtain the grant of probate/letters of administration and register with all asset holders.
- Collect in the assets of the estate.
- Settle debts and liabilities of the estate as estate funds come available.
At this stage the Executors will be in sight of the finishing post but they still have much to do:
- any outstanding tax issues including personal (and business) tax returns to the date of death, followed by tax arising during the administration period.
- Identifying the named beneficiaries in the will.
- Identifying all beneficiaries who are referenced only by relationship
- Settling any bequests or monetary legacies of money
- Identifying gifts of specific items in the will, and after all those are safely rounded up,
- Arranging clearance of the property.
- Preparing the property for sale
Only after all of these tasks have been safely undertaken can the Executors turn their attention to:
- Distributing what is left – the residuary estate – to the residuary beneficiaries in accordance with the Will (or rules of intestacy).
- And even then there may be further tasks such as Corrective Accounts to sort out with HMRC.
That is some checklist for someone who in most cases did not ask for the job and in some wasn’t aware that they had been given it!
But not to worry – we at Baines Bagguley Penhale are here to help! We have an experienced and very approachable team who will be more than happy to guide you through all the rigours of estate administration.
Contact our specialist team at Baines Bagguley Penhale would be pleased to assist. Please contact us on 01524 401010.
Children’s Vaccinations and the Law
Children usually receive vaccinations in accordance with the school vaccination programme up to the age of 16 – but what happens when there is a dispute between the child’s parents about whether the child should receive a vaccination?
Both parents have to consent to vaccinations when they both have parental responsibility. Married parents both have parental responsibility for their children. Unmarried fathers only have parental responsibility when they are registered as the father on the birth certificate and the child was born on or after 1st December 2003. If the child’s father is not registered on the birth certificate, there is no registered parental responsibility agreement or parental responsibility order and he does not agree with the mother’s decision about whether the child is vaccinated he should take specialist legal advice about whether to apply to the court.
Over the last 20 years there have been a number of high profile disputes as a result of the concerns about the combined MMR vaccine and the courts have made it clear that where parents are in dispute about this issue neither parent has the right to make the decision alone and should seek the specific approval of the court.
The court’s primary concern is the child’s welfare. Recent case law has made it clear that:
- if the court receives medical confirmation that there are no contrary indications in the child’s medical history to the proposed vaccine, then generally the risk of catching the disease will be found to outweigh the risks associated with the vaccine and that
- vaccinations are generally now to be treated by the courts as public preventative healthcare intended to protect individual children and society more generally.
A parent who wants to oppose a routine vaccination needs to have strong medical evidence as the court is likely to follow the medical advice about their child’s health and if they are unsuccessful, they can be ordered to pay the other parent’s legal costs.
The Covid-19 pandemic and the development of a vaccine, now being administered to those most at risk, means that parents have to decide and agree whether their children will receive this vaccination with the added anxiety in these challenging times of how to protect elderly grandparents and maintain important family relationships.
Please contact our specialist family lawyers to discuss your child’s circumstances and how to resolve children’s vaccination issues.
Divorce – How do we get an agreed Financial Court Order?
We are often asked to help when, following separation, a married couple have agreed how their finances are to be dealt with and they want to make these arrangements final so that neither can change their minds. This is a very good idea as, without a court order, financial claims can be made at any time after the first divorce order, Decree Nisi. These claims do not end on the making of the final divorce order, Decree Absolute.
Within divorce proceedings, you can apply to the court for a financial consent order which is a document approved by the Court setting out the agreement you have reached and which provides that neither of you can make any further financial claim against the other (provided there is no ongoing spousal maintenance). These orders can only be applied for after the making of the first divorce order, Decree Nisi. The Court require you both to complete and sign a Statement of Information which sets out the facts in your case, including a summary of your income and assets. The Court requires this information so that it can decide whether it is appropriate in all the circumstances to approve the financial consent order.
Although it is not necessary for the order to be signed by solicitors on your behalf, this is an important legal document and we recommend that both spouses take separate independent legal advice on the contents. Once the financial order is made it can rarely be changed. The order can record agreements and include provision for the payment of a lump sum, transfer of property, sale of property, transfers of assets such as shares, pension sharing orders, spousal and child maintenance orders.
Our specialist family lawyers can prepare these documents for you and advise you upon the court’s procedure and powers.
We now offer a range of fixed fees in this area. Please see our Financial Agreement Fixed Fee page for further information.
