Clarke and Son News

All businesses will need to understand what the introduction of the Provision of Services Regulatons 2009 will mean to their businesses. The Regulations came into force on 28th December 2009 and  apply to the majority of private sector businesses providing services in the UK, unless they provide an excluded service. They require businesses to make information available to customers, and to deal with customer complaints promptly.  The Regulations also prohibit discrimination against individual customers in the provision of services on the basis of their place of residence.

 Please see the attached checklist - provision-of-services-regulations-2009-checklist.pdf  -  to help you get up to speed with your obligations under the Regulations.

 For more information on business services, contact Peter Turner on Tel: 01256 320 555.

In Fidler V Secretary of State for Communities and Local Government [2010] EWHC 143 (Admin), a landowner built a house without obtaining planning permission and concealed it behind bales of straw covered with tarpaulin.  After four years, the landowner removed the straw bales and the tarpaulin to reveal the house.  Within a year of the bales being removed, the local planning authority issued an enforcement notice requiring the landowner to demolish the house.

The landowner claimed that the property was immune from planning enforcement action because more than four years had passed since the building operations were substantially completed.

The High Court held that the erection and removal of the bales and tarpaulin were not building operations in their own right.  However, the landowner had always intended to remove the bales and tarpaulin so, as a matter of fact and degree, their removal was part of the building operations when the totality of the operations as originally contemplated and intended was considered. The property was not immune from planning enforcement action.

At first glance, the decision that taking down a wall of straw bales amounts to building operations appears to be surprising. However, it is a good illustration of the holistic approach take by the House of Lords in Sage v Secretary of State for the Environment, Transport and the Regions [2003] UKHL 22 and makes it clear that the meaning of “building operations” for the purposes of section 171B of the Town and Country Planning Act 1990 (TCPA 1990) is wider than the definition set out in section 55 of the TCPA 1990.

For advice and assistance relating to developments please contact Charles Marchant-White or Chris Lockley on Tel: 01256 320 555.

The Department for Communities and Local Government (DCLG) has published the responses to its consultation on how to improve standards in the private rented sector.  The report explains the DCLG’s next steps and its plan for further work with stakeholders.  It intends to implement the following key measures:

• A hotline for private tenants offering free practical advice (by Summer 2010).
• A “Tripadvisor” style website comparing landlords (by Summer 2010).
• A mandatory national register of landlords.
• Regulation of letting and managing agents.
• Mandotory written tenancy agreements.
• An increase in the maximum rent for assured shorthold tenancies  to £100,000 per annum (from 1 April 2010).
• The creation of local letting agencies and landlord accreditation schemes.

For advice and assistance relating to private lettings, please contact Paul Cowdery on Tel: 01256 320 555

On 26 January 2010, the FSA published a consultation paper entitled ‘Mortgage Market Review: Arrears and Approved Persons’.

In this paper, the FSA sets out a package of measures designed to strengthen its current rules on arrears handling and approved persons.  These were identified by the FSA in its October 2009 mortgage market review discussion paper (DP09/3) as priority areas that need addressing.

 The FSA proposes a number of measures to help to ensure that mortgage holders in arrears are treated fairly.  The key measures proposed clarify the FSA’s existing arrears handling rules and introduce some new provisions.  They include:

• Clarifying that firms must not apply a monthly arrears charge where a firm and its borrower have agreed an arrangement to repay the arrears. Any charge imposed should represent the cost of additional administration work.
• Clarifying that firms must not add early repayment charges (ERCs) on arrears charges and interest levied on those charges.
• Clarifying that payments by borrowers in financial difficulties must first be allocated to clearing missed monthly payments, leaving charges to be paid later.
• Requiring firms to consider all options for borrowers, with repossession always being the last resort.
• Obliging firms to record all arrears handling telephone calls and to keep all arrears records for three years.

If you have any questions about mortgage payments contact Paul Cowdery on Tel: 01256 320 555.

The recent pre-budget report has highlighted the following issues that may be of interest to Tax payers:

National  Insurance - All rates of National Insurance will increase by 0.5% from April 2011, in addition to the 0.5% rise announced in the 2008 Pre-Budget Report.  The threshold at which National Insurance becomes payable will be increased by £570.

 Income Tax - Personal allowances and the higher rate threshold for 2010/11 will be frozen at 2009/10 levels. A 50% tax rate will apply to income over £150,000 from 2010/11.  The higher rate of income tax threshold will be frozen in 2012/13 at the 2011/12 level.

Restriction of Pension Tax Relief - The rules introduced in Budget 2009 have been tightened so that any pension benefit provided by an employer or third party will be taken into account in calculating whether a person’s income exceeds the £150,000 threshold.  Also, the anti-forestalling measures have been extended to restrict irregular pension contributions over £20,000 (or £30,000 in some circumstances) for those whose income is £130,000 or over from December 2009.

Inheritance Tax - The Inheritance Tax allowance will be frozen at £325,000 in the 2010/11 tax year. Legislation closing two Inheritance Tax avoidance schemes involving the transfer of property to a trust in which the transferor retains a future interest, and also where a person purchases an interest in a trust will in all likelihood be introduced.

If you are interested in Estate Planning Issues, please contact Nia Wharry on Tel: 01256 320 555.

In Morgan v Fletcher & others [2009] UKUT 186 (LC), six residential tenants (the “tenants”) in a building of eight flats (the “building”) applied to the Leasehold Valuation Tribunal (LVT) to vary their leases (the “leases”).  The tenants claimed that the service charge provisions in the leases were “unsatisfactory” under section 35 of the Landlord and Tenant Act 1987 (LTA 1987).  At the time of their application the aggregate of the service charge proportions under the leases amounted to 116% of the landlord’s expenditure.

 The landlord then amended the service charge provisions for the other two flats in the building, reducing the total service charge contributions for the building to 100% of the landlord’s expenditure. The LVT adjusted the leases of the tenants to make the service charge contributions proportionate. The landlord appealed.

The court allowed the appeal. It held that section 35 of the LTA 1987 was not intended to deal with unfairly disproportionate service charge provisions.  It was only intended to deal with surplus contributions or a shortfall and not situations where the contribution amounted to 100% of the landlord’s expenditure albeit the contribution proportions were unfair.

 Paul Cowdery comments:

In a surprising decision (in fairness terms) relating to service charges on residential flats, on appeal from the Leasehold Valuation Tribunal the Court has found that it has no statutory based power under section 35 of the Landlord and Tenant Act 1987 to adjust the apportionment of service charges between lessees.

The extent of the court’s statuory power is limited to instances where the drafting of leases allows for a surplas or shortfall in the service charge (i.e. so that the amount recoverable from all lessees is more or less than 100% of the recoverable costs incurred).

When purchasing leasehold property it is important that buyers understand the actual arrangement being entered (i.e. what is specified in the lease of the particular property). Whilst the court had sympathy for the tenants in this case, they had no authority to amend what were disproportionate service charge contributions. The court could not intefere with the contractual freedom of the parties to enter leases on those terms.

 If you would like more information about Landlord and Tenant issues, please contact Paul Cowdery on Tel: 01256 320 555.

Recently the One Show on the BBC broadcasted a feature focusing on the importance of putting in place a Lasting Power of Attorney.  They interviewed one viewer who had been battling to get control of her family’s finances after her husband had been left in a coma for three years following an accident. Her husband had not drawn up a Lasting Power of Attorney, so no one else was appointed to deal with his affairs in the event that he became either mentally or physically incapable of doing so.  As a result, his wife had to apply to the Court of Protection each time she wanted to access her husband’s accounts incurring time delays and charges.

 If you are worried about what may happen to your loved ones should you become mentally or physically incapable during your lifetime and would like further information on a Lasting Power of Attorney, please contact Nia Wharry Tel: 01256 320 555.

The Court of Protection’s role is to make decisions in relation to the health, welfare, property and affairs of children and adults who are suffering from mental incapacity.  Currently, these decisions are made in hearings held in private, with only the parties to the application being present, to ensure confidentiality is maintained for the vulnerable people involved.

Recently, the Court of Protection, which was quoted in The Times as being “One of Britain’s most secret courts” has been subject to widespread criticism in its workings. These criticisms are largely from people applying to manage the affairs of elderly or vulnerable relatives who have found the Court of Protection to be bureaucratic, complex and intrusive. As a result of these complaints the senior judge at the Court of Protection, Denzil Lush, has stated that he would favour a decision to allow media access to the hearings, as is the current position with the rest of family courts.  He did, however, specifically state that “there would have to be anonymity for the vulnerable elderly people involved, the details of whose financial affairs were being exposed”.

What is clear is that media presence could boost public confidence and understanding of the Court of Protection after the recent widespread criticism of its workings.

If you have any issues relating to the Court of Protection, you can contact Nia Wharry, Head of Wills & Probate department on Tel: 01256 320 555.

The Department for Communities and Local Government has published special lease templates for landlords with empty commercial properties who are worried about empty property rates, the threat of illegal squatters as well as the security/insurance costs associated with owning an empty property.  These have been called ‘Meanwhile Use leases’.

 The leases are intended to encourage the temporary occupation of empty town centre shops by occupiers who can contribute to the viability and vitality of town centres but who would otherwise be unable to afford normal commercial rents.

The intention is that occupiers, such as local voluntary or charitable groups, information centres, artists and musicians, will be able to use a vacant property temporarily and rent free for a non-commercial purpose, while the landlord looks for a permanent new tenant.

The British Property Federation has supported the initiative as a way of trying to revive activity on high streets and make it easier to find new uses for vacant premises.

 Commercial Property Partner Charles Marchant- White says:

“Meanwhile use leases should give landlords an opportunity to reduce their property costs, avoid empty property rates, ensure that the building is maintained whilst also having the legal assurance of getting the property back quickly once they can let it commercially again. They appear to be a simple temporary option worthy of consideration to achieve real practical and financial benefits.”

For more information on Commercial Property issues, contact Charles Marchant-White on Tel: 01256 320 555.

Zurich Insurance plc has confirmed that Zurich Building Guarantee has decided to withdraw from the new home warranty and building control markets. It will honour its existing commitments to its customers, but is closed to new business.

Zurich has confirmed that its decision took effect from 30 September 2009, but the decision has not been widely publicised by Zurich or widely reported. This is an important development in the market for new home warranty products, as Zurich were one of the main providers of those products.

If you are a residential property developer, you will no longer be able to obtain the Zurich Building Guarantee for new sites.  If you are purchasing a new residential property, or a property which has been converted, where a Zurich Building Guarantee is on offer, Zurich has confirmed that it will issue policies and certificates in the normal way, as sites and properties already registered with it are commenced and completed.

For further information on Moving Home, Mortgage and Property Services, contact Paul Cowdery on Tel: 01256 320 555.