Author Archives: Sam Sharratt

1. A Guide To: Title Indemnity Policies

   November 11, 2020 4:58 pm Leave a Comment

   Title Indemnity Policies (also known as defective title cover or legal indemnity cover) are often used during the conveyancing process where a title defect is found with the property. A title is considered to be defective where there is a potential for a third party to establish a right or interest in the property which could either have a negative effect on the title or result in the owner losing the title of the property altogether. This can include anything from an absence of planning permission for any work carried out on the property, missing or lost title documents, a breach of a restrictive covenant to a lack of formal rights of access to the property.

   In appropriate circumstances, an indemnity policy can often be the most cost-effective and efficient way to deal with a title defect. It is a low-cost resolution that does not result in any delay, any adjustment in sale price or prejudice. The policy will protect the owner of the property (and the lender, if applicable) from the cost of defending any litigation, should a claim or enforcement be attempted.

   The policy will become effective after the payment of a one-off premium. The premium will usually be calculated based on the value of the property and the nature of the defect. Another benefit of using an indemnity policy is that they are usually automatically transferred to any future owners of the property and their lenders.

   Although indemnity policies are commonplace in many conveyancing transactions, there are a few things worth considering before proceeding.

   Title indemnity policies do not remedy the title defect itself. Indemnity policies only deal with defending enforcements.

   If a potential claimant under the indemnity policy is notified of the title defect, this will most likely result in the policy being invalid. For example, if the property has been altered without planning permission, no contact with the local authority should be made in order for the policy to remain valid.

   The policy used will cover the property in its current position when the policy is purchased. It will not apply to any title defects that arise after the policy is purchased, even if they come under the criteria of the policy. It may be possible, however, to purchase another indemnity policy for this title defect.

   If you wish to find out any more information regarding title indemnity policies or how one of our experienced Property Solicitors can assist you further, please contact our Client Service Advisors.

2. Transfer of Equity: The Basics

   October 9, 2020 10:04 am Leave a Comment

   Photo: [Pattanaphong Khaunkaew] © 123RF.com

   Equity is the legal term for the amount of money you have in your property, being the value of the property less the balance of any mortgages. Transfer of Equity is therefore a change in the ownership of a property. This could be by adding another person, removing a person or transferring the property into the name(s) of new individuals. This will be done through altering the title deeds. 

   Despite what the name suggests, transfer of equity can be achieved without money changing hands. This is more common when parents wish to transfer the property into the names of their adult children for example, often for tax planning purposes.

   It is common for people to transfer equity when they are going through changes in their family circumstances, including when a couple move in together, marry or form a civil partnership, or where a couple divorce/separate. Within divorce proceedings, a transfer of equity can be ordered by the court, or it can be by agreement between parties as part of a divorce settlement or separation agreement.

   A transfer of equity is usually a straightforward transaction, providing there is no current mortgage on the property in question. The process will usually be quick (depending on individual situations) and will mainly involve submitting paperwork filled out by all parties to be submitted to the HM Land Registry. 

   Although it is still possible to transfer equity with a mortgage on the property, this does add some further stages to the transaction. Your mortgage lender will have to approve the transaction and will only do so if they are satisfied that it will not affect the monthly payments being made to them. This process is likely to cause the most delay in the transaction and therefore it is advisable to speak to your mortgage lender as soon as you have decided you wish to transfer equity. 

   Although we would recommend that all parties involved in a transfer of equity are represented by a solicitor, only the party buying out other parties must be legally represented. Seeking independent legal advice is always recommended when considering a transfer of equity. 
   
   A transfer of equity may also have some further implications surrounding Capital Gains Tax and Stamp Duty Land Tax. You can discuss your specific situation with your solicitor who will be able to advise you as to whether this applies to your transaction.

   If you wish to find out some more information regarding a transfer of equity transaction, please contact our Client Service Advisors who will be able to assist you further. 

3. A Guide To: First Time Buying

   April 20, 2020 11:28 am Leave a Comment

   Buying your first home can be a long and complicated process. We aim to be a helping hand for you throughout the first time buying process, from clarifying the procedure to carrying out actions that will lead to you turning the key to your very first home.

   We’ve collated a handy timeline of the process to clarify every step that will lead you to owning your own home from Help to Buy ISAs to HM Land Registry.

   The first step that most people take when looking to purchase a property is saving. If you’re using a Help to Buy ISA to save for your first home then the Government will boost your savings by 25%. This means that for every £200 you save the Government will give you £50 extra towards your savings.

   The maximum Government bonus that you can receive is £3,000. Note that the deadline for opening a Help to Buy ISA has now closed so you’ll need a pre-existing account to receive this Government bonus.

   Once you’ve considered how you’ll fund your deposit the process is usually as follows:

   • You’ll need to visit a mortgage advisor/lender to get a mortgage offer in principle.
     
     
   • Once your offer has been accepted on a property, contact Tinsdills to obtain a quote for conveyancing services.
     
     
   • Provide the estate agents with your Solicitor’s details.
     
     
   • Once the memorandum of sale has been produced by the estate agents your Solicitor will forward a ‘client care pack’ to you including their terms of business and outlining the next steps in the conveyancing process.
     
     
   • If you are having a mortgage a survey will be required which you will arrange with your mortgage provider. You can choose from a basic survey or something more in-depth like a Homebuyer’s Survey. 
     
     
   • Following the results of your survey, if you are happy to proceed with the purchase, then you can complete and return the client care pack to your Solicitor. You will also need to produce your ID and make payment of money on account of searches. 
     
     
   • The four standard searches that will usually be required for lending purposes will be a Local Authority Search, Environmental Search, Drainage Search and a Mining Search although this will depend on the location of the property.
       
   • If you are having a gifted deposit, details will need to be provided of the person gifting funds together with ID and proof of where the funds are coming from (e.g. bank account/savings passbook). Your Solicitor will explain their requirements to you.
     
     
   • Your mortgage lender will issue a formal mortgage offer to you when they have completed their checks. The mortgage lender will issue a separate copy of the mortgage offer together with details of their instructions in relation to your purchase to your Solicitor.
     
     
   • Your Solicitor will obtain and check the contract pack from the Seller’s Solicitor, request the appropriate searches and raise enquiries on the title.
     
     
   • Your Solicitor will then review the replies to the enquiries raised, review the search results and deal with any legal requirements on your mortgage offer and survey.
     
     
   • When your Solicitor has concluded their investigations they will report to you on the title and their findings in relation to the property. You will then be asked to make an appointment to come in to see your Solicitor to discuss your purchase in more detail and sign the necessary paperwork. At the meeting your Solicitor will discuss a completion date with you and once this date has been agreed with the Seller’s Solicitor your Solicitor will request the deposit from you.
     
     
   • If you are using a Help to Buy ISA your Solicitor will explain the bonus drawdown process to you and provide you with a declaration to sign confirming that you are a first time buyer. You will need to close your Help to Buy ISA account near to the completion date and provide your closing statement to your Solicitor.
     
     
   • Your Solicitor will use this declaration, together with the closing balance statement, to apply for your HTB bonus from the Government Help to Buy portal. The bonus money will be held on your client account until we are ready to complete your purchase.
     
   • You should note the bonus cannot be used as part of your deposit but can be used as the final contribution towards the purchase price on completion. Further details can be found at the following link; https://www.helptobuy.gov.uk/help-to-buy-isa/how-does-it-work/
     
     
   • When a completion date has been agreed your Solicitor will submit the Certificate of Title to your mortgage lender confirming that the legal requirements have been satisfied. Your Solicitor will request the mortgage advance to be released in readiness for completion. You will be asked to pay any balance funds due including your legal fees and Stamp Duty Land Tax (if applicable) prior to completion.
     
     
   • When all parties are ready Contracts are exchanged, your deposit is paid and the agreed completion date then becomes fixed. You will be asked to arrange buildings insurance for the property from the date of exchange of Contracts.
     
     
   • The mortgage advance will be sent from your mortgage lender to your Solicitor in readiness for completion.
     
     
   • Your Solicitor will undertake the pre-completion searches and completion will then take place on the arranged date. You will be informed when the keys are ready for you to collect from the estate agents.
     
     
   • On your behalf your Solicitor will then make payment of the Stamp Duty Land Tax (if applicable) to the Inland Revenue. Your Solicitor will then register you as the new owners of the property at H M Land Registry. This can take up to 6 months due to H M Land Registry timescales.
     
     
   • Once the registration is completed a copy of the updated title will be forwarded to you showing you as the registered owner of the property. You will have successfully purchased your first property.

   

   Throughout the whole first time buying process you’ll have your dedicated team at Tinsdills on hand for clarification and assistance. Our aim is always to deliver clarity and confidence while you take life’s biggest steps. Feel free to contact us today by calling 01782 652300, or dropping us an email at lawyers@tinsdills.co.uk.

4. Prepare for Capital Gains Tax Changes in UK property Sales

   March 6, 2020 9:36 am Leave a Comment

   As of April 6^th 2020, the pre-existing deadlines in place for paying Capital Gains Tax following the sale of a residential property are changing in the UK. To be as prepared as possible, you need to understand these changes.

   From the aforementioned date, you will have approximately 30 days to inform HMRC and pay owed Capital Gains Tax – if you are a UK resident selling a residential property in the country.

   Should you fail to inform HMRC about your Capital Gains Tax within the 30-day post-completion window, you could receive a penalty and be made to pay interest on top of what you already owe. Because of these potential consequences, it is crucial that people fully comprehend the changes.

   What is Capital Gains Tax?

   Put simply, Capital Gains Tax is what you pay on any profit you make following the sale or disposal of an asset that’s value has increased.

   You can view a more comprehensive guide on Capital Gains Tax on the Government’s website.

   In these situations -you need to report Capital Gains Tax within 30 days

   If you sell or dispose of any of the following, you might need to report on your Capital Gains Tax and make a payment:

   • A property that hasn’t been used as your home
   • A property used for holidays
   • A property that you let out for others
   • An inherited property that hasn’t been used as your home

   However, you will not be required to report or pay if:

   • A contract for sale was made prior to 6^th April 2020
   • The Private Residence Relief criteria are met
   • The sale was to a spouse or civil partner
   • The profit gains fall within tax-free allowance
   • The property was sold at a loss
   • The property exists outside of the UK

   

   Online Service to be Launched

   HMRC are launching an online platform that lets you report on or pay any Capital Gains Tax owed by yourself.

   Advice for Agents

   Do you act as an agent for a person who is selling or disposing of residential property in the UK? If so, you need to:

   • Register with Agent Service
   • Ensure that Capital Gains Tax owed by any of your clients is reported and paid within the 30-day window following completion

   If you’re a non-UK resident

   Are you a non-UK resident? If so, you will need to carry on reporting the sale/disposal of any UK property and/or land. You must do this even if there is no Capital Gains Tax owed within the 30-day window following completion.

   You will no longer be allowed to defer any Capital Gains payment you owe through a Self-Assessment return, and any you owe will have to be paid within the 30-day window.

   Included in this is the disposal of residential property, non-residential and other disposals.

   From April 6^th 2020, non-UK residents can use the new online platform, which is replacing the pre-existing reporting service.

   If you are a non-UK resident, you can discover whether you need to pay Capital Gains Tax here.

   What About Trusts?

   Do you represent a Trust? If so, you will need to register at the Trust Registration Service. For existing Trusts, you can utilise your UTR in order to gain access to the new service.

   If you represent a Trust for a UK-based resident who sells/disposes of UK residential property, you will need to make sure any Capital Gains Tax owed is reported & paid within the 30-day window following completion.

   Similarly, if you represent a Trust for a non-UK resident who sells/disposes of UK residential property, you will need to make sure any Capital Gains Tax owed is reported & paid within the 30-day window following completion.