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The hidden costs of 999 year leaseholds

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Beware of 999 year leasehold properties - our Head of Residential Property, Paul Berry explains more.

There is a growing trend among developers to sell homes as leasehold when they previously would have been freehold.  Buyers are given reassuringly long 999 year leases, but later find that buying the freehold is prohibitively expensive. 

For example, Taylor Wimpey sold a leasehold property to a purchaser in 2011 for £122,000, who have since sold the freehold to E&J Estates. The leasehold homeowner now finds that to purchase the freehold will cost £40,000 - one third of the house’s original value. 

The problem arises from the escalation in ground rent in the small print of long leases. Initially they look affordable - for example, just £295 a year.  The trouble is that the lease says the ground rent will double every 10 years.  This provides a very valuable income to the freeholder. 

Government figures indicate 6,000 new houses were sold with long leases in the last year alone. Persimmon, Taylor Wimpey and Bellway are now regularly selling estate houses as leasehold. 

This current trend emphasises the need for buyers to be advised carefully by their lawyers when purchasing long leaseholds of houses and/or flats.

More information

If you are considering purchasing a house or flat on a long leasehold term, contact our Residential Property Department for further information on our services. Contact 01708 229444 or This email address is being protected from spambots. You need JavaScript enabled to view it. to speak to a member of the team at any of our offices in Brentwood, Hornchurch and Upminster. We are also able to see clients in Leigh on Sea.

This article was written by Paul Berry, Head of our Residential Property Department at Pinney Talfourd Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of January 2017.

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The Autumn Statement and Residential Property

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New spending on housing projects totalling £3.7bn in England has been announced by the chancellor in the Autumn Statement.
£2.3bn is going to be spent on infrastructure (such as roads) in relation to housing developments. This will obviously make it easier and cheaper to build homes and boost this sector, meaning more properties overall and (in theory) lower prices.

The chancellor has said the funding will help support the building of up to 100,000 new homes.

The government has also agreed to spend an extra £1.4bn on affordable housing in England, which would fall into categories such as Affordable Rent, Shared Ownership or Rent to Buy.

This is expected to lead to 40,000 more affordable homes being built.

Paul Berry, Head of Residential Property says “There still seems to be a big demand for property. We’re certainly as busy as ever in the Residential Property Department and prices don’t seem to be going down any time soon.”

Hopefully these will be Freehold properties, moving away from the recent trend of Leasehold houses, where the “buyer” essentially takes a lease over a new build house (albeit for 999 years maybe) with a ground rent that could be several hundred pounds, and depending upon the lease, potentially doubling every 10 years causing substantial problems in years to come.

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New solicitor joins Brentwood Property team

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Our Residential Property Department are delighted to welcome solicitor Chloé Pannu to the team in Brentwood. 

As you may already know, Pinney Talfourd has relocated offices in Brentwood and are now based at New North House on Ongar Road. This new office space has allowed us to expand our teams to cater for the growing demand in the Brentwood area. 

The Residential Property Department are as busy as ever and are delighted to welcome Chloé Pannu to the team to help serve our growing number of clients. Chloé studied at Brunel University and then completed her training at another Essex firm to qualify as a solicitor in July. She is working alongside Head of Department Paul Berry who is confident she will be "a great asset to the team."

She specialises in all areas of residential property including freehold and leasehold sales/purchases, investment purchases, auction property, lease extensions and right to buy.

The recent move has also allowed us to offer a better level of service from the Brentwood office.

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Legal Community blamed for Property Fraud

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A recent story in the press has highlighted the plight of sellers and purchasers who have fallen victim to a fraud commonly knows as "Friday Afternoon Fraud". 
Criminals intercept emails containing bank details which have been sent between legal firms and their clients and change the bank details so large sums of money are diverted. The recipient is unaware of any tampering with the correspondence. Transactions taking place towards the end of the working week are being targeted as the chance of detection is limited and the ability to follow it up immediately is delayed.

The legal community is being blamed for doing little to protect sellers and purchasers. Here at Pinney Talfourd this is most definitely not the case. Where possible we require details by letter or, if absolutely necessary, by telephone. The firm has a strict policy against sending the firm’s bank details by email. If a client sends their bank details electronically, staff must telephone to confirm the details before arranging for any funds to be transferred. The benefits of using a local firm to you mean that it is easier to hand deliver written instructions, you will have met with your solicitor face-to-face and spoken several times over the telephone, in short – you will know who you’re dealing with. The chances for fraud are substantially reduced. Our policy on sending bank details by email may be met with puzzlement at first but when the reason is explained the majority of clients are happy to resort to the old fashioned forms of communication to protect their finances.

In a world where clients and organisations require faster and more responsive communication, there seems little option but to utilise email to its fullest. It goes without saying that it’s a cheaper alternative to the postal service. Vigilance against property fraud and cyber crime is down to each of us. See below for some pointers to help in this ongoing battle.

▼ Tips on how to avoid property fraud and email hacking

The Legal community has been aware of these issues for some time now and the majority of firms drum it into their employees that no matter how safe the firm’s property firewalls/anti-virus or spam filler are, those of the public will probably be less so. The Bold Legal Group has over 420 member firms throughout England and Wales and I have been highlighting these issues to my members, on a regular basis, for the last year or two. We have compiled a few pointers for the public:
  • If you receive the solicitor/conveyance firm’s bank details by email, and don’t also receive the details by post, phone the firm to make sure they are correct (using a verified landline telephone number).
  • Do not send your bank details by email (to anyone), either phone them through or take them in.
  • Make sure the firm acting for you in genuine by checking with the lists compiled by the Law Society or the Council for Licensed Conveyancers. Carry out a law firm search via Solicitors Regulatory Authority website. Read carefully anything sent to you by your conveyancers carefully. Many firms provide clients with their bank details at the outset (by post) and stress that those details will not change. Always telephone to check if the bank details provided appear to have changed.
  • Read anything sent to you by your conveyancers are fully. Many firms provide clients with their bank details at the outset (by post) and stress that those details will not change.
  • If you are being pushed to proceed very quickly be careful, fraudsters often use this tactic so that emails are used and corners are cut.
  • If you are buying an empty or tenanted property, tell your conveyance and make sure they are 100% sure the seller is who they say they are.
  • Ask the firm you are thinking of instructing what anti-fraud and cybercrime measures they have in place.
  • Ask them what checks they carry out to ensure the buyers/sellers firm is genuine. Do they use services like Lawyer Check/Lender Exchange/The Safe Move Scheme?
  • If you have to send sensitive information by email do not give a clue to what that information might be in the emails subject line.
  • Test your conveyancers account details by sending a nominal amount, say between £1.00 and £10.00 first, and then phone to make sure it has arrived safely.
  • Do not post any updates on social media as to the progress of your transaction – this is how some fraudsters identify when to send the scam email requesting money.
  • Working with your conveyance is a two way street. No matter how good and safe they are, if you are not as vigilant you may end up having your emails hacked or becoming involved in property fraud.
  • Above all, remember that buying or selling a property is one of the most important and complicated things you will ever do. Do not instruct the cheapest firm to act for you. Visit the firm if possible. Certainly speak to the person who will be handling your transaction (or the Head of Department or Team Leader) and make sure you feel confident in them and their ability.
May 2016, Rob Hailstone (Founder and CEO), Bold Legal Group, www.boldgroup.co.uk


More information

If you are buying a residential property, whether it is a primary or second home, contact our Residential Property Department for further information on our services. Contact 01708 229444 or This email address is being protected from spambots. You need JavaScript enabled to view it. to speak to a member of the team at any of our offices in Brentwood, Hornchurch and Upminster. We are also able to see clients in Leigh on Sea.

This article was written by Lexie Jacobs, Chartered Legal Executive in our Residential Property Department at Pinney Talfourd Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as at May 2016.

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New Stamp Duty rules explained

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The changes to the stamp duty rules for additional properties finally came into force on 1st April. Head of Residential Property, Paul Berry looks at the implications.
The changes to the stamp duty rules for additional properties finally came into force on 1st April. Although the intention of the policy is to reduce distortion of the housing market, some of the new rules may create problems for ordinary home buyers.

Paul Berry, Head of the Residential Property Department at Pinney Talfourd in Essex, explains the main changes to the stamp duty rules and who will be affected.

Stamp duty land tax (SDLT) is paid on all house purchases above £125,000 on a sliding scale. From 1 April 2016 anyone who already owns a residential property now has to pay an extra 3 per cent SDLT if they buy an additional residential property.

Additional residential property

Anyone who owns only one residential property at a time is not affected. Where someone buys an additional residential property, the key test is whether it is intended to replace the buyer’s previous main residence.

If it is, and the previous main residence is being sold at the same time or was sold in the preceding three years, no additional SDLT is payable. Otherwise, the higher rate will apply.

Where anyone owns more than one residential property, the decision as to which one is the main residence will be based on fact. There is no scope for the property owner to make an election, as they can for capital gains tax. This could mean that a different property is treated as the main residence for each of these taxes.

The new rules are wide-ranging, catching buy-to-let residential property and furnished holiday lettings as well as owner-occupied property. In deciding whether a new residential property purchase attracts the higher rate of SDLT, any residential property already owned anywhere in the world is counted.

The rules are complex and property owners will need specialist legal advice to make sure they pay the right amount of tax.

Bridging provisions

Anybody moving from one main residence to another, but who has to complete on the purchase of the new property before the original one has been sold, will be caught by the new rules. They must pay the higher rate of SDLT on their purchase. However, if the original property is sold within three years, they can have the additional SDLT refunded but this will clearly have cash flow implications.

Married couples

Married couples and civil partners may have only one main residence between them. Any additional residential property either of them purchases, jointly or separately, will attract higher-rate SDLT, unless their former main residence is sold within three years. The government recognises that the new rules may cause difficulty where a relationship breaks down, so separated couples can be treated separately for SDLT purposes in some circumstances. Anyone in this position should take legal advice.

Unmarried couples

Property purchased in joint names outside a marriage or civil partnership will also be subject to higher-rate SDLT. This could disadvantage someone purchasing their first residential property jointly with someone who already owns a residential property.

Parents helping children

The changes will also affect parents who commonly purchase jointly with their children when trying to help them to get onto the property ladder. From April, higher-rate SDLT will be payable in these circumstances, unless the parents sell their own main residence.

Inherited property

Inheritance and trusts are also areas where property owners will need specialist legal advice. No SDLT is charged when property is inherited and this will not change. However, inherited property may be taken into account in deciding whether an individual owns more than one residential property, depending on the size of that person’s share and when it was inherited. Where property is held on trust, the rules are complicated.

Company owned property

The new regime affects property purchased by companies as well as individuals and even the first purchase of a residential property by a company will attract higher-rate SDLT. The government was expected to recognise the role of large-scale investors in the housing market by giving an exemption for bulk purchases of residential properties but it has decided not to do so.

The transitional provisions mean that, generally, the higher rates of SDLT will not apply where contracts were exchanged before 26 November 2015, as long as the contract is not assigned or varied.

Like much tax law, this is a complex regime and many property owners will now need specialist advice about the SDLT consequences of buying residential property.

More information

If you are buying a residential property, whether it is a primary or second home, contact our Residential Property Department for further information on our services. Contact 01708 229444 or This email address is being protected from spambots. You need JavaScript enabled to view it. to speak to a member of the team at any of our offices in Brentwood, Hornchurch and Upminster. We are also able to see clients in Leigh on Sea.

This article was written by Paul Berry, Head of our Residential Property Department at Pinney Talfourd Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as at April 2016.

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New Residential Property Lawyers join team

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Pinney Talfourd are delighted to welcome two new members to our residential property team.

As the Firm continues to grow so does our Residential Property team. Lexi Jacobs and Sofia Khan joined the firm recently to cater for growing demand for our conveyancing services.

Lexi Jacobs

Lexi joins our Hornchurch team with a strong background in residential property law. She qualified as a Fellow of the Chartered Institute of Legal Executives in 2006 and has worked in-house, in private practices and even set up her own conveyancing firm before joining our growing team.

She started out her career in a Local Authority legal department before moving to a high street legal practice in Essex to learn the craft of conveyancing. Lexi also helped set up a small high street conveyancers with her husband and was the sole conveyancer for a number of years before deciding to move on, using her business skills to help grow another business in the mobility retail sector.

Why conveyancing?
“I love the satisfaction of being able to help people move house”

Biggest job so far
“Multiple purchase of several new build flats on a development near the Olympic Park in Stratford for an Ireland based client”

Other interests
“Running, cooking, sci-fi novels (reading, not writing), camping and my dog.”

Contact Lexi

To find out more about Lexi and get in touch with her directly please click here.


Sofia Khan

Sofia Khan has joined us from a small London law firm specialising in property law, namely commercial and residential leasehold and freehold conveyancing. She has joined the team as a specialist in residential property transactions at Brentwood.

Prior to becoming a solicitor she worked in a very different area of the law – catching criminals. She served as a Police Officer with the West Midlands Police Force for a number of years before deciding to pursue her long term career goal of becoming a solicitor. She went back to school and completed her law degree in Birmingham before doing her LPC at the College of Law, London.

Favourite area of conveyancing
"Residential property transactions – I thoroughly enjoy this practice area and relish tackling the unusual jobs in particular!”

Why Pinney Talfourd?
“I really admire Pinney Talfourd’s ethos of focussing on the needs of our clients. It is an energetic practice with an open culture amongst its staff, who are aware of the vision and plans for development and success of the firm."

 

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