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Commercial, commercial property, Lease    No Comments

I often get asked about VAT on commercial properties. Commercial properties are exempt from VAT however this exemption can be waived.

It is important for a tenant to check at the early stages of the lease negotiations as to whether or not VAT  is payable. If it is then VAT at the appropriate rate will be payable on top of the rent. If the tenant is registered for VAT this is not much of an issue it will just effect cash flow in that the tenant will have to pay the VAT out and then reclaim the VAT payment back. The problem is when the tenant is not VAT registered as they will pay VAT on the rent and will not be able to claim it back.

There is then the additional problem in that even if VAT is not payable when you initially tkae on the lease it could become payable during the term of the lease as the landlord can opt to charge VAT on the property at any time.

Is there anything the tenant can do?

Yes. In the initial negotiations if VAT is payable and the tenant is not VAT registered they can try and negotiate a lower rent

If the VAT  is not payable at the start of the lease and the tenant wants to ensure that this remains the same throughout the term of the lease, then the tenant can try and  negotiate that a clause be included in the lease to state that during the term the landlord will not opt to charge VAT.

Any landlord realistically will wish to avoid both of the options above this is why it is important for a tenant at the early stages of negotiations to instruct a solicitor so that the tenant is aware of all the options available to them and  to ensure that they negotiate the best rental terms.

If you are a tenant and are thinking of taking on a lease please feel free to call me on 01623 663244 and I would be happy to assist with any enquires.

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Good Leasehold title, Lease, leasehold, Leasehold Conveyancing Quote, Property Market, purchase, Quicker conveyancing, sale, Service Charge    No Comments

flat block

 

Owning the freehold means that you own the land and the building on the land.

If you own a leasehold property the land is owned by the freeholder known as the landlord and the leaseholder, the tenant, owns the property the term of the lease. When if the lease expires, the property returned back to the ownership of the landlord.

Leasehold properties are common and are very useful when you need to have rules in place regarding the management of common areas, say a block of flats, as the leaseholders will each own their flat but the landlord will continue to own the structure and the common parts such as the staircases, the gardens, parking areas etc  and each of the leaseholders will generally be required to pay towards the upkeep of such.

If you are planning to buy or sell a leasehold property please contact our specialist leasehold team as they would be happy to provide you with a fixed fee quote.

Christie Limb

 

 

 

 

 

 

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Commercial, commercial property, Lease, Uncategorized    No Comments

blog image commercial building

 

If you own a commercial property or are thinking of investing in a commercial property with a view to letting the property out you should consider investing by way of a SIPP or a SSAS.

 

A SIPP stands for Self Invested Personal pension and a SSAS is small self administered scheme.

 

My clients who have invested through such pension schemes already either own the property and let it to their company or are buying it with a view to letting it to their company. What happens then is that the rent from their company is invested into their pension scheme.

 

The benefits of investing through a SIPP or SSAS include:-

 

– contributions into the scheme receive tax relief

– the rent received by the pension scheme is not subject to income tax

– the property when sold has not capital gains tax liability

– in most circumstances there will be no Inheritance tax liability on death

– the ownership of the property prevents the pension being an asset that could be claimed in bankruptcy

 

If you are thinking of investing in a commercial property by way of a SIPP or a SSAS I would be happy to handle the legal part of the transaction for you at a fixed fee price. please feel free to call me on 01623 663244

Christie Limb

Partner

 

 

 

 

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Lease, leasehold, Leasehold Conveyancing Quote, Property, Property Market    No Comments

What is a leasehold property

blog image high rise flat

A leasehold property is different to a freehold property as rather than buying the actual property what you are buying is a lease to live in the property for a number of years.

 

The lease will details all the areas that you own but generally you will not own common areas such as stairs, common gardens etc as these will still be owned by the freeholder. The freeholder is the person who owns the title to the property and this will be your landlord.

 

The landlord will often employ a management company who will handle the day to say running of the common parts, such as maintenance of the communal gardens, the decoration of the common parts like the stairs.

 

On buying a leasehold property the buyer will enter into a lease of the property with the landlord and this will clearly detail what property you are going to be able to occupy and what rights you have over the common areas.

 

The purchase of a leasehold property is generally more complicated than a purchase of a freehold property as there are extra documents to consider including the lease.

 

Your solicitors will

 

– check the lease and ensure that the terms are correct for example they will check the mortgage term and see if the length of term is appropriate and if not advise you on whether the lease should be extended.

 

–         check the terms the lease to ensure that none of the obligations are too onerous

 

–         check that the rent is fixed and easy to establish

 

–         ensure that there are appropriate provisions for insurance. As you will have the right to occupy the property it will be important that the insurance provisions for the whole building are appropriate

 

–         check that there are appropriate rights granted for the enjoyment of the property such as rights of access, rights of support and protection

 

–         check that there are no unreasonable restrictions in the lease

 

It is important that you seek specialist advice when buying a leasehold property and at Fidler and Pepper we have a specialist leasehold team. If you are thinking of buying a leasehold property then please click here to obtain an online quote and also feel free to call on 01623 451111 if you have a questions.

 

 

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Commercial, commercial property, Landlord, Lease, Uncategorized    No Comments

I often get asked about VAT on commercial properties. Commercial properties are exempt from VAT however this exemption can be waived.

It is important for a tenant to check at the early stages of the lease negotiations as to whether or not VAT  is payable. If it is then VAT at the appropriate rate will be payable on top of the rent. If the tenant is registered for VAT this is not much of an issue it will just effect cash flow in that the tenant will have to pay the VAT out and then reclaim the VAT payment back. The problem is when the tenant is not VAT registered as they will pay VAT on the rent and will not be able to claim it back.

There is then the additional problem in that even if VAT is not payable when you initially tkae on the lease it could become payable during the term of the lease as the landlord can opt to charge VAT on the property at any time.

Is there anything the tenant can do?

Yes. In the initial negotiations if VAT is payable and the tenant is not VAT registered he can try and negotiate a lower rent

If the VAT  is not payable at the start of the lease and the tenant wants to ensure that this remains the same throughout the term of the lease, then the tenant can a negotiate that a clause be included in the lease to state that during the term the landlord will not opt to charge VAT.

Any landlord realistically will wish to avoid both of the options above this is why it is important for a tenant at the early stages of negotiations to instruct a solicitor so that the tenant is aware of all the options available to them and  to ensure that they negotiate the best rental terms.

If you are a tenant and are thinking of taking on a lease please feel free to call me on 01623 663244 and I would be happy to assist with any enquires.

 

Christie Limb

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Lease, leasehold    No Comments

The law in England and Wales provides tenants of flats (upon meeting certain criteria) the legal right to effectively take the place of the freeholder by either getting together with fellow tenants to buy the freehold of the building they occupy (known as leasehold enfranchisement) or forming a right to manage company (RTM) which takes over the management of the building.

Leasehold enfranchisement

Broadly speaking, if 50% of tenants in a building on leases of 21 years or longer  wish to acquire the freehold title, then they can do so upon following a set procedure.  Such an option may seem attractive to tenants who wish to take control of granting their own lease extensions and of the management of the building. 

 

Right to Manage

To qualify for the right to manage, tenants must hold a lease of 21 years or over and the qualifying tenants wishing to exercise the right must own at least two-thirds of the flats in the building.  The building itself must also meet certain qualifying criteria.  Assuming that there are the requisite number of qualifying tenants and the building meets the qualifying criteria, an RTM Company can then be set up to take over the management of the building.  Any qualifying tenant is entitled to be a member of the RTM Company as is the freeholder.

lease extension pic

Is it time to take control?

Both enfranchisement and the right to manage do offer leaseholders the potential to take some degree of control.   Once in the driving seat, tenants are free to assume responsibility for managing the building themselves.   However, both options are major steps and so it is essential that tenants take advice as to whether in their particular circumstances either route is advisable as there could be implications which should not be taken lightly.

The process of leasehold enfranchisement and right to manage may be costly depending on the size and complexity of the building.  Managing a building is complicated and involves a whole host of laws and regulations.  Often the tenants driving enfranchisement or right to manage are a small group who has to put in enormous amounts of time and effort and so a managing agent is required anyway.   Tenants wishing to enfranchise or set up an RTM Company will need to strongly consider whether they have the stomach for a dispute with their neighbour over issues such as unpaid service charges.  Can the tenants get on as a group?  It is nearly always impossible to say as future owners come into the equation.

Both the right to manage and enfranchisement are important legal options available to some tenants.  However, neither right is without its pitfalls, and tenants need to take advice to ensure that they go in with their eyes wide open.    If you would like advice on your options as a leaseholder then please contact either Luke Rees or Christie Limb in the commercial and leasehold department on 01623 451111.

 

 

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Lease, leasehold, Property, Uncategorized    No Comments

 

flat image 

Lease enfranchisement

 

What is it?

 

When you buy a leasehold property you own the leasehold title but a third party owns the freehold title. Lease enfranchisement allows the leaseholder owner to acquire the freehold.

 

Why would you want to acquire the freehold?

 

If you own the freehold it allows you to:-

 

1. grant lease extensions yourself;

2. control the management of the building  and

3. if the lease needs variation etc then this allows you the freedom to do so.

 

Can I apply? 

 

To qualify to apply for enfranchisement the following must be satisfied:-

 

1.there must be at least two flats in the building;

2. at least 2/3 of the flats, must be let to “qualifying tenants”

 

What is a qualifying tenant?

 

1. the lease must be for 21 years or more (certain other leases do qualify);

2. at least 50% of the flat must join in the application, if there are only twp flats both must participate;

 

What is the procedure?

 

There is a set procedure for the application starting with the tenant serving a notice with required information on the freeholder. I would suggest that a solicitor be involved at this stage to ensure that the procedure is followed.

 

What will the tenant have to pay?

 

1.Usually the tenant will have to pay certain fees of the freeholder and

2. the purchase price for the freehold the price depends on a number of factors such as the length of the leases and the value of the flats. If the lease term is over 80 years less value will need to be paid.

 

If you require any assistance with such an application Fidler and Pepper have a specialist team who handle such cases and we would be happy to provide you with a quote for the work. Please call Christie on 01623 448302 for further information

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Lease    No Comments

Due to the economic client more tenants are negotiating break options in commercial leases.

 

A break option allows the Tenant to terminate the lease of serving notice to the other party. They can be either a rolling break option, this can be exercised at any time on notice, or a set date break option.

 

Landlords will generally wish to avoid break options as it provides the tenant with flexibility.

 

When negotiating a break option care needs to be taken to ensure the terms of the break option are reasonable. Break options can be conditional i.e. the rent must be up to date; there must not have been any material/substantial breach of the terms of the lease etc.

 

Quite often tenants agree the terms of the lease before they instruct a solicitor. My advice would be to instruct a solicitor when negotiations on the lease terms start to ensure that the lease terms agreed are appropriate.

 

If you need any assistance in negotiating lease terms please contact me Christie Limb at climb@fidler.co.uk or if you need a quote for taking on a lease please use the online quote system at    http://www.fidler.co.uk/commercial_conveyancing/index.cfm.

 

Christie Limb

Partner

 

 

 

 

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