Currently, where an estate is owned or managed by individuals or trustees sells a let property the disposal and any capital gains tax (CGT) payable has to be reported and paid to HMRC by 31 January following the end of the tax year.  That can mean the tax may not be due for up to 21 months after the disposal.

From 6 April 2020 this all due to change.  If a gain is realised on disposal of a UK residential property after this date, a return and payment on account of CGT is due within 30 days of completion. The payment on account will need to be estimated reliably and so an idea of income levels of the person making the disposal may be required. However, the estimate can take into account brought forward capital losses and any annual exemption available, as well as private residence relief (PRR).

The new rules also cover gifts – for example, where a residential property is gifted to a trust or where a residential property is passed down the generations by way of gift. These transfers trigger the same reporting and payment requirements, although holdover relief may be available to reduce any payment due.

The tragedy at Grenfell Tower has brought the dangers of building cladding into sharp focus. Some estimates indicate that there are still around 600 buildings in the private sector which have the same cladding as that used on the Grenfell Tower, namely aluminium composite material (ACM).  Many other blocks maybe affected by the latest government advice and recommendations.

The government has declared ACM and other cladding to be unsafe and building control deem all buildings with unsafe materials to be in breach of health and safety regulations.

Many long leaseholders are faced with large service charge bills relating to costs incurred by the freeholder to replace unsafe cladding.

Pre-contract enquiries may be raised on behalf of buyers and renters and likely questions include:

• what type of cladding has been used;
• whether the installation of any cladding complied with building control;
• what fire risk assessments are in place and whether any recommendations have been carried out (including work carried out in the last three years and proposed future work); and
• the date of any risk assessment. If one has not been carried out in the last three years and the freeholders proposals in relation to this will be essential.

An additional concern for buyers of leasehold flats is that if they are to acquire an interest in the freehold or management company, there may be a risk of enforcement action if a fire risk assessment is not carried out.

Clearly whilst a conveyancer can report findings to the buyer and any lender the cladding relates to the fabric of the building and this is an issue which should be advised upon in detail by a surveyor.

Buyers are clearly at risk to ensure that they do not unwittingly take on any liability which may only come to light if a property with unsafe cladding is unsaleable or unmortgageable now or in the future.

How to extend your Lease of leasehold house or flat under various Acts and regulations – Leasehold Reform Act 1967, 1993 and later.

A specified form of Notice may be served under the Leasehold Reform Act 1993 by a ‘qualifying tenant’ with the right to acquire a new lease of a flat. s42/1993.

A ‘qualifying tenant’ is a tenant of a long lease who has been the owner for the period of two years before the relevant date of notice. s39(3).

The notice may be withdrawn or can be deemed to be withdrawn and then will cease to have effect.  Where there is withdrawal of a s42 notice then no subsequent notice may be given within twelve months of the date of withdrawal.

This may have consequences where there is a change of tenant or a movement in price. s42(7).

The form and content is important and notice must be addressed to the landlord and any other third party referred to in the tenant’s lease and must:

• give the full name of the tenant and address of the flat
• give details of the flat to identify it and details of the lease to identify it
• specify the premium which the tenant proposes to pay for the grant of a new lease
• specify any other terms that the tenant wishes to have included
• state the name of the person who will act
• give the date by which the landlord must respond by giving counter-notice under s45
• be signed

In the case of the death of a person who was a qualifying tenant then the personal representatives have the same right within two years of a grant of Probate or letters of Administration.

Where a notice has been given by a tenant the right can be passed to another party by assignment. s43.

If the flat is assigned without the benefit of the notice then the notice is deemed to be withdrawn.

After notice is served
The landlord must serve a counter-notice by the date specified in the tenant’s notice and either admit the right to the grant of a new lease set out in the notice or indicate that the landlord either wishes to redevelop or has other grounds to oppose.

In respect of any opposition the landlord should set out a counter-proposal. s45(3).

The landlord has a right to inspect the premises for the purpose of getting a valuation of his interest. s44.

The landlord can require a deposit of 10% of the price set out in the tenant’s notice.

Refer regulation 3(2)

Schedule 2 of The Leasehold Reform Regulations 1993

An application must be made to the Court not later than two months from the date of the counter-notice if the landlord’s counter-notice does not accept the right of the tenant to apply for a new lease.

Where there is a dispute relating to the terms of a new lease then either the landlord or the tenant may apply to the court within two months of the date of the counter-notice but not later than six months after the date of the counter-notice.

It is vital that this time limit is not overlooked by either party. s48.

Where the tenant’s notice has been given but the landlord fails to give a counter-notice the Court may on the application of the tenant make an order dealing with the proposals in the tenant’s notice.  Similar procedures apply where terms are agreed and the new lease has not been concluded. s49.

The tenant’s notice is deemed to have been withdrawn at the end of the period for application to the Court if no application has been made. s53.

The right to a new lease is for a lease in substitution for the existing lease on payment of a premium at a peppercorn rent for a term expiring ninety years after the term date of the existing lease. s56.

The terms of the new lease will be the same as the existing lease but with modifications as necessary to the circumstances or subject to modification for redevelopment.

Where the interest of either party is subject to a mortgage then the new lease is deemed to be binding and authorised against the mortgagee. s58.

The costs payable by the tenant include the costs of the landlord for dealing with the notice and obtaining a valuation of the flat and the costs of the grant of a new lease. s60.

In addition to the premium, the tenant must pay additional amounts for any intermediate landlords.