- HIPs are having a ‘major impact’ on the housing market
- Inheritance tax planning with heir conditioning
- Reasons for directors being disqualified
- Equal rights for agency workers after 12 weeks
- Legal rights for cohabiting couples put on hold
- Changes to housing benefit could affect buy to let landlords
- Court overturns man’s will because he failed to provide for his wife
HIPs are having a ‘major impact’ on the housing market
Home Information Packs (HIPs) are having a major impact on the housing market, according to figures released by the Government.
HIPs are now obligatory when selling homes of all sizes in England and Wales. They’re provided by the seller for the benefit of potential buyers and must include information such as evidence of title, terms of sale and the results of standard searches. There must also be an Energy Performance Certificate (EPC) rating the energy efficiency of the property.
Research carried out on behalf of the Government shows that more than 640,000 HIPs have been produced, most of them within 7 to 14 days. More than 700,000 homes now have EPCs containing energy saving recommendations that could save each household an average of £300 in fuel bills.
One other effect of HIPs has been to create greater competition in the property searches market. This has led some local authorities to reduce their search fees by up to £120.
When HIPs were introduced there was a provision for first day marketing to ensure a smooth transition to the new system. This allowed for a property to be marketed without a HIP if the required documents had been commissioned and paid for and there was an expectation that they would arrive within 28 days. This provision was due to expire at the end of May but now the Government has decided to extend it until the end of December this year.
There was also a provision covering leasehold properties which meant that a HIP could contain the lease only. This was because of the difficulties and cost involved in the provision of leasehold information. This provision was also due to expire at the end of May but has been extended until the end of December to give more time to assess the problems.
Please contact us if you would like more information about HIPs or any aspect of buying a selling a house.
Inheritance tax planning with heir conditioning
New research suggests that more and more people are concerned that leaving large sums of money in their wills to their children could do more harm than good.
A joint team from Barclays Wealth and the Economist Intelligence Unit carried out a survey of 790 people with disposable assets of more than £100,000. More than 30% said they were reluctant to leave significant sums to their children because it might reduce their desire to succeed through their own efforts.
The solution for many reluctant benefactors is to attach conditions in their wills specifying certain tasks or achievements their children must attain before they can inherit. Some of the more common stipulations were holding down a well paid job for at least two years or attaining a higher qualification such as a degree.
Thousands of people are building up considerable estates nowadays because of rising property prices so inheritance planning is becoming more and more important. If you want your children to inherit your money in the most efficient way and on your terms then it is important to start planning as early as possible.
It is important to ensure your will is up to date and reflects your current views on how your estate should be divided. If you want to specify any conditions then now is the time to do it. It is also advisable to look at ways of reducing the burden of inheritance tax so that your beneficiaries don’t end up giving a large part of your hard earned wealth to the Treasury.
Reasons for directors being disqualified
Directors are 300 times more likely to be disqualified for breaches of financial regulations than for breaches of health and safety law, according to research by the School of Law at Warwick University.
The research was commissioned by the Health and Safety Executive (HSE) to examine the effectiveness of the Company Directors Disqualification Act 1986 as a sanction against directors convicted of health and safety offences. The researchers concluded that the sanctions were adequate but there was a surprising failure on behalf of the HSE to use them.
The researchers could only find ten directors who had been disqualified for health and safety reasons between 1986 and 2005. This was in contrast to the hundreds of company directors disqualified by the courts each year for financial reasons.
Interviews with HSE operations directors showed a low level of awareness of the disqualification provisions within the 1986 Act.
The report which is entitled, A survey of the use and effectiveness of the Company Directors Disqualification Act 1986 as a legal sanction against directors convicted of health and safety offences, recommends that guidelines should be drawn up to inform prosecutors of when it would be appropriate to seek a disqualification order.
In response to the report, the Health and Safety Commission has issued a new set of instructions to inspectors on how to seek disqualification as a penalty for breaches of health safety rules.
Equal rights for agency workers after 12 weeks
Agency workers will be entitled to the same treatment as permanent staff after 12 weeks in employment under a deal agreed between the Government, the unions and the CBI.
The three parties say they have tried to reach an agreement that would protect the rights of workers at the same time as maintaining flexibility for employers. Business Secretary John Hutton said: “It will give people a fair deal at work without putting their jobs at risk or cutting off a valuable route into employment."
A joint statement by the Government, the CBI and the TUC says that the equal treatment to which agency workers will be entitled after 12 weeks “will be defined to mean at least the basic working and employment conditions that would apply to the workers concerned if they had been recruited directly by that undertaking to occupy the same job.”
There will now be further consultations between the three parties on the implementation of the Directive. In particular they will be looking at “mechanisms for resolving disputes regarding the definition of equal treatment and compliance with the new rules that avoid undue delays for workers and unnecessary administrative burdens for business”.
They will also be looking at anti-avoidance measures with particular reference to such things as repeat contracts for the same worker.
The European Union is currently considering legislation on the position of agency workers and so the British Government will not be able to implement its own Agency Workers Directive until it has reached an agreement with its EU partners. It says it hopes to reach such an agreement by the autumn so it can introduce implementing legislation in the next parliamentary session.
The Government and the CBI believe the agreement may help prevent more extreme measures being introduced by the EU. The CBI Deputy Director, John Cridland, said: "There has been a major risk of damaging legislation coming from Brussels, and the CBI has judged that the Government’s proposals represent the least worst outcome available for British business.
“Critically, as well as enabling the European directive on agency work to be put to bed, this agreement should allow the retention of the working hours opt-out from the working time directive, which is equally vital to the future of the British economy."
Legal rights for cohabiting couples put on hold
Proposals to provide cohabiting couples with the same kind of protection enjoyed by married couples have been put on hold by the Government.
Last summer the Law Commission put forward several measures that would give cohabitees more legal protection but stop short of the kind of rights provided by marriage. It was widely expected that most of the proposals would be accepted but now the Government says it wants more time to examine the cost implications. Many experts fear the proposals will be now be put aside and forgotten.
It means that the four million people currently cohabiting in England and Wales remain at risk if their relationship breaks up. They can be exposed to a great deal of financial and emotional heartache.
It is not uncommon to see examples where a couple live together for several years yet one partner effectively loses thousands of pounds when the relationship ends because they have no legal right to a share in the home. Or they may find they lose out because their partner dies without making a will and the estate they helped to pay for and expected to inherit is instead divided up between family members they hardly know.
According to the latest British Social Attitudes survey, only one in six cohabiting couples who own a home have a written agreement about their share in the ownership and only one in five have sought advice about their legal position.
A few years ago the government started a campaign urging couples to draw up living together agreements to say how their assets should be divided if their relationship ended. Thousands of people have done so and now have more peace of mind when they look to the future.
Cohabiting couples who haven’t made a will, discussed the ownership of their home or drawn up an agreement for the future should consider seeking legal advice as soon as possible.
Changes to housing benefit could affect buy to let landlords
The Housing Benefit system, which subsidises the rents paid by people on lower incomes, has been reformed to make if fairer and more transparent.
The main change relates to mainstream private tenancies and tenants in the deregulated private sector. Thousands of people who rent their homes from buy to let landlords will be affected.
Under the previous system, about 60% of benefit payments in the private sector were paid directly to landlords. This gave landlords the security of knowing that they would receive their money every month. Now that is about to change.
The Welfare Reform Act introduces a new system in which tenants in the private sector receive a Local Housing Allowance (LHA). The LHA is a flat rate allowance based on the size of the household and the area in which a tenant lives. Each local authority area will be divided into Broad Rental Market Areas, each with their own level of Local Housing Allowance.
One of the key objectives of the changes is to empower tenants so they have more control over the allowance they receive. The Government believes therefore that the allowance should no longer be given directly to landlords but should be sent to the tenant instead in the same way as other benefits and tax credits.
Tenants will be allowed to use their allowance as they choose. If they find a property they like which costs less than their rent allowance then they will be able to keep the difference up to a maximum of £15. Money that is nominally intended for rent could therefore be used on something else if the tenant so wishes.
The Government believes that enabling unemployed tenants to take responsibility for paying their rent themselves will help them to develop the kind of skills needed to move back into work.
That may well be the case but it introduces a level of uncertainty for landlords over whether the rent on their properties will be paid regularly and on time. Tenants will be encouraged to set up a standing order to pay their landlord but they will not be obliged to do so. Most tenants will behave responsibly, of course, but it’s likely that a significant minority will start to fall into arrears.
There are some safeguards. If eight weeks of rent arrears build up then local authorities can pay the allowance directly to the landlord unless it is in the tenant’s “overriding interests not to do so”.
However, that would only cover future rent payments. The local authority will not pay the arrears as it will have already paid the allowance to the tenant and cannot make a duplicate payment of benefit.
This leaves landlords with the problem of how to recover the unpaid rent. They should begin by making sure they keep on top of the situation and try to take action as soon as arrears start to build up. Contacting the local authority early on in the procedure may help but it may eventually be necessary to seek repossession.
Under Schedule 2 of the Housing Act 1988, a landlord may be able to terminate the assured shorthold tenancy agreement once eight weeks rent arrears have built up on a property where the rent is paid weekly or fortnightly. Often, a letter from a solicitor is enough to get tenants to clear arrears but where that is not the case it is advisable to begin possession proceedings as soon as possible to prevent debts building up.
The Local Housing Allowance changes were introduced nationally on 7th April this year. They won’t apply automatically to all existing tenancies but will be phased in as tenants move properties or if there’s a break in their claim.
Court overturns man’s will because he failed to provide for his wife
A wife has succeeded in getting her husband’s will overturned because the court accepted that he had not made reasonable financial provision for her.
The husband’s assets consisted of the matrimonial home, his scrap metal and recovery business and the premises from which the business was conducted. Under the terms of his will, the home and ownership of the business premises were placed in trust for his wife and his children. The business itself was transferred to the children who continued trading.
The wife received some money from insurance policies and the couple’s joint bank account. However, the small income she had been receiving from the business ceased. She was struggling financially and submitted that her husband had not made adequate provision for her in his will.
She believed she was entitled to sole ownership of the house and a one-off payment of £550,000 to provide her with an income of £30,000 a year.
The court held that under the Inheritance (Provision for Family and Dependants) Act 1975, the wife was entitled to reasonable financial provision above the level of mere maintenance. Arriving at the correct level of provision meant taking into account factors such as the length of the marriage and the contribution she had made to bringing up the children and maintaining the family home. The couple had been together for 20 years and she had played a major role in raising the children.
The court decided therefore that she was entitled to more than had been left to her in the will. She was awarded ownership of the matrimonial home and a lump sum payment of £410,000.
More and more people are now coming forward to challenge wills if they feel they have not been provided for properly. Please contact us if you would like more information about any aspect of wills and probate.
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