Bump up your property’s value by extending your lease

Most flats in England and Wales are leasehold Properties. If you own a leasehold property, you should be aware of the remaining term of the lease on your flat. In this article, we will use the terminology “tenant” for owners of leasehold properties and “landlord” for freeholders.

Particular concern should arise when the remaining term of your lease is around 80 years. Leasehold properties tend to be less marketable if the lease term has less than 80 years remaining. In addition to this, mortgage rates are likely to be higher and some lenders will refuse to mortgage properties with less than 70 years remaining on a lease. This would therefore restrict the range of potential buyers to cash buyers only.

If you are a “Qualifying Tenant”, then you can extend your lease. The 1993 Leasehold Reform Act (“the Act”) defines “Qualifying Tenant” to be an owner who has own the property for at least 2 years (“the qualifying period”).

The Act prescribes what you need to do to extend your lease:

• Serve notice on the landlord to extend the lease.

• Propose to pay a premium for the lease extension – this will need to be a fair market price for the extension.

• The Act states that the lease can be extended by 90 years the rent adjusted to a peppercorn (nil). If for instance, you have 85 years left on your lease paying an annual ground rent of £100, the new term will be 175 years after the extension and no further ground rent will be payable.

The qualifying period is an important threshold and one that you may need to consider if you are buying a property where the unexpired term of the lease is around or under the 80 year mark. On the one hand, you cannot extend the lease until you have owned the property for two years. And on the other hand, the shorter the remaining term is, the higher the premium will be.

Various lease calculators can give the tenant an idea of the premium payable for the lease extension. Once a tenant is ready to proceed with the lease extension, he or she should hire a surveyor to get a valuation of the flat and an estimate of what the premium should be. This will help the tenant in making an offer when serving notice of the landlord. The landlord will most likely also carry a valuation of the flat to determine the premium payable and serve a counter-notice with a counter-offer on the tenant.

The tenant should be aware of the fees he or she are likely to incur when extending their lease. They are:

• Surveyor’s fees

• Tenant’s solicitors’ fees

• Premium

• Landlord’s legal fees

• Landlord’s surveyor’s fees

It is highly recommended that tenants are represented by solicitors as an invalid will prevent them from making a further application for over a year. Solicitors will also be able to facilitate negotiations of the premium between the landlord and tenant. If a premium cannot be agreed or the landlord is unresponsive, the tenant will be able to apply to the Tribunal to have this matter resolved.

If the above seems daunting and costly, a tenant should bear in mind that for a small premium payable, an extension of the Lease will most likely bump up the value of the Property.

Identity Theft - How to Stop Others from Stealing your Brand

My friend received a letter from a lawyer earlier this year demanding that he stopped trading under his business name. My friend is a food entrepreneur and has worked very hard to establish a unique and fast-growing business in London.

His business philosophy is simple. Serve good food, good drinks and create a vibrant and friendly atmosphere where people can eat and hang-out. He started out on his own in a trendy part of London and now has branches in various parts of the city. Apart from his winning business philosophy, his business had a winning brand! His logo was smart and simple. The name was catchy, easy to remember and describing the essence of the business.

Unbeknownst to my friend, another business opened up in London with a similar name and brand.

My friend tried to fight the other business but in the end decided it was not worth the cost of the legal battle his competitor was threatening.

In short, my friend should have protected his business name by trade marking his brand.

How can you stop this from happening to you?

You must register your trade mark!

As business owners, we work very hard at building our brand. However, we should also ensure that we protect our brand.

According to the Institute of Trade Mark Attorneys, a trade mark is "any sign capable of graphical representation which can distinguish the goods and services of one undertaking from those of another". It can inlcude words, names, signatures, logos, numbers, signs and designs.

In the UK, trade marks are registered on a first come first served basis. It is important therefore to register your trade mark in the early stages or as part of the product or business launch.

The cost of registering your trade mark is a fraction of the cost of the legal action that may ensue as a result of unauthorised use of your brand.

If you are already trading and have not registered your trade mark as of yet, we advise that you do so as soon as possible to protect your brand and ensure continued business success.

Use a Professional

I recommend that you seek the advice of a legal professional to protect your brand. At Posada & Co, we can help you from the outset by:

• Conducting the necessary searches to establish whether you can register yur brand;
• Advising you on the right classes for your trade mark;
• Preparing the trade mark application;
• Advising you on any issues that may arise as a result of your application (e.g. someone may object to your application).

For assistance with protecting your brand, contact our Commercial team at Posada & Co.

The Importance of Terms & Conditions

Claire d'Humilly de Serraval, our Commercial Lawyer, has published a great article on the importance of terms and conditions. You can read the article by clicking on this link. 

The Impact of Brexit on UK Employment Law

Written by: Claire d'Humilly de Serraval

It is undeniable that the UK employment law has been substantively shaped and widened by the EU law over the years. The EU legislation as implemented in our legal system contributed to confer wider protection to the UK employees. To name only a few, we can be thankful for the rights not to be unfairly discriminated, the working time regulations, annual leave and family leave rights, collective rights and employees’ protection affected by a transfer of undertaking.

Four months have passed since the Leave vote and not much seems to have happened (on the Brexit side, not on the political drama side). So where do we stand on our employment rights?

Since June 2016 we expect that the Brexit should not trigger any major change to the UK employment Law framework, on the basis that the EU legislations are now a core part of the UK legal system. It thereafter became clearer that redrafting the entire UK legal system – on top of renegotiating worldwide trade agreements - is such a cumbersome task that there are not enough parliamentary time, ministers or even civil servants to decide to wipe out the current legislations as to suppress the existing EU provisions.

However, in the longer term and depending on the Brexit model which will be negotiated, there is a risk that some employment law provisions may be amended or deleted. Particularly those which were unpopular with businesses might be reviewed: such as the basic protections for agency workers to benefit from the same employment conditions as their colleagues directly recruited by their employer and the high protections benefiting employees of a business being transferred to another. There are speculations that the UK post Brexit could be veering towards more liberal laws which would be less favourable to employees and jeopardising their fundamental rights.

Mid-October 2016, a list of 170 questions has been put to the government, including whether the EU employment protections would remain in force. It has been suggested that the government could reply to one question every day in order that a clear plan may be established by the end of March 2017. We eagerly await the government’s daily responses to those – if this ever happens – so that we may get some clarity on our position and on our future. Considering the proposed immigration reforms - for businesses to declare the nationalities of their employees, the uncertainty on the EU workers’ status, the further curbs to the non-EEA migrants’ visas – it appears that the upcoming immigration law reforms would impact both employers and employees to the risk of endangering our current non-discrimination laws.

To see the full list of 170 questions, click here.

If you would like advice on employment law as a result of Brexit or in preparation for the UK leaving the EU, please do not hesitate to contact us.

Claire is a Solicitor specialising in commercial matters. In her spare time, she likes to travel and play tennis. She has a bachelor's degree in English law and a masters degree in European law. She speaks four European languages.

The Importance of Partnership Agreements

Our founding Partner, Delfin Posada, has just published an article on Partnership Agreements. Check it out on this link.

*Image courtesy of reynermedia

A Social Evil or Generational Empowerment?

Tax Planning in light of GAAR and the Panama Papers

There is much interest in the Panama Papers and the fact that a law firm in the Carribean has acted for various international figures (both famous and infamous) to avoid tax.

Here in the UK, the spotlight is on the Prime Minister. The Panama Papers revealed that his father was party to an off-shore tax avoidance scheme and that his mother utilised the legal and widely acceptable form of tax planning called "lifetime transfers".

None of the allegations against the Prime Minister are illegal. Sadly, however, we live in a world where tax planning is regarded by many as reprehensible, a social evil. It does not help that the media sensationalise these issues. It is clear from recent media releases that journalists cannot differentiate between off-shore hedge funds and off-shore family trusts. And sadly, the general public cannot seem to differentiate between companies avoiding taxes (such as Google and Starbucks) and honest hardworking individuals who simply wish to protect their assets and pass them on to the next generation.

The HMRC has recently introduced anti tax-avoidance regulations called GAAR. According to the HMRC, if they regard the tax planning to be abusive - then there will be a challenge. They will analyse each tax planning scheme on a case by case basis.

If your estate is worth more than the nil-rate band (currently frozen at £325,000 until 2021), it is important that you receive bespoke tax planning to ensure that your wealth is preserved for the next generation. The tax planning must be bespoke and tailored to your particular needs. In light of GAAR, the Panama Papers and the HMRC taking an increasingly tough stance on what they regard as abusive planning, gone are the days where you can have an IHT and CGT saving scheme that can be rolled out for everyone.

If you have not revisited your Will for more than a couple of years, or perhaps your will was drafted pre-2007 and it contains a Nil-Rate Band Discretionary Trust - it is time to book an appointment with your Solicitor to see if your Will still suits your requirements. Also, if you took advantage of the lacuna which pilot trusts intended to exploit, this cavity has now been filled and can no longer be exploited. It is therefore important that you speak to your lawyer to ensure to check that your pilot trusts are still valid.

There are also tried and tested lifetime and estate planning strategies which your solicitor can discuss with you to ensure that your wealth is preserved for the next generation. For example, despite what the papers say about Mrs Cameron's gifts to the Prime Minister, lifetime transfer is not a social evil. It is a well established planning tool for preserving wealth in the family and empowering the next generation.

There are other reliefs which if utilised properly can ensure that your assets stay within the family such as Business Property Relief (BPR) and Agricultural Property Relief (APR). There are ways to increase the nil-rate band inheritance tax threshold by utilising the transferable nil rate band and the residential nil rate band. It is important that these reliefs are nailed down and not lost.

At Posada and Co, our lawyers can help you with your estate and capital tax planning needs. We can provide you with an Estate Planning Report following an initial fact-finding meeting with one of our lawyers (which lasts between 60 to 90 minutes, depending on your circumstances). Our usual minimum charge is £450 plus VAT for the Estate Planning Report.

For more information, please contact us on 020 3744 3800.

This article is written by Delfin Posada. Delfin is a director and the founder of Posada & Co. Delfin qualified as a Solicitor and Barrister in Australia in 1999 and has been practising in the UK since 2004.