You and the law
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Spring 2008
A good time to move?
David Knapp, Head of our Residential Property Department with over 20 years experience, has been following the market closely…
After enjoying a buoyant residential property market for several years, the first 10 months of 2007 saw the famine begin to bite. A dramatic change came in the final two months, with prices falling. The indicators and signs that pre-empted the crash in the early 1990s were present some 12 months ago but memories are short and little heed was taken of the warning signs.
Living as we do in a rapidly-changing society, the market has gone from “bull” to “bear” in a very short space of time.
Fuelled by the collapse in the USA property sector and the sub prime chaos, the UK is but a few months behind. 2008 promises to provide a struggling market for the first two quarters
at least.
Making the most of it
The best time to move up market, however, is in a falling market as the amount one “loses” on the property one owns is more than compensated for by the gain made in the reduction in value of the property being purchased.
The prophets in the property game have already sold and moved into rented accommodation, ready to pick up bargains
when they appear in the coming months.
The rental market is very buoyant on the back of the downturn in sales and so the brave will retain their existing property and convert their mortgage to a buy-to-let mortgage, rent out their existing property and purchase their new home at the bottom of the market. The rented property can be kept until the market picks up and then sold at a good price, which is made all the more attractive, taking into account the forthcoming changes to the Capital Gains Tax regime.
The South East picture
The South East of England is cloistered because the property market will always be active, due to people selling and buying on marriage, divorce, death, upsizing/downsizing, financial considerations, job relocations, schooling requirements and so on.
In addition, a sizeable chunk of the executive home property market is sold to buyers who relocate to the provinces from London, who in turn sell to foreign buyers who are not so concerned about buying expensively.
2008 will see properties change hands in large numbers but the public is often confused by the messages being emitted by various commentators, who tend to suggest that a depressed property market means no houses are being sold. In reality, it’s the prices that are depressed as opposed to volume of traffic.
It looks as though the turbulence of uncertainty that the last recession caused to the property market in the early 1990s will not be as dramatic in the coming months.
For further information
contact David Knapp on
01483 887766.
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Your house or mine?
Did you know that just because you may own a property in joint names it does not mean that any equity arising from the property would be shared equally.
This point was well illustrated recently at the House of Lords in the case of Stack v. Dowden. They had lived together for 19 years, latterly in a house that they jointly owned. Most of the money for the purchase came from Miss Dowden.
In owning a property there is a difference between the legal ownership (who owns the property) and the beneficial ownership (how much of the equity each is entitled to). Unless the owners specifically declare their entitlements to the equity in the property then a dispute may arise, with one party seeking a greater share.
The issue in this landmark case was whether the equity should be shared equally to reflect legal ownership – or unequally to reflect Miss Dowden’s greater financial contribution. The lawlords decided in favour of Miss Dowden, awarding her 65% of
the equity.
Where a property is jointly owned there is often a strong presumption that the equity will be shared equally. The onus is on the claimant to displace this presumption.
The Court will consider the parties’ intentions, whether actual, inferred or imputed, with respect to the property and look at the whole course of conduct in relation to it.
Relevant factors will include: financial contributions to the property, the purpose for which the home was acquired, the nature of the parties’ relationship and how they paid the outgoings and other household expenses.
For the full article please click here
For further information contact Rita Veitch, Family Department, on 014893 887766
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Divorce with dignity
The sad but true reality is that the New Year is often the busiest time for marriage counsellors and family lawyers.
Christmas can place severe pressure upon a relationship which is already in difficulty and, come the New Year, the decision to end the relationship is often taken.
This may be a decision taken by one partner and the manner in which it is communicated to the other can affect the way in which issues arising on the breakdown of the relationship are resolved.
A spouse who comes home to find that the other has moved out leaving just a note is going to experience emotions ranging from distress and loss to anger. They may decide that they are not going to co-operate in resolving issues.
The spouse who wants to end the relationship may feel frustrated that matters are not moving as quickly as they want because the other needs time to adjust to the change in their life. They may take the view that court proceedings are required at an early stage, when in fact they will be quite counter-productive.
The legal process
Most couples take legal advice early on as to their rights and obligations on the breakdown of the relationship and how the lawyers - and ultimately the courts - can resolve any issues. Ideally the family lawyers will be members of Resolution and subscribe to their code of conduct, which is to adopt a non-confrontational approach and to encourage couples to resolve issues without court intervention.
Most couples are content for their lawyers to resolve issues on their behalf and to have little direct contact with their former partner. However, some couples feel that they want to be more directly involved but with the assistance of their lawyer - especially where they have a reasonable dialogue with their former partner.
Collaboration
Collaborative Family Law allows a couple and their lawyers to enter into a written agreement not to go to court but to sit down together to find solutions that they can both agree to. Hart Brown has a number of lawyers specifically trained in advising on Collaborative Law.
Sharon Powell explains, “The couple set the agenda together and dictate at what pace they want to proceed. They are given the opportunity to talk openly about issues with the assistance of their lawyers.
“I have seen many clients benefit particularly from collaboration when negotiating over family issues. Clients have often stated that it puts them back in control and helped with the negotiations, without the need for court intervention.”
Collaborative Law is not a process which is appropriate for everyone but it does empower those clients who want to have a voice in negotiations which are going to affect their lives and those of their children. At the same time, it illustrates to any children involved that their parents are willing and able to sit down amicably together to resolve issues.
For further information contact Sharon Powell, Family Law
department, on 01483 887766.
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It Pays To Be Married!
New laws are being drawn up to give cohabiting couples similar rights over financial assets to married couples - but these will only apply when the relationship breaks down. Until that point, marriage will continue to provide greater benefits whilst in a relationship.
Married couples enjoy advantages in relation to Income Tax, Capital Gains Tax and Inheritance Tax, but it is the Income Tax advantages which are the most straightforward and the least controversial.
The fact that assets can be transferred freely between spouses and civil partners means that income-producing investments can be placed in the name of the spouse who pays tax at the lower rate. This could also apply to the ownership of a second home, the rental income from which could be used to ensure that the personal allowance of a non-working wife was utilised and any income in excess of the allowance taxed at a lower rate than that applicable to the husband.
Equally, married couples can plan their Wills so as to ensure that each makes full use of the £300,000 “nil rate band” of Inheritance Tax. A will creates certainty, reduces worry and provides peace of mind, ensuring an individual knows how their money, property and possessions will be dealt with after their death.
It has long been standard advice for married couples with taxable estates to execute back-to-back Wills creating “nil rate band” discretionary trusts, and if properly constructed this arrangement is still effective and can achieve substantial savings, despite an adverse ruling in the recent case of an academic, Dr Phizackerley, where the facts were very unusual (the implications/solutions of the case can be accessed via our website www.hartbrown.co.uk).
Some couples have sought to take full advantage of their annual allowance for Capital Gains Tax by undertaking a “bed and breakfast” arrangement whereby the spouse who wishes to realise gains on an investment but not to relinquish the investment would sell enough to utilise the allowance and then arrange for it to be bought back in the name of the other spouse. However, the Revenue is thought now to be critical of such arrangements and could call them into question.
Over many years, Hart Brown has built an enviable reputation for reliability, quality, trustworthiness and fair dealing. Our team of trust and investment lawyers are highly experienced advisors who can help individuals achieve tax savings with the preparation of their wills, income tax, capital gains tax and inheritance tax planning.
For further information
contact Paul Tobias, Trust & Investment Department, on 01483 887766.
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Are my investments protected?
Recently, many people have been concerned about their legal rights in the case of a bank or other provider being unable to meet its obligations.
Investor protection is mainly provided by the government’s Financial Services Compensation Scheme and depends on the type of investment.
UK bank and building society deposits, following the run on Northern Rock, are now covered up to £35,000. Until the recent change in the rules, the maximum pay-out was £31,700 for deposits of £35,000 or more. The Chancellor, Alistair Darling, has suggested that these limits will almost certainly increase.*
UK investment products, such as unit trusts or OEICs, that were sold after 27 August 1988 are 100% covered for the first £30,000 and 90% covered for the next £20,000, making the maximum pay-out of £48,000 on £50,000 of investments.
UK life assurance policies are covered for 100% of the first £2,000 and 90% thereafter, with no cash ceiling, although the 90% figure could be cut back if an independent actuary considered the original benefits excessive.
For further information contact Paul Tobias, Trust & Investment Department, on 01483 887766.
*Speech by the Rt. Hon Alistair Darling MP, 1 October 2007.
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Ageism still endemic
Despite the introduction of new age discrimination laws over a year ago, the results of a recent poll by The Employers Forum on Age (EFA) suggest that ageism in the workplace is still rife.
The new rules relate to recruitment, promotion, retirement, pay, promotion, redundancy and pension provision but there are problems...
Employees can work past the age of 65, but only if their employer grants permission to do so. If employers refuse consent, the refusal must be based on ‘objectively justified’ reasons – which can lead to disputes.
If your company has a compulsory retirement age, this may be something that will need to be reviewed in the future, as the EFA is calling on employers to remove mandatory retirement ages.
On the other side of the coin, the EFA also found that young workers are also affected because older workers were being paid more than them for doing the same job.
Elsewhere, the British Youth Council also contends new ageism laws are being broken by the three-tier minimum wage system.
For further information please contact Gerard Gibbs on
01483 887766.
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Appointments and promotions
Ursula Martiniussen joined the firm in October. Ursula is an Employment lawyer at our Guildford offices. She trained with a firm in Hertfordshire before qualifying last September. During her training, Ursula was awarded the prize for the best trainee solicitor in Hertfordshire by the Hertfordshire Law Society.
Sharon Powell has joined Hart Brown’s Family department in Godalming as a Senior lawyer. Sharon has practised family law for over 20 years and is experienced in all types of matrimonial work, with particular expertise in the financial implications of divorce.
Dr Caroline Kerr is the newest member to join the firm's Personal Injury (PI) and Medical Negligence team at Guildford. Having worked for seven years as a qualified doctor in hospitals nationwide, Caroline requalified as a solicitor in 2002, specialising in personal injury and medical negligence claims. She has been particularly successful in representing pedestrians and motorcyclists injured in road traffic accidents. She has also dealt with many "accident at work" and medical negligence claims.
Hart Brown is pleased to announce that the following people have been promoted for their performances, commitment and hard work.
Emily Wiggins
to Associate – Trust & Investment
Sam Dodd
to Associate – Commercial Property
Rajani Beeharry
to Associate – Residential Property
Peter Wickwar
to Senior solicitor – Trust & Investment
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A marathon achievement
Fiona Maslin, a trainee solicitor in the Commercial Property Department, is running the London Marathon on 13 April for the Esther Benjamin's Trust - one of Hart Brown's nominated charities. She hopes to raise over £1,400.
The Esther Benjamin’s Trust supports disadvantaged Nepalese children and has rescued many from the streets and prisons of Nepal and circuses of India. It also helps Nepal's disabled children and fights against child trafficking.
The Trust supports the children in its refuges through education, sport and many other activities, with the aim to reintegrate the children back into society. (Their website is www.ebtrust.org.uk).
Fiona started training last November and had not run since she was at school, so has built up from being able to jog for 15 minutes to completing the Cranleigh 21-mile race in 3 hours 30 minutes in March!
She says, “It has been challenging to keep to my training programme as, at times, it requires running 10 miles after work which can take over one-and-a-half hours. I have joined a local running club and this has helped with morale and motivation!”
Fiona hopes to complete the marathon in 4 hours 30 minutes or less. If you would like to sponsor her please contact the marketing department on 01483 887780.
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In Brief
There is much to look forward to this year, including Hart Brown’s various events and seminars, details of which will be posted up on our website and mentioned in future publications in forthcoming months.
Many of our events, such as our annual themed dinner, are held for charity. In 2007, Hart Brown raised over £30,500 for charities, including The Esther Benjamin's Trust and the Surrey Air Ambulance. These two organisations are Hart Brown’s nominated charities again this year.
One of our biggest events in 2008 is our fourth annual Hart Brown Economic Forum, entitled ‘There is only opportunity’, on Wednesday 18 June at the Surrey University. We welcome Dr Richard Roberts, Market Analysis Director & Chief Economist at Barclays UK Banking; Mark Hoban, Shadow Minister for the Treasury and MP for Fareham, and Tim Price, Director of Investment, PFP Wealth Management, as our speakers.
The Economy will certainly be on all of our minds as we go through the year and this newsletter has addressed several of the key issues currently affecting us in the UK.
For those who need further advice on any of the issues featured, or indeed other areas of concern, Hart Brown’s experienced and specialist lawyers are always here to help. Or, as a first port of call, you may prefer to visit our website at www.hartbrown.co.uk which covers most topics. I hope you find it useful.
Bettina Brueggemann – Managing Partner
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