J&G Collie

The Long Leases (Scotland) Act received Royal Assent on 7 August 2012. The Act will on the “Appointed Day” (the first Martinmas (28th November) falling 2 years after the relevant sections of the Act come into force) convert the tenant’s interest in long leases into outright ownership and extinguish the existing rights of land owners in exchange for payment of compensation.

Leases which are affected by this Act are those:

1. whose original duration or term was for more than 175 years;
2. which still have more than 100 years left to run where the subjects comprise wholly or mainly a private dwellinghouse, or more than 175 years left to run in any other case; and
3. which have an annual rent of £100 or less.

The Act will not apply to leases:

1. which are only of minerals;
2. which are granted for the sole purpose of allowing the tenant to install and maintain pipes or cables; or
3. of a harbour in respect of which there is a harbour authority.

Only the tenant has the ability under the Act to opt out of conversion. They also have the ability to cancel their opting out, but for any of these to be effective, the tenant’s notice must be signed and registered at lease 2 months before the Appointed Day.

The Landlord will be entitled to claim payment of compensation from the tenant in accordance with the formula set out in the Act for the loss of his ownership right. In each case, the Landlord will be entitled to claim for loss of rental income, which also takes into account any premiums which may have been payable for a lease renewal or extension. In some cases the Landlord will also be able to claim for compensation for (i) loss of right to get the property back if there was more than 200 years of the term left to run after the Appointed Day, and (ii) loss of right to enforce non-monetary obligations.

Upon conversion of the lease, any standard securities over the tenant’s interest in the lease will remain in place, however standard securities over the landlord’s title will be extinguished.

For further information please contact Caren McNeil on 01224 581581 or by email at c.mcneil@jgcollie.co.uk

One of the more unpleasant aspects of any house purchase is paying Stamp Duty Land Tax (“SDLT”). It is usually far and away the biggest outlay in any house purchase. According to statistics released by Aberdeen Solicitors Property Centre, the average house price in Aberdeen in 2011 was £208,398. This would attract SDLT of £2,083. Further up the housing ladder, SDLT payments can reach eye watering levels. In a recent residential purchase transaction here at James & George Collie, SDLT of £165,000 was paid.

As taxes go, Stamp Duty – the forerunner of SDLT – has a more colourful history than most. Stamp Duty may have cost the UK its biggest asset. The introduction of The Stamp Act 1765 to the colonies is acknowledged as one of the main causes of the American Revolution which took place just 10 years later. For the American republicans this was the last straw, and riots and revolution ensued. There has never been Stamp Duty in America. It seems the scars have never healed.

For the government SDLT is really the perfect tax. It is collected by solicitors on their behalf and all the form filing is done by the solicitor and the client. The costs of administration must be minimal in comparison to other taxes.

And what happens if you don’t pay it? Then your solicitor can’t register your title and you won’t get the keys. There is really no point or future in being an SDLT “refusenik”.

SDLT is also a very good earner for the government. In 2009/10, a year of deep recession for property sales, SDLT receipts in Scotland came to £249m and in the UK to £4.885 billion. In recent years SDLT receipts in both Scotland and the UK have been roughly equal to the amount raised by Capital Gains Tax and Inheritance Tax put together.

There are however changes afoot. Under The Scotland Act 2012, SDLT in Scotland will be abolished. In a major move by Westminster the powers to raise tax on land and buildings have been devolved to the Scottish Government. SDLT will be replaced in April 2015 with a new land and buildings transaction tax which has already got its very own acronym – LBTT. The Scottish Government is currently consulting about LBTT but the indications are that it will be a progressive tax based on value. That is no different from SDLT but it is likely the extreme effect of banding for SDLT on residential transactions will be mitigated. At present, a purchase at £249,000 yields SDLT of £2,490 at 1%. A purchase at £251,000 is charged at 3% and yields SDLT of £7,530. The Scottish Government wants to do something about this anomaly. Another suggestion is that purchases at less than £180,000 are to have no tax which should stimulate the lower end of the market. On the other hand, it is likely that properties at the higher end will attract high levels of LBTT. All should be revealed towards the end of this year.

Property professionals and The Law Society of Scotland have given a cautious welcome to the overhaul. Our view at James & George Collie is that anything which will simplify land taxes on house purchase or commercial transactions and promote fairness is to be supported.

For further information or advice, please contact Forbes McLennan by telephone on 01224 581581 or by email at f.mclennan @jgcollie.co.uk

In a recent landmark decision by five Justices of the Supreme Court, some clarity has been brought to the issue of cohabitee’s rights writes Graham A Garden. Whilst it has always been accepted that the terms of The Family Law (Scotland) Act 2006 did not seek to provide couples, who chose to co-habit rather than to marry or enter into a civil partnership, the same rights to financial provision, the Justices decided that the Inner House of the Court of Session had adopted too narrow an approach in considering what financial provision should be made on the termination of cohabitation. The Justices acknowledged that the main principle in deciding what financial claims a cohabitee may have against a former cohabitee, is one of fairness whilst at the same time acknowledging that cohabitation is a less formal, less structured and more flexible form of relationship than marriage or civil partnership. In the case which the Court was considering, Mr Grant and Miss Gow first met in 2001, became engaged, but separated in 2008. Miss Gow had owned a property in Edinburgh before the relationship and had sold this during the course of her relationship with Mr Grant. The proceeds of sale of her flat were used during the course of the relationship and the couple had lived in Mr Grant’s home for a period.

The terms of Section 28 of The 2006 Family Law Act (“the 2006 Act”) dictates what awards, if any, should be made in the circumstances. The Sheriff at first instance exercised his discretion in concluding that taking all matters into account Miss Gow had suffered a net economic disadvantage as a result of the relationship and that she should be compensated in the amount of £39,500. Mr Grant appealed against this decision to the Inner House and this Appeal was allowed. Miss Gow then took the decision to the highest Civil Court in the land, namely, the Supreme Court, who found in her favour. Lady Hale, in her judgement, acknowledged that the law does not seek to impose upon unmarried couples the same rights and responsibilities which result from marriage or civil partnership but seeks to redress the gains and losses flowing from the relationship.

If nothing else, this decision simply underlines the need for couples who have decided that they do not intend to marry or enter into a civil partnership to consider entering into a Cohabitation Agreement to minimise the potential financial fallout in the event that the relationship ends. In view of the fact that the 2006 Act covers the position in relation to the ending of cohabitation of same sex couples as well as couples of opposite sexes,  this decision has significant ramifications for all couples who make the decision to cohabit and not to marry.

For further information please contact Graham Garden by email on gag@kinnearandfalconer.co.uk.

It is now less than 6 months to go until the “Green Deal” launch which is set to revolutionise the energy efficiency of all UK homes and businesses.  The Green Deal stems from the Energy Act 2011 and is designed to enable private firms to offer consumers energy efficiency improvements.  The benefit to consumers and businesses is that there will be no upfront costs and it will result in cheaper warmer buildings and will make them more marketable to tenants.  The cost of the improvements will be recouped through a charge added to the end-user’s energy bill.

It is therefore recommended that consumers and businesses start to think about making energy efficiency savings, otherwise they risk not being able to let out a property that is not compliant or having to carry out costly improvements in tight timescales.

The Green Deal provides that from April 2016 private residential landlords will be unable to refuse a tenant’s reasonable request to consent to energy efficiency improvements where a finance package is available. It also states that by April 2018, it will be unlawful to rent out residential or business premises which do not reach a minimum energy efficiency standard (it is likely that the minimum rating will be “E”).  It is therefore recommended taking advice early when obtaining an Energy Performance Certificate (EPC).

How does it work?
Energy companies will become “green deal providers” and will employ qualified assessors. A property will be inspected by an assessor and energy efficiency improvements recommended. The green deal provider will then provide an estimate of the savings on the energy bill if the works were carried out and offer to carry out the works based upon instalments added to the energy bill.
The instalments will be paid by “the person who is for the time being liable to pay the energy bills for the property” and “will be made to the relevant energy supplier through the energy bills for the property”.   As tenants are in most cases the bill payer, it will be tenants who pay the instalments by way of their energy bill.  Tenants will need to be aware when they are taking on a lease of a property if it is subject to the Green Deal.
It is thought that in the future EPC’s will disclose all Green Deal arrangements as part of the Government’s plans to allow disclosure of information held on the national register of all EPC’s throughout the UK.  As a result of the database requirements the cost of obtaining EPC’s is increasing.
In summary, energy efficiency is not going to go away.  It is a flagship policy for the Government and it is recommended that both tenants and landlord’s take advice early on EPC’s and the Green Deal in order to reap the benefits.

For further information, please contact Caren Glennie by email at c.glennie@jgcollie.co.uk.

A tenancy deposit scheme is a scheme – approved by the Scottish Government – provided and operated by an independent third party to hold and protect tenants’ deposits until they fall to be repaid at the end of the tenancy. These schemes will come into operation very soon, advises John Sinclair.

Concerns that some private landlords or letting agents unfairly withhold tenants’ deposits led to provisions in the Housing (Scotland) Act 2006 allowing Scottish Ministers to bring forward regulations for the approval of tenancy deposit schemes in Scotland. The Tenancy Deposit Schemes (Scotland) Regulations 2011 came into force on 7 March 2011. These regulations set out the conditions that all schemes must meet before they can be approved by the Scottish Ministers.

Three schemes have been approved by Scottish Ministers and all three will start operating on Monday 2 July 2012. The regulations which impose legal duties on landlords who receive a deposit in connection with a relevant tenancy will also be triggered from 2 July.

The legal duties on landlords are:

(i) to pay deposits to an approved tenancy deposit scheme, and

(ii) to provide the tenant with key information about the tenancy and deposit.

The dates by which landlords must pay deposits to an approved scheme and provide information to the tenant vary, depending on when the deposit was received. Details of these key dates will be published on our website but in the meantime if you are a landlord and have any questions please contact us and we will be delighted to give you the guidance you need.

Most landlords who let privately rented property are required to register with the local authority in which the property is situated. Every landlord who receives a deposit, and who is required to register in the local authority register of landlords (in accordance with the Antisocial Behaviour etc. (Scotland) Act 2004) must comply with the Tenancy Deposit Schemes (Scotland) Regulations 2011. This includes landlords of assured and short assured tenancies, university accommodation and various other types of occupancy arrangement.

Landlords must comply with the regulations and there are sanctions for non-compliance. A tenant can apply to a sheriff for a financial penalty to be imposed on a landlord if the landlord fails to submit deposits to an approved scheme and/or provide information to the tenant. Where satisfied that a landlord has not complied, a sheriff can order the landlord to pay the tenant up to three times the deposit. The sheriff has a discretion as to the amount of any financial penalty to be applied.

The schemes will be free in the sense that there will be no charge for tenants, landlords or letting agents to join a scheme. Additionally every approved scheme will provide a free service to resolve disagreements over the return of deposits as an alternative to taking legal action through the courts.

The introduction of these schemes will have a significant impact on the current practice of landlords and their letting agents in relation to tenants’ deposits and hence it is important that both are fully aware of the obligations imposed by the regulations and also the rights of tenants.

For further information or guidance please contact John Sinclair by telephone on 01224 581581 or by email at j.sinclair@jgcollie.co.uk

A matter which is becoming increasingly prevalent, particularly in the North East of Scotland which houses a fairly transient population, is the situation whereby after a couple have separated, one of them requires to move either to another part of the United Kingdom or possibly with more profound consequences, to another Continent.  Clearly, this is a matter with potentially deep lasting effects not only for the parent with care of the children but also the parent with whom the children do not live and, more importantly, the children themselves as this will not only involve the children moving to a different part of the country but potentially a different part of the world.

It goes without saying that matters such as these should, in the first instance, always be discussed between the parties.  Obviously, this, in many instances, is neither practical nor conducive to matters being resolved by agreement and, unfortunately, as is becoming all too prevalent nowadays, the matters must be decided by a Court.  Until fairly recently, there were scant few recorded cases on this subject but these are starting to filter through.  In deciding such cases, the Judge will consider a number of factors including the reasonableness of the move, the motive of the parent with care wishing to take the children away, the importance of the children’s relationships with the family who will be left behind, the amount and frequency of Contact with the parent who remains behind, the children’s views (if they are of an age to express them), the effect of the move on the children, the effect of refusal to move on the parent with care and the effect of refusal to move on the welfare of the children.  The Court also have to satisfy themselves that a satisfactory level of continuing contact would realistically be achievable.  At the end of the day, the best interests of the children are of paramount consideration.  It also goes without saying that such a move affects a considerable number of people and it is best that any possibility that these may be raised, be raised at the earliest possible juncture to avoid, as far as possible, as a Court action can not only be financially expensive but also emotionally destructive.

For further information, please contact any of our Family Lawyers,

Graham A Garden, Telephone Number: 01569 763555, Email: gag@kinnearandfalconer.co.uk, Duncan M Love, Telephone Number: 01224 581581, Email: d.love@jgcollie.co.uk,

Susan Waters, Telephone Number: 01224 581581, Email: s.waters@jgcollie.co.uk,

Hayley Mitchell, Telephone Number: 01224 581581, Email: h.mitchell@jgcollie.co.uk.

This measure is coming although the start date is not yet known. Janet Hood considers the implications for customers and retailers.

Janet was having a chat with her local shop keeper on the realities of minimum pricing – set in Scotland at 50p per unit. The shop is part of a well known UK wide convenience store  chain. They had a very good offer on her favourite Shiraz at £4.90 per bottle. The percentage alcohol per volume was marked as 14%. When minimum pricing comes in that bottle will not be able to be sold at less than £5.25.

How was that worked out? Well not in her head, but by applying the Scottish Government formula:

MPU x S x V x 100

where MPU is minimum price per unit in £’s, S is the strength of the alcohol as a percentage, and V is the volume of the alcohol in litres.

Initially it was a bit tricky trying to work out what these terms meant as the bottle was labeled as follows

14% vol – this is the strength of the alcohol and means the amount of alcohol in the wine

75cl – is the volume or amount of alcoholic liquid in the bottle or the wine

£0.50 is the minimum price per unit

Therefore the minimum price is:

0.50 (MPU) x 0.75 (Volume) x 14/100 (Strength, as % per volume) x 100 = £5.25

A litre bottle of whisky at 40% strength currently being sold for £13.00 per bottle will have a minimum cost:

0.50 (MPU) x 1.00 (Volume) x 40/100 (Strength, as % per volume) x 100 = £20.00

If we were in England or Wales where minimum pricing is likely to be set at 40p per unit the wine would be able to be sold at £4.20 and the whisky at £16.00.

If you sell alcohol together with other products for a single price – say in a hamper – the alcohol must be sold at minimum price however the other items can be priced as you wish.

Takeaway food premises are being targeted by HMRC across Scotland – a potentially costly business

On a separate matter, a word of warning for the operators of takeaway food premises:

HMRC officers are intending unannounced visits to takeaway premises across Scotland. Visits are likely to be at weekends or after busy trading days, late at night after they have observed how targeted premises are trading. They will be looking at numbers of customers going in and out of premises and calculating the likely number of transactions made.  The HMRC officers can interview staff, check tills and run a “Z” report to ensure that all monies likely to have been made have gone through the till. They are entitled to take copies of documentation.

The aim of this initiative is to identify undeclared income. They will charge a penalty of 100% of any VAT not declared and will likely take criminal proceedings if they find discrepancies.

If you or someone you know would like detailed advice on how to prepare for these visits, or if you have already been targeted and require assistance in dealing with HMRC

DON’T DELAY

Contact James and George Collie, Solicitors, 1 East Craibstone Street, Aberdeen, AB11 6YQ

Tony Dawson 01224 581581; e: a.dawson@jgcollie.co.uk or

Janet Hood 0771 888 2837; e: janethood@me.com

Introduction

As most of the Top Gear fans amongst you will know if you accumulate 12 points or more on your driving licence you can be disqualified from driving. However, this is not by any means a foregone conclusion.

Statutory Basis

The relevant piece of legislation is Section 35 of the Road Traffic Offenders Act 1988 which provides that the court must order the driver to be disqualified for not less than the minimum period unless the court is satisfied, having regard to all the circumstances, that there are grounds for mitigating the normal consequences of the conviction and thinks fit to order the driver to be disqualified for a shorter period or not to order the driver to be disqualified at all.

Minimum Period

The minimum period of disqualification is 6 months where no previous disqualification (lasting 56 days or more) has been imposed on the driver within 3 years immediately preceding the commission of the date of the offence (rather than the date of conviction by the court) which results in the totting-up procedure being applied. The minimum period rises to 1 year where there has been a single previous disqualification and 2 years if the driver has received 2 or more such previous disqualifications.

Exceptional Hardship Hearing

Section 35(4) represents a significant restriction on the circumstances that can be taken into account by the court when deciding whether or not to apply the totting-up procedure. This states that no account is to be taken of hardship, other than exceptional hardship.

Both the circumstances of the offence and of the offender can be taken into account. Each case is considered on its own merits. The court has taken into account the following circumstances in the past: the likelihood of the loss of employment to the driver as a result of the disqualification and the effect that this may have on their family (or employees and their families where the driver has their own business); having an ill child or other member of family who requires regular transport to and from hospital; and the lack of nearby available public transport as an alternative means of transport.

However, it must be emphasised that these factors are not be any means exhaustive or conclusive. If you find yourself subject to the totting-up procedure or are prosecuted for any road traffic matter or indeed any other criminal offence please do not hesitate to contact Duncan Love, Denis Daun or Steven Gauld.

When is a garage not a garage? A garage is described as ‘a building or shed for housing a motor vehicle’. So, what is a motor vehicle? Can this include a motorbike? A moped? Anything with an internal engine? These are the kinds of questions solicitors and estate agents will have to consider asking themselves. If a property is misrepresented in some way, an individual will potentially have a claim against that firm or company under the Property Misdescriptions Act 1991.

This Act “prohibits the giving of false or misleading statements in certain specified matters in the course of estate agency or property development business”. This can include a wide variety of statements as well as pictures and videos. Although having your clients fill in and sign their Property Questionnaire minimises the risk, it will not protect you if you print a misdescription you could have reasonably checked yourself. The maximum fine on summary conviction is £5,000 per offence and on conviction on indictment an unlimited fine.

A false statement is one which is false to a material extent (i.e. not trivial). A material degree will vary with circumstances and an objectivity test will apply. The extent to which a statement is false must be material but it is possible for a statement to be misleading without actually being false if a reasonable person would draw a false inference from it. Equally a statement may be misleading if it is incomplete. The Act does not create a duty to volunteer information but imposes an obligation to ensure that any details which are given are accurate.

In considering whether an offence had been committed, a court would be likely to base its view on what a normal prospective purchaser would consider to be false to a material degree having regard to generally accepted standards. An example of a property misdescription can include describing an entire property as ‘recently re-decorated and beautifully refurbished’ when this can only apply to 1 or 2 rooms in the property. The Act does not require you to disclose defects such as a leaky roof. However, the description as a whole must not give the impression that the property does not have that defect. And of course, if a garage cannot accommodate a motor vehicle, it should not be described as a garage.

There is a defence to show that all reasonable steps have been taken and all due diligence exercised to avoid committing the offence. General disclaimers are not prohibited by the 1991 Act. They cannot be relied on in preventing an offence, however, there are some cases where a specific qualifying description may be acceptable. A qualification may be applied to the working order of household appliances or central heating. The crucial fact in assessing whether a qualified description is valid is the ease with which you could have reasonably checked it.

The Government is currently reviewing the need for the Property Misdescriptions Act in view of the introduction of the Consumer Protection from Unfair Trading Regulations in 2008. A consultation paper issued by the Department for Business Innovation and Skills in early 2011 indicated that the thinking was that consumers are protected by two broadly equivalent pieces of legislation. This duplication may be unnecessary and the 1991 Act could potentially be repealed without affecting consumers.

Nonetheless, this is something that many businesses and estate agencies should be aware of. It may not be practicable to have your Oxford Dictionary on stand by every time a property schedule is prepared, but no fact should be misleading or false to a material degree. Beware what you say, what you type and what you sell!

For further information please contact our Property Sales Team at our 220 Union Street Office, Telephone 01224 572777.

In Scotland, the law tells us who will inherit your estate when you die without making a Will.  This can give rise to your assets going to someone who you may not be pleased will benefit.  There are quite a few misconceptions about this, including the wrong assumption that your spouse will automatically inherit everything.  This is not always the case.

Under the Scottish laws of intestacy, your spouse or civil partner is entitled to certain preferential rights to certain parts of your estate.  These are known as Prior Rights.  The value of these rights increased substantially on 1 February 2012.   Your spouse or civil partner is entitled to your interest in your home, up to a value of £473,000, a huge increase from its previous level of £300,000.  The Scottish Government was hopeful that this level would cover the majority of properties in Scotland.  Your spouse or civil partner is also entitled to furniture and contents in the home, up to a value of £29,000 increased from £25,000.

The final part of Prior Rights means that your spouse or civil partner is entitled to a cash sum of £50,000 if you leave children or £89,000 if you have no children.  These figures have been increased from £42,000 and £75,000 respectively.

After all this, then your spouse or civil partner is entitled to claim his or her legal rights.   This is a share in what remains in your net moveable estate, which is usually everything except buildings or land.   This will amount to a one-third share if you have children or descendants, and one-half if you have not.   If you have children or descendants, then they also will be entitled to their legal rights in your estate, one-third if you have children or descendants, or one-half if you do not.   Needless to say, with a higher level of Prior Rights now, it is possible that a spouse or a civil partner will inherit everything in your estate, even if you have children.   However bear in mind that if this is a second marriage, and you have children from the first marriage, then it is possible that they will receive nothing on your death and they would not have any automatic rights of inheritance on the death of your second spouse or civil partner.

After these Prior and Legal Rights have been dealt with, then the remainder of the estate could go to your spouse, but only if you do not leave any children or descendants or parents or brothers or sisters or similar relatives.  These other relatives would all be entitled to share in your estate to the exclusion of your spouse.

You should also be aware that it is now law that if you have been co-habiting with someone, and die without making a Will, that co-habitee could raise an action to claim a share in your estate as well.   On the other hand it is however important to note that if you co-habit with your partner, there is no guarantee that he or she will inherit anything, unless you make a Will and name them as a beneficiary.

As you will have seen, this is a complex area and it is much better to set up a Will in which you can say who you wish to inherit your estate.  This is particularly important where you have a second marriage and you want to be as definite as you can be about who you want to benefit.   It is also true that if you die without making a Will, it is more expensive to administer your estate, as additional work has to be carried out.

For any further advice regarding your Wills, please contact Philip Dawson on p.dawson@jgcollie.co.uk or Vivienne Bruce. On v.bruce@jgcollie.co.uk.