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James & George Collie Managed Portfolios – Review of Q2 2017

Wednesday, September 20th, 2017

by Scott Middleton, Chartered Financial Planner, James & George Collie Financial Management Limited

Executive Summary

  • The James & George Collie Model Portfolios again posted a positive return during Q2, extending the gains made in the first quarter of 2017
  • Equity markets continued their upward trend in the second quarter of 2017, with an improving global economic outlook, reduced political uncertainty and positive corporate earnings revisions providing support across regions
  • For sterling-based investors European, Asian (ex Japan) and Emerging Markets equities have been the standout performers year-to-date, with UK, North American and Japanese markets also enjoying positive returns in the first half of 2017
  • In contrast, conventional gilts sold off in June, reversing the gains seen in the first quarter as Bank of England policymakers debated whether to raise interest rates.

Review of Q2 2017

5While the general election itself did not have a massive impact on bond yields, one of the most important points to note during the second quarter of 2017 was that conventional gilts posted negative returns, as the perceived change in attitude of central banks towards normalising monetary policy caused a sharp spike in yields. The ensuing speculation about austerity policies being watered down, as well as a potentially softer Brexit, also did not help gilts, leading to a total return of -1.3% from the FTSE Actuaries UK Conventional Gilts All Stocks index over the period.

As highlighted last quarter, the James & George Collie Model Portfolios remain underweight fixed interest from an asset allocation perspective, a function of our relatively cautious stance on bonds in general given the historically low level of yields on offer. This positioning once again added to relative returns, though the majority of the outperformance seen over the quarter was generated at the underlying fund selection level.

Turning to equity markets, and the FTSE All-Share posted a total return of 1.4% over the quarter, with mid- and smaller-cap companies again outperforming their larger counterparts. Year-to-date total returns for the FTSE Small Cap (ex IT) and FTSE 250 (ex IT) now stand at 8.8% and 8.4% respectively, comfortably ahead of the 4.7% return from the FTSE 100 index. The period also saw a continuation of “growth” stocks outperforming “value”, with sectors such as Oil & Gas, Basic Materials and Utilities posting negative returns over the period.

The James & George Collie Model Portfolios active UK equity holdings outperformed over the quarter, with a number of managers extending their relative gains year-to-date. The Artemis Income, Investec UK Alpha and CF Woodford Equity Income funds were three such examples, all benefiting from strong performance at the individual stock selection level as well as their underweight exposure to those poorly performing sectors mentioned above. The James & George Collie Model Portfolios allocation to the smaller end of the market also delivered firmly positive returns, with the River & Mercantile UK Equity Smaller Companies fund enjoying continued strong performance from long-standing holdings across the AIM market.

Turning to international equity markets, Europe was the standout performer during the second quarter, with the FTSE Europe ex UK index returning 4.6% against an improving political, economic and corporate backdrop. In France, the election of Emmanuel Macron was received positively by markets, with significant asset flows into the region arising from the successful navigation of this perceived political hurdle. Pleasingly, the James & George Collie Model Portfolios European equity exposure outperformed at the fund selection level, while the overweight allocation to the region also contributed to relative returns. We further increased the exposure across several of the strategies towards the end of the quarter, while also making a change to our holdings. Further details can be found in the next section.

North American equities ended down in sterling terms over the quarter, a function of the dollar weakness seen during the period. The James & George Collie Model Portfolios exposure also finished in negative territory, underperforming the broader market as the Old Mutual North American Equity and Schroder US Mid Cap holdings lagged modestly.

Elsewhere, returns from the James & George Collie Model Portfolios Asian allocations were positive, with the BGF Asian Growth Leaders – a new holding introduced in March – also benefiting from its exposure to technology names. In Japan, the Baillie Gifford Japanese Income Growth fund continued its strong start to the year with another quarter of outperformance.

Finally, the James & George Collie Model Portfolios Absolute Return exposure delivered a marginally positive return over the quarter, with the Invesco Perpetual Global Targeted Returns and – within the lower-risk strategies – Newton Real Return funds the standout performers. Returns from the James & George Collie Model Portfolios Commercial Property exposure were positive on both an absolute and relative basis, with the F&C Property Growth & Income fund enjoying a particularly strong quarter to bring its year-to-date return to 7%.

Q2 2017 Changes to Portfolios

To summarise, the key changes made to the James & George Collie Model Portfolios asset allocations over the quarter were as follows:

  • The James & George Collie Model Portfolios exposure to European equities was increased, a move that reflects our continued positive outlook for this market on the basis of an improving economic environment, diminishing levels of political risk and positive corporate fundamentals.
  • The James & George Collie Model Portfolios exposure to Japanese equities was again selectively increased, with the allocation maintained as one of our key overweight exposures at the regional level.
  • We have closed our modestly underweight allocation to UK equities across the portfolios, a move that reflects more our constructive outlook for risk assets than a wholesale change in our view on the domestic economy.
  • We have increased the exposure to Absolute Return funds within the James & George Collie Moderately Adventurous and James & George Collie Defensive portfolios, having already raised this allocation within the James & George Collie Balanced and James & George Collie Cautious portfolios earlier in the year.
  • The James & George Collie Model Portfolios cash levels were selectively reduced in the process.

At the fund selection level, we have introduced a new active fund within the James & George Collie Model Portfolios European equity allocation, while also moving the James & George Collie Model Portfolios active Emerging Markets equity holdings to an equal-weighted basis.

Starting with Europe, we have exited the James & George Collie Model Portfolios exposure to the BlackRock Continental European Income fund in favour of the Henderson European Selected Opportunities fund. This move concludes the work undertaken to increase the economic sensitivity of the James & George Collie Model Portfolios exposure to the region, and was decided upon in the wake of the first round of the French election, when our positive outlook for European equities was reaffirmed.

The addition of the Henderson fund to the strategies removes some of the more defensive biases that we had identified as a potential source of concern in a pro-cyclical market environment. John Bennett, the manager of the fund, is pragmatic in nature and his current positioning of the portfolio reflects our own broadly positive outlook for the region. Indeed, the fund’s investment process provides the flexibility to rotate into sectors that are typically under-represented within the BlackRock fund, and Bennett’s recent activity has certainly increased the “value” characteristics of the portfolio in recent times, with a move away from Healthcare in favour of an increased allocation to Banks the most notable example. The rationale for this rotation was based partially upon the valuation premium of certain sectors appearing high relative to history, but also the team’s view that selected European Banks are finally investable, both in terms of their financial strength (with their dividend yield well covered) and lowly valuations.

Paired alongside the incumbent allocation to the JOHCM Continental European fund, the result of this change is an exposure to two ‘core’ active managers that better reflect our outlook for European markets. Both remain broadly positive in their outlook and positioning, as well as relatively large cap in nature, and ensure synchronicity with our overweight allocation to this region.

The final change of note was the repositioning of the James & George Collie Model Portfolios active Emerging Markets equity holdings to an equal-weighted basis, having previously been tilted in favour of the more “value”-orientated Lazard Emerging Markets fund. The resulting position ensures a more balanced exposure to the low beta, high quality bias of the Henderson Emerging Markets Opportunities fund alongside the positive tilt towards global reflation obtained from the Lazard holding.

At the headline level, there is little quarter-on-quarter difference to our positioning across the James & George Collie Model Portfolios. Rather, it is the emphasis of these tactical allocations that we have changed. As such, we remain biased towards equities, with North America, Europe (ex UK) and Japan our key ‘overweight’ positions relative to strategic benchmarks. This is in contrast to the UK, where we maintain a ‘neutral’ allocation.

Within the James & George Collie Model Portfolios bond exposure, we retain a cautious stance overall. Although gilt yields did rise modestly during the last quarter, they still remain close to historical lows and do not appear to offer much value, especially when elevated levels of inflation are taken into account. Unfortunately, most other parts of the bond market also look expensive following a prolonged period of strong returns. We are therefore focusing on quality and liquidity, while also seeking to earn a competitive return. We remain of the opinion that yields will be slow to rise, and expect the Bank of England to keep interest rates low for the foreseeable future.

Elsewhere, we have further reduced the portfolios’ cash levels, having already lowered levels earlier in the year, ensuring that the strategies now hold only a very modest overweight position. And finally, Absolute Return holdings have been selectively increased across the strategies, though alongside Commercial Property we retain our ‘underweight’ position to Alternatives within the portfolios.

Conclusion

Eight years into the economic cycle and with equity markets touching new highs, exceptional year-on-year returns and no sign of a correction, it is hardly surprising that many investors are feeling cautious. However, a combination of rising nominal GDP and relatively slow monetary tightening is a benign environment for risk assets, and strong 2017 corporate earnings will provide additional support. While the tapering of central bank balance sheets requires close monitoring for signs of tighter credit conditions, equities can still make progress. A modest rise in bond yields should also be expected.

The past year has seen above average sector rotation and this has provided opportunities for active investors. Falling bond yields in recent years have helped “growth” stocks out-perform “value” and, although the former are now looking expensive, valuations are still nowhere near “tech bubble” territory. If tapering by central banks results in a steeper yield curve, “value” stocks – typically represented in most markets by financials – could come back into favour. Analysts’ forecasts of a 14% increase in global corporate earnings puts world equities on a forward price/earnings ratio of 17x. This is above the longer-term average, but by no means extreme. The US looks the most expensive and Asian/ Emerging Markets the cheapest with Europe (including the UK) somewhere in the middle. Income-seeking investors will continue to be attracted by dividend yields and these are well supported by profits at this stage in the cycle.

When it comes to making investments, there is no substitute for taking specialist advice, but remember that markets can be volatile and the value of investments can go down as well as up.

For more details on how you could invest within the James & George Collie Managed Portfolios please contact Scott Middleton on 01224 581581 or by email at scott.middleton@colliefinancial.co.uk to arrange an appointment.

1 April 2018- Three years of LBTT and the implications for Commercial Leases

Wednesday, September 20th, 2017

4With a limited number of exceptions, all new commercial leases in Scotland since 1 April 2015 have required an LBTT return to be submitted to Revenue Scotland shortly after the “relevant date” which varies depending on the particular circumstances. In some circumstances commercial leases in place prior to April 2015 which have since been varied will also have required an LBTT return.

The treatment of leases for LBTT purposes is significantly different to the treatment of purchases of land and buildings. The reasoning is simple, the terms of a lease can and usually will change over its lifetime. A lease may be varied, extended, assigned to another tenant or indeed may come to an end earlier than originally planned. All but the shortest leases will generally contain rent review provisions and it is common for the rent to be reviewed at regular intervals and/or on any extension of any lease. Extensions can be formally documented but can also occur by operation of law where the original lease is not terminated at the end of its documented term.

The LBTT legislation does not require a further LBTT return to be submitted to Revenue Scotland every time a change to the lease takes place. Instead, it requires that unless the lease has been terminated or assigned (at which point returns also need to be made), a further LBTT return is to be submitted by the tenant at every third anniversary of the effective date of the lease. It should also be noted that in the case of an assignation the assignee will still be required to make a LBTT return on every third anniversary of the effective date of the lease as the date of the assignation does not have any impact on the relevant filing dates. An assignation made in year two, for example, will still require a return in year three, unless it is terminated before then.

These three yearly LBTT returns inform Revenue Scotland of any changes that have occurred since the original effective date or last review date and allow the amount of tax chargeable on the lease to be reviewed taking account of those changes. Depending on the particular circumstances additional LBTT may need to be paid or some may be reclaimed. It is important to note that even if the lease has not been altered in any way a further return will still be required every three years to confirm that nothing has changed!

The 30 day timescale allowed for submission of the first of these triannual returns will start to run on 1 April 2018 for those leases which have a “relevant date” of 1 April 2015. While this may seem to be a long time away it is important for tenants to be aware of their obligations and to keep accurate records to be able to meet them when the time comes. Failing to make a return when required can result in penalties being applied by Revenue Scotland and these can be quite substantial.

If you require any further information or assistance in regard to the content of this article, please contact Steven Allan on 01224 581581 or s.allan@jgcollie.co.uk or get in touch with your usual contact  at James & George Collie.

Overseas Broadcasts of Football Matches

Wednesday, September 20th, 2017

3There have been a large number of cases recently where companies such as the FA Premier League, BT and Sky have been pursuing publicans for damages in respect of showing “live” football matches.  This area of law has become quite complex over the last few years.  There is a great deal of confusion for members of the public and for owners of public houses.  This article will aim to shed some light on the law surrounding the broadcast of football matches without permission from the Premier League or without having a Sky or BT subscription.

It is becoming increasingly common for members of the public to walk into any pub across Aberdeen to watch a football game either at 3pm on a Saturday afternoon, or one that was scheduled to be broadcast on BT Sport or Sky Sports, and instead find themselves watching a game with either a small time delay or from an overseas broadcast.  There are a number of companies operating throughout Scotland who provide publicans with equipment to be able to show overseas transmissions of football matches which would otherwise not be broadcast in the UK or only broadcast through Sky Sports or BT Sport.  These companies are not acting in an illegal manner as there is nothing to prevent anybody from showing a football match on TV.  Any pub can transmit a broadcast of a football match to the public without the requirement of a licence however what it cannot do, is show what is referred to as “the copyright works”.  The copyright works include, but are not limited to, any logos, music, and sound effects which are played that are protected by the company.  The companies, in these cases, would be the Premier League, Sky and BT.

As a result, many of the suppliers of the overseas transmissions operate a delaying system where the logos are blurred out either on BT or Sky or, if watching a 3pm kick off, a blurring of any of the Premier League logos.  If this is performed correctly, there is no breach of any copyright, as the copyright is not being broadcast to the public.  However, many publicans are being caught because they are showing games where logos are appearing, either on BT Sport or Sky Sports, because they are showing the wrong broadcasts.  What they are doing is showing a broadcast from Sky Sports or BT Sports instead of an overseas broadcast which they should be doing.  If they are caught with the Sky Sports logo or BT Sport logo on their screen they will likely be reported by an independent investigator and could face court action from either BT or Sky.  Many of these cases do not go to court; however these companies will insist on substantial damages being paid in order for the action to be dropped.  They will also require an undertaking to be signed giving up all of the equipment and to provide the identity of the supplier of the equipment.  The FA Premier League will also do something similar.  They will open a Court action against you for broadcasting the Premier League logo if you have displayed it on your screen without it being blurred over.

How do these companies catch so many pubs?  The FA Premier League employs officers to visit thousands of pubs across the UK every year. Inspectors from the organisation FACT visit pubs and report any broadcasts of Sky or BT to the supplier.   Once you have been caught, you will have very little choice but to pay the damages they request, or face a lengthy Court battle which will cost substantially more than simply paying the damages.  Publicans run a massive risk by broadcasting Premier League games, Sky Sports games and BT Sport games without proper licences.  As much as it is legal to broadcast any football match, it is illegal to broadcast any of the copyright works.  One slip could result in thousands of pounds of damages being paid to the FA, Sky or BT.

It should also be noted that any organisation, not just Sky, BT or the FA Premier League, may make a claim against you if their copyright works are being broadcast without permission or a licence.

We at James and George Collie can offer advice on this matter.  Please contact Greg Lawson at g.lawson@jgcollie.co.uk for more information or assistance.

Improving your chances of selling your home

Wednesday, September 20th, 2017

2With more than 98% of buyers using the internet in the search for their new home, the first few seconds’ viewing can be ‘make or break’.

Check the competition and you will see some showing bright, sunny rooms with a minimum of clutter, flowers on the table and fresh towels and bedding while others could show a dingy house with unmade beds, dirty dishes in the sink, washing on the line and toys and clothes left lying around.

These days you have to take an active part in selling your home and learn to market it properly so that it appeals to the maximum number of buyers. Put yourself in the place of buyers and imagine you are seeing your house for the first time.

The key to best presenting a house for sale is to tidy, declutter, clean, neutralise the decor, fix minor repairs, decorate if appropriate and subtly accessorise – all of which will ensure your home is looking its best and you are ready to show to potential buyers.

Consider doing some of the following:

  • Store excess and outdated furniture, books and toys off site. Do not use the loft or garage where viewers will want to look;
  • Fix chips in woodwork, cracks in plaster, broken tiles or glass and dripping taps, and replace mouldy grout or sealant in the bathroom;
  • Neutralise the decor by painting over bold colours and get rid of patterned carpets. Remove family photos and ornaments and use colour sparingly on a few accent pieces;
  • Clean outside and in, including all surfaces and floors, both sides of windows and ledges and remove cobwebs clinging to walls. Do not forget to tidy the front garden as that is the first thing buyers will see; and
  • Style and accessorise by making up the beds with fresh neutral linen, dress the table for dinner, turn on lamps and add flowers and fresh towels.

Should you wish guidance on selling your home, please contact either Mary Birse in our Stonehaven office by email at m.birse@jgcollie.co.uk or your usual contact in the Firm.

Premises Licences – Annual fees

Wednesday, September 20th, 2017

1Janet Hood, Consultant, issues a timely reminder about annual fees for your premises licence.

Every licensing board in Scotland will have sent out demands for the payment of the annual fee to maintain premises licences.

The notices will have either been:

1. sent to the premises;

2. sent to the premises licence holder; or

3. sent to the premises manager.

Every year a large number of premises licences are revoked due to non-payment of these annual fees.

This means that you cannot sell alcohol on the premises until an application for a new licence is granted or occasional licences are granted to cover the situation. In an over provision area where the licensing board believe there are too many licences, an application for a premises licence or occasional licence might not be granted and the business will be lost.

Please instruct senior staff to open the mail, please ensure your head office opens the mail and if it is a demand for payment of annual fees please ensure they are paid immediately. It can be fatal to put these demands in a drawer for payment later!

If you are:

1. a premises licence holder;

2. a premises manager; or

3. a senior member of staff

please check to ensure someone in your organisation has paid the fees.

If you have not received a demand for payment by now, please call the local licensing board which deals with your premises licence and ask them to either confirm payment has been made or to re-send the annual fee demand to you by email to ensure they are paid.

Letters get lost in the post. It is no excuse to say you did not receive the demand.

Your future is in your hands……

Should you require further advice or guidance on any liquor licensing matter, please contact Janet Hood by email at j.hood@jgcollie.co.uk

Q1 Market Commentary

Monday, June 26th, 2017

By Scott A. Middleton, Chartered Financial Planner
James & George Collie Financial Management

Despite a perceived background of worldwide uncertainty and volatility the Q1 of 2017 has witnessed further upward growth for many investors. The FTSE 100 Index increased in value by 2.86%, the FTSE World Index by 2.89% and there was a significant upturn in European Equities, which increased in value by 7.31% measured by the FT Europe (ex UK) index.

Sterling strengthened by nearly 3% during the quarter, which reduced the performance of equities that traded in overseas, dollar based, assets in Sterling terms, but boosted the performance of more UK focused firms in the ‘mid caps’ sector which rose by 9.34% measured by the FTSE 250 (ex IT) index.

During March the upward momentum in major markets appeared to reduce significantly as President Trump withdrew his healthcare bill after it failed to gain sufficient support to pass in Congress. The ‘snap’ UK election also caught many people by surprise when it was announced on 18th April and this led to a fall in the FTSE 100 whilst the progress of the far right party of Marine Le Pen in France, also caused market volatility. After a long period of strong upward returns many investors are now asking the key question ‘Is it time to bank profits and avoid the risk of a market pullback?’

It is undeniable that P/E ratios are a little on the high side. This ratio measures the share price of a company divided by the earnings per share or, to put it another way, the number of years it would take for the company to pay for itself based on current earnings. There has been some press coverage that this measure has only been above current levels on two previous occasions and both times a significant market crash followed, suggesting that investors should expect a similar outcome.

Although this press speculation is broadly accurate, there are two further pieces of immediately relevant information investors should consider. The first is that on both previous occasions valuations went up considerably further than current levels before the crash occurred suggesting that even if history does repeat itself, it is still too early to take profits. The second is that PE ratios need to be considered alongside the alternative investment option of bond yields in order to make a meaningful comparison.

Interest rates have fallen and fallen over the recent investment cycle, which began in the late 1980s. This period has been heralded as a super cycle for fixed interest markets. Yields have fallen from double digit returns to historically low levels and therefore whilst PE ratios may look high historically the yield available from lower risk asset classes is lower still and therefore equities continue to look good value on a relative basis.

Current valuations aside, the main driver of equity returns will rest on the ability of companies to increase earnings into the longer term. The last six months has witnessed an increase is equity asset valuations and this effect has sometimes been described as ‘Trumpflation’. Donald Trump, as one of his election policies, wanted to reduce taxes and increase government infrastructure spending, targeting economic growth of between 3% and 4%.

There is a widespread need to replace infrastructure within the US as many bridges, roads, railways and dams are in a poor state of repair and need imminent replacement. The combination of the potential improvement to infrastructure and the economic boost of spending the $1trn mentioned during Trumps campaign, won support from many voters and equity traders.

Stock markets have responded positively since Donald Trump won the election, but suffered a set-back in mid-March as his plans to repeal Obamacare, another key election pledge, ran into difficulties and were withdrawn. Investors began to wonder if his spending program could be relied upon, which caused equities to fall back whilst bonds recovered from a period of weakness. Whilst this set back does raise some concerns, we continue to expect the spending plans to go ahead given that the Obamacare repeal bill was closely contested and the spending plans have wider support.

Theresa May’s announcement of a ‘snap’ election on 18th April caught many by surprise, not least because she had categorically ruled out this action on, at least, 5 previous occasions. With hindsight, this decision was perhaps flawed, and the effect on the political power base and Brexit negotiations currently remains uncertain. The future potential moves of Sterling are too difficult to predict at this stage and will be influenced significantly by political developments, which are unpredictable in nature.

We continue to consider the potential future influence of the estimated $13trn which has been printed and injected into bond markets since the credit crisis by central banks. Had $13trn been spent directly within the global economy, the direct economic effect would have been incredible with a huge rise in economic activity, growth and inflation but only on a temporary basis. The mechanism of injecting this money into the bond markets has been the equivalent of a muscle based injection with a slow release over time. The impact on the real economy has been small but there is evidence that cash is moving from bond markets and impacting the real economy.

Economic data over the last twelve months has been positive with economic growth and inflation showing a more stable upward path. Confidence indications have also trended higher as companies, in particular, are more confident about the future and therefore are more likely to trigger capital spending programmes, which are stimulatory in nature.

Although it is not a good idea to rely on the past too greatly, we do recognise that some patterns in financial markets can be seen to repeat frequently. At the moment some analysists are particularly excited by the FTSE 100 as this index has been in a maximum trading range of circa 7000 since January 2000, but has recently broken above this figure seventeen years later. They point out that seventeen years is a long period for a new high not to be reached and historically, when a breakout occurs, the next cycle is often a significant upward rise and this occurred between 1992 and 2000 when the FTSE 100 increased by over 160%. Whilst this point has little relevance in isolation it does provide some context with regard to market timing in relation to the other positive economic observations.

In summary, this is an interesting time for investors with few historical reference points, especially in recent history. Yields and interest rates have not been as low as current levels in modern times (the information age which began in the 1960s and significantly impacted the global economy from the 1980s). The economic back drop has shown a generally upward trend and valuations are reasonable on current factors continuing earnings growth being likely to improve this picture. The key downside risks are largely political at present and although recent European elections have had favourable outcomes, the risks of populism are on-going in addition to global political uncertainty, especially given the unpredictable nature of President Trump.

Strategy

There are many uncertainties at present, both domestically and internationally, however we believe that there is risk on both sides. A case for significant increases in equity market values can be justified as well as outlining risks, which could lead to equity market falls. In either scenario it is difficult to see fixed interest investments being able to off-set the risk through the normal diversification process, as yields are generally too low to offer much upside to any negative news.

On balance, we see more opportunities for further growth in equity markets than downside risk and therefore portfolios are positioned with increased equity weightings. Lower risk portfolios are diversified through short dated fixed interest holdings, which are relatively less sensitive to interest rate increases, and are expected to reduce the overall volatility of the portfolio. In addition we have also included inflation linked holdings, which will benefit if inflation continues to accelerate as we expect.

The outcome of the General Election could have a major impact on your financial plans and investments.
Why not canvass our professional adviser’s opinion on the best way forward?
Pension/retirement planning
Investment management
Estate planning
Tax planning

Contact us on 01224 581581 or scott.middleton@colliefinancial.co.uk to arrange an appointment.

Continuing and Welfare Powers of Attorney….Why Should You Have One?

Monday, June 26th, 2017

They are recommended by solicitors universally, and are becoming ever more popular; but what is a Power of Attorney, and more importantly, why do you need one?

The Adults with Incapacity (Scotland) Act 2000 provided a framework for protecting the welfare and managing the finances of adults who lack capacity due to mental illness, learning disability or a related condition, or an inability to communicate. The instrument you can grant to provide this protection is a Continuing and Welfare Power of Attorney. By granting a Power of Attorney, you are taking control of a situation before it presents itself. There are two aspects to a Power of Attorney; the continuing side in relation to financial matters; and the welfare side in relation to health and wellbeing matters.

Firstly, a Continuing Power of Attorney allows an Attorney to act on behalf of the Granter in relation to all financial or business matters. This would cover operating their bank account, organising insurances, and even selling any property. Once the Power of Attorney has been signed and registered, the Attorney can commence their duties whenever the Granter chooses. This is beneficial in situations where the Granter has not lost capacity but is perhaps physically unable or struggling to look after their affairs. The attorney would be able to continue to act in the event of the Granter losing capacity in the future.

The second is a Welfare Power of Attorney which would allow the Attorney to take decisions relating to medical treatment, care and accommodation. In this case, however, the Attorney would only be able to take these decisions in place of the Granter if they were to lose capacity, which will only be confirmed by a doctor. It is vitally important that a Granter advises their attorney what medical treatments they would choose and how they would like to be treated prior to this coming into effect. An Attorney should be able to commence their duties knowing exactly how the Granter would like to be treated.

Who should you choose as your Attorney? If you are married, most Granters will appoint their spouse. However, it is also recommended that you choose a substitute for your spouse as they may not be able to act in the future. You can also have more than one Attorney, and they can make decisions acting together or independently depending on your wishes.

Perhaps the greatest benefit of a Power of Attorney is preventing a negative. If you lose capacity without having a Power of Attorney in place, a Guardian may have to be appointed through the courts in order to make decisions on your behalf. This process is costly and immeasurably time consuming. By taking steps now, a Power of Attorney can be set up within twelve weeks of signing and can act as an insurance policy going forward. A Power of Attorney will not only alleviate the stress for the Granter but also for the family and friends who will be able to take care of the Granter’s needs without having to worry about administrative hurdles.

Please contact Greg Lawson at our main office on 01224 563367 or by email at g.lawson@jgcollie.co.uk to arrange a meeting to discuss granting a Power of Attorney. It’s never too early…

We’re all going on a Summer holiday!

Monday, June 26th, 2017

Separated parents often wish to spend extended periods of quality time with their children over the Summer months; but when it comes to taking your children abroad on holiday, what do you need to know?

The Children (Scotland) Act 1995 provides that no person can remove a child habitually resident in Scotland from the UK without consent of both parents who have parental responsibilities and rights. This means that if you wish to take your children abroad this Summer, the law says that you will need to obtain the other parent’s consent to do so.

Despite the fact that there is no specific requirement to do so, it is good practice to seek consent in writing. In particular, it is worth bearing in mind that some destinations may even require sight of written consent to travel prior to entering the country.

Of course, many parents have difficulty communicating post-separation, and unless permission to remove a child from the UK is addressed in a Separation Agreement, it can often be difficult to reach an amicable agreement on this matter.

Ultimately, there is the option to apply to the Sheriff Court for a Specific Issue Order which would allow you to take your child abroad on holiday. This can be costly, time-consuming and stressful on both parties, therefore parents should always try to negotiate between their Solicitors, or attend mediation, in the first instance. The Court will take a view of the specific facts of the case, such as any particular objections that the other parent has to the holiday. The holiday may be deemed unreasonable due to the age of the children or length of the trip or it may be that there is a risk that the children will not be returned. However, the overriding consideration will be the best interests of the children. In general, the Court takes the view that a holiday abroad falls within this bracket and broadly speaking they are supportive of non-resident parents enjoying extended periods of contact with their children.

With a view to avoiding matters reaching Court, we advise you to plan well in advance and seek consent from the other parent at the earliest possible opportunity. Be open and transparent about your plans and provide as much information as possible about the holiday. Discuss practicalities such as handing over passports and emergency contact details. Likewise, allow the parent who is remaining at home to raise any concerns they may have and take steps to alleviate these. Think of the child/children and aim to keep their involvement to a minimum. Exposure to any upset may affect them in the long term as well as casting a shadow over the holiday. If you are still unable to come to an agreement, consult your Solicitor.

If you do come to an agreement, we recommend that you give some thought to recording this in writing and putting it into a formal Separation Agreement which can set out the terms of future contact and holidays, and avoid any conflict further down the line.

Most importantly, the paramount consideration should always be the children enjoying quality time with both parents, therefore it is in everyone’s best interests to try and approach this issue in a calm and sensible manner.

The Family Law team at James & George Collie are happy to advise you on any of the points contained in this article or indeed any other related matter.


Scottish Private Residential Tenancies

Monday, June 26th, 2017

A new leasing regime is being introduced by the Scottish Parliament in terms of the Private Housing (Tenancies) (Scotland) Act 2016.  The Scottish Private Residential Tenancy – or SPRT – will replace the existing private leasing regime in Scotland.  At present, privately let properties are let on a short assured tenancy.  The beauty of a short assured tenancy is that at the end of the period of lease, provided certain notices are served in the correct order at the correct time, the Court must grant an eviction of a tenant.  This is what is known as a “no fault” ground for repossession.  The no fault ground however is set to disappear under the new regime.  On one hand, tenants will have enhanced rights of security.  However, as this article will hopefully demonstrate, there are many new grounds available to a landlord to regain possession of their property.

The Act will come into force in December this year, after which, no new short assured tenancies can be created.  Existing short assured tenancies will remain in place until they in turn come to an end.  It can be appreciated therefore that it is important that landlords with existing tenancies should take advice on the changes and be aware of the impact those will have.

A SPRT will continue indefinitely unless (a) the tenant wants to leave or (b) the landlord can end it on one of the prescribed grounds for re-possession.  The no fault ground has gone for good.  A tenant must give four weeks notice to leave no matter how long the lease is for.  Depending upon the ground a landlord founds upon, the notice period can be twelve weeks if the tenancy was for six months or more, or four weeks if the tenancy lasted for less than six months.  Regardless of the length of tenancy, if the tenant is not occupying the property, or has failed to pay three consecutive months rent in full, or is in breach of the tenancy agreement, or has behaved anti-socially, then the notice period is four weeks.  The new eviction grounds include where a landlord intends to sell, or the property is to be sold by the lender, or the landlord intends to re-furbish, or the landlord intends to live in the property.  In all of these cases, the tribunal, if satisfied the relevant ground applies, must grant an order for eviction.  Further, if the landlord intends to start using the property as a shop, or the tenant is no longer an employee of the landlord, or the tenant is not occupying the property, the tribunal is bound to grant an eviction order.  It is also an eviction ground where the tenant has been in rent arrears for three or more consecutive months.  Where there is a finding that for three or more consecutive months the tenant has continuously been in arrears and that at any point in time the arrears have been an amount equal to or greater than one months rent then the tribunal are bound to make an eviction order.  If it can be shown there has been criminal behaviour by a tenant or anti-social behaviour then the tribunal may grant eviction.

From the end of the year, there will be one model tenancy agreement to be used by landlords and tenants alike.  There will be no notices required at the beginning of the lease as there are in the case of the present short assured tenancies.

Landlords will regret the passing of the no-fault ground of repossession.  However, it remains to be seen whether in real terms a tenant does have improved security of tenure given the fact that landlords can seek an eviction order simply on the basis that they intend to live there themselves or that they wish to sell their property or re-furbish it.

If you require any advice in relation to property leasing matters and in particular in relation to eviction, please do not hesitate to contact Court Partner, Duncan M Love by email at d.love@jgcollie.co.uk

Additional Dwelling Supplement (ADS) – are you liable to pay?

Monday, June 26th, 2017

The Land and Buildings Transaction Tax (Amendment) (Scotland) Act 2016 (containing Additional Dwelling Supplement or “ADS” provisions) came into effect on 1 April 2016, adding an additional cost to buyers who purchase an ‘additional’ dwelling at a price over £40,000. The tax amounts to 3% of the total purchase price and the tax appears to have contributed to a decline in “buy to let” purchasers entering the market.

Consider the following examples which illustrate that whether ADS is payable is very much dependent on individual circumstances, and ADS applies in more situations than many of our clients may have been aware.

Example 1

Where you do not own any dwelling but your partner (spouse, civil partner or cohabitee) does then you may have been under the mistaken belief that since you do not own a dwelling yourself, the ADS does not apply to you and you can purchase your own buy-to-let flat. However under the rules of “deemed ownership” it is deemed that you and your partner are treated as one ‘economic unit’ and you will potentially be liable for the ADS on the purchase of a new property.

The Scottish Government has felt that this rule ensures that couples cannot complete simple transfers of title in order to purchase multiple properties without paying the ADS tax liability.

Example 2

Where you own multiple dwellings and are selling your main dwelling (your primary residence) and you are replacing this with a same day purchase of your new main dwelling then even though you own other properties you will not be due to pay the ADS because you are replacing your main dwelling.  However, under the same example, if it was not your main residence that you were selling but another property you had, as you are not replacing your main residence then you will be liable for the ADS.  An example would be where you owned multiple buy-to-let flats and were selling a dwelling that you had let out and were buying a new dwelling for any reason. The tax is liable because you will own multiple dwellings but will not be replacing your primary residence by selling your existing one and buying a new one.

On a similar note where you buy a new main dwelling and later (within 18 months) sell your main dwelling (therefore replacing your main residence) you will have paid the ADS up-front on your purchase but are entitled to claim the ADS back. If you are not replacing your main residence then you are unable to claim the tax back later.

If you sold your main residence in the last 18 months and are buying a new main residence in replacement of your main residence within that 18 months you will not be liable for ADS.

Example 3

Where a company is purchasing its first dwelling it will always be liable for the ADS. It is unsurprising that the Scottish Government has blocked such an obvious way of avoiding/mitigating the additional dwelling supplement tax.


Example 4

Where you own a house which is your main residence and you buy a piece of land then if that land has planning permission for a residential dwelling but no building work has commenced nor does it have any existing structures on it then you will not be liable to pay ADS on this purchase as the land you are buying will not be considered as a dwelling.  Although you intend to build a dwelling on it, the use of the property at the effective date of the transaction overrides any past or intended future uses.

However the land may be considered as a dwelling if at the effective date there exists a structure or building already on it (even if you intend to substantially refurbish or demolish it), a dwelling is currently being built on it, or if a contract exists for a builder to construct a dwelling on it i.e. an off-plan property.

Example 5

Where you are selling your own main residence and replacing this with a new main residence, and for the purposes of this example, let us assume that you are very wealthy, and in addition to the large mansion you are purchasing you are also acquiring, as part of the deal, a “gate house”. You will be liable to pay ADS on the part of the purchase price that is attributable to the “gate house” as this part is considered to be an additional dwelling.

These examples are not exhaustive and as you can see from some of the examples above, whether you are liable for ADS is very much dependent on your particular circumstances. Therefore, should you believe that you are potentially affected by the additional dwelling supplement you should take individualised legal advice and this article should not be relied upon or construed as providing legal advice.  Should you require any legal advice regarding any of the issues raised in this article, or should you wish to discuss your next purchase, please get in touch with either Mark Allan, Associate, by email at m.allan@jgcollie.co.uk or your usual contact at James & George Collie.