A sledgehammer to crack a nut - POCA reporting where asbestos surveys are missing

Professionals such as lawyers, estate practitioners and tax advisers are increasingly being used by criminals to launder money. The legislation governing money laundering is wide ranging and impacts on many areas of practice which some practitioners may not necessarily be immediately aware of.

In practice, obtaining an asbestos survey from the seller is the simplest way to avoid the issues set out above. It may be that the sellers' solicitors are not aware of the consequences that failing to supply an asbestos survey will give rise to and therefore an early call explaining the position may be all that is needed to avoid using your sledgehammer and involving NCIS.

Key steps

1. On any property transaction make an early check as to the availability of an asbestos survey.

2. Where there is no asbestos survey - lean on the sellers to deliver one.

3. If the sellers will not provide an asbestos survey, discuss the consequences with your MLRO and
     make colleagues aware of the issue and potential impact on timing.

4. Disclose position in a report to NCIS.

5. Receive clearance and proceed with transaction.

To find out more, please contact Stephen Law

Community Infrastructure Levy – your chance to change the law!

Many developers will be aware of the Community Infrastructure Levy, the proposed replacement for the current 'section 106' mechanism for local authorities obtaining contributions to local infrastructure as a condition of granting planning permission for development.

The Government is currently consulting on proposals for the new levy.  Details of this consultation as well as others in relation to various planning matters can be found at http://www.communities.gov.uk/planningandbuilding/publications/consultations, with several of the consultations ending on 23 October.

It is proposed that each local authority will be able to set a tariff or 'charging schedule' of required contributions to local infrastructure (affordable housing, roads and transport networks, open spaces and sports facilities, medical provision, schools and flood defences are all mentioned), and developers will be required to pay contributions based on that charging schedule and the gross internal floor area of the proposed development.

Councils will be required to consult on their charging schedules, and different councils will be able to set different charges, as long as they can be justified by the council to an independent examiner who will have the power to require changes to the schedule if the council has for example not taken a relevant consideration into account.

The developer will have to notify the council prior to commencing development, and payment of the Community Infrastructure Levy will generally be required to be made within 28 days of commencing development.  If the payments are not made, the council will have the power to charge interest and surcharges, and also ultimately stop development until payments are made.

While the current proposals are only at consultation stage, they are likely to give a broad outline of the implementation of the levy.  Developers in particular may want to ensure that their voices are heard as part of the consultation process.  Obviously the amounts required to be paid in connection with developments will not be known until councils set their tariffs, but it is unlikely that contributions will be reduced from current levels as a result of the changes.

To find out more, please contact Graham Dixon

Note: An edited version of Graham's article is also featured in the October 2009 issue of           The Business Magazine - Solent & South Central.

SDLT implications of holding over and rent review clauses

Many leases granted after the introduction of Stamp Duty Land Tax on 1 December 2003 are now expiring or subject to rent reviews, and tenants in particular should be aware of the SDLT consequences of such events.

If a tenant is 'holding over', or remaining in occupation of a property following the contractual expiry date of its lease, the period for which the lease is held over is treated as an extension of the original lease for SDLT purposes.  This may mean that further SDLT is due, or SDLT becomes due where none was payable before.  If further tax is due, the tenant must submit an additional SDLT return and pay any additional SDLT within 30 days of the contractual expiry of the original lease.

If the lease is eventually renewed and the renewal lease is backdated to the expiry of the previous lease, then for SDLT purposes the term of the new lease is treated as beginning on the date to which the lease is backdated, rather than the date of grant of the renewal lease.  Rent payable between the expiry of the old lease and the actual date of grant of the renewal lease may be eligible for 'overlap relief', in order to avoid a double charge to SDLT.

If there is a rent review within the first five years of the term, a reasonable estimate is made of the rent that will be payable after the variation.  At the end of the fifth year of the term, the NPV is recalculated using the actual rent and further SDLT paid, if necessary.  If the lease has been assigned in the meantime, it will be the assignee who is liable.

If a rent review takes place after the first five years of the term of a lease, a new SDLT return is only required where the rent increase is deemed to be 'abnormal', generally where the annual rent has increased by over 20%.  In such situations, the rent increase is treated for SDLT purposes as the grant of a new lease made on the date when the new rent first became payable. The new lease is treated as being granted for consideration equal to the rent increase.

To find out more, please contact Sarah Cardew or Laura Lindsay

Next Property update issue

Please look out for the next issue of our Property update which is due in December.

Coming soon...a new update on property litigation issues

We are launching a new update specifically covering property litigation issues. The first issue, due out next month, looks at dilapidations and outlines how landlords can reduce the risks during the term.

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