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Is a payment for dilapidations to be treated as an income or capital receipt?

Authored on September 14th, 2017

Virtually all leases have clauses which stipulate that when the lease comes to an end, the tenant must leave the premises in the same condition as they were in when they entered them, and the negotiations over the termination of a lease will often involve a payment by the outgoing tenant to take account of the dilapidations.

In principle, the payment from the tenant to the landlord is to put the landlord back in the position it was in at the commencement of the lease: restoring the asset (the leased premises) to its former condition.

Furnished holiday lettings under tax attack

Authored on September 14th, 2017

The United Kingdom has very favourable Inheritance Tax (IHT) treatment for the owners of business assets used in a trade and, in general, the value of these will be outside the charge to IHT on death provided certain criteria are met.

The IHT relief available on business assets is called Business Property Relief (BPR), or Agricultural Property Relief in the case of agricultural assets. It is only available for assets used in a trade, not those used to generate investment income, such as the letting of land.

Tenant fails in asbestos claim

Authored on September 14th, 2017

Decades after the dangers of asbestos were first recognised, the substance has still not been eradicated from some buildings constructed in the 1960s or earlier. A High Court case that should be required reading for residential landlords underlined that the risk of asbestos exposure remains a ticking time bomb even today.

Restrictive covenant prevents development of bungalow

Authored on September 14th, 2017

Planning permission is usually all that you need to turn your development plans into reality – but not always. In one case, a restrictive covenant enshrined in title deeds before the Second World War was enough to defeat proposals for a new bungalow.

Landlord’s Motivation on Redevelopment Lease Renewals is Irrelevant

Authored on August 21st, 2017

A recent case decided by the High Court will (if not overturned on appeal) have potential implications for some commercial tenants seeking renewals of their tenancies.

It involved a dealer in textiles that occupies areas in the ground and basement floors of London’s Cavendish Hotel and which wishes to renew its tenancy relying on the security given by the Landlord and Tenant Act 1954, which gives such tenants the right to renew their tenancies except in certain circumstances.

18 Month Rule Applies to Service Charges Demanded on Account

Authored on August 21st, 2017

When it comes to issuing service charge demands, landlords must stick to the letter of leases or risk recovering nothing at all – even if that results in tenants receiving an unwarranted windfall. The Court of Appeal made that point in relieving a residential tenant of liability to pay service charges over a four-year period.

Prescriptive Rights of Way – The Absence of Permission Is Vital

Authored on August 21st, 2017

Rights of way across the land of others can become established if they have been used openly and without force for at least 20 years. However, such use must also be without permission and, as one case showed, that can often prove a sticking point.

The owners of land on which a workshop stood claimed a vehicular right of way over an adjoining yard. The First-tier Tribunal (FTT) found that the yard had been used as a means of vehicular access to the workshop for the required 20-year period.

Student Bedsits Are Not 'Separate Dwellings'

Authored on August 21st, 2017

In a decision of great importance to landlords of student accommodation, a tribunal has found that bedsits with communal facilities are not separate dwellings. The ruling meant that the tribunal had no power to consider an attempt by a group of students to have their service charges fixed by law.

Property damage – on what basis should compensation be calculated

Authored on July 16th, 2017

Where works carried out on one property damage another, should compensation be payable on the basis of reinstatement costs or diminution in value? The High Court tackled that issue recently.

The owner of a house had obtained an award under the Party Wall etc. Act 1996 that authorised a building project, including excavation works. The award required the owner to make good any decorative or structural damage caused to a neighbouring property, a block of flats, or to make payment in lieu.

Commercial landlord punished for failing to arrange building insurance

Authored on July 16th, 2017

Commercial landlords usually bear the burden of arranging building insurance and any failure to do so can expose all concerned to the risk of catastrophic loss. In one case, a landlord who failed in that duty received a stiff fine for breaching a High Court order.