Fire and ice – Spring budget
Personal taxes were largely frozen in the March budget, but rural businesses may benefit from a range of incentives and reliefs which the Chancellor hopes will help ignite the economy. Front runners include the extension of the VAT reduction for the hospitality sector, the ‘super-deduction’ rate for capital allowances and an increased ability to carry back trading losses. Click here for our budget summary.
Carry on camping
In anticipation of a large increase in English ‘staycations’ this Summer the Government has relaxed planning regulations, until the end of the year, to allow temporary campsites for 56 days instead of the usual 28. Might this make a campsite on estate land financially attractive? Little capital input will be needed but a local authority site licence might be required, individual circumstances may mean permitted development rights are overridden and you will need to give careful thought to which moveable structures are on what land and when. You may also wish to bear in mind the salutary lessons of Ed Perkin’s article ‘What to do when the media storm hits’.
Permitted development opportunities
Do you have redundant office buildings on the estate? Under recently granted permitted development rights a detached building that was in existence on 12 March 2020 and used as an office may now be able to be demolished and replaced with a single, purpose-built, detached dwelling house. These new rights can make redevelopment easier but are subject to many restrictions.
Permitted development rights also now allow an additional storey to be added to a dwelling house if it is a single storey building or up to two storeys if it already has two. Will this work in practice? Again, there are many rules and restrictions. For instance, the dwelling’s location, say in an Area of Outstanding Natural Beauty, may disqualify it. Rules provide for the maximum height of the roof. A prior approval application will need to consider the impact on neighbours. Detailed investigation is essential.
The Electrical Safety Standards Regulations 2020 began applying to existing tenancies from 1 April 2021 (new tenancies having been subject to them since last Summer). They affect tenancies of less than seven years (and 7 - 21 years with a break in the first seven) which grant a right to occupy as a main home and which charge a rent. Landlords must arrange for testing before the tenancy starts (and then at least every five years), provide the report of that inspection to the tenant, arrange remedial work within 28 days and ensure the latest wiring regulations are met throughout the tenancy. Landlords of farm holdings may find their obligations under the Regulations (in relation to the main farmhouse) in conflict with the provisions of an FBT which places these responsibilities on the tenant. Some farm tenants may be surprised to find they too have responsibilities under the Regulations (in relation to underlet farm cottages).
Stamp duty land tax
In an attempt by the Government to improve the affordability of housing, a new stamp duty land tax (SDLT) surcharge now imposes on non-UK residents an extra two per cent of SDLT on the purchase of residential property. The complexity of SDLT has increased once again and many questions spring to mind: exactly which purchases does the surcharge apply to, when does it take effect and how is residency determined? Charlotte Black’s article addresses all these questions and more.
There remains a brief window to take advantage of reduced SDLT for a purchase of residential property as the full benefit of the ‘stamp duty holiday’ granted at the start of the pandemic (which increased the nil tax threshold to £500,000) will now end on 30 June 2021. The threshold will then reduce to £250,000 on 1 July before returning to £125,000 on 1 October.
Residential evictions still on hold…
Whilst residential possession claims may now be issued, and pre-existing claims reactivated, evicting a residential tenant remains beyond the reach of most landlords. A review hearing is now required before a substantive possession hearing and a landlord must provide evidence of the impact of the pandemic on their tenant. Even then, save in limited situations such as at least six months’ rent being unpaid, possession orders cannot be enforced so it remains unlawful to evict most residential tenants and will be so until at least 31 May 2021.
… and commercial landlords similarly constrained
The Government has, again, extended the moratorium on forfeiture of commercial leases to 30 June 2021 preventing a landlord from effecting re-entry or forfeiture for non-payment (whether or not for a coronavirus related reason). Likewise, restrictions on the use of Commercial Rent Arrears Recovery have been extended to the same date after which it is due to revert to the pre-coronavirus threshold of seven days’ rent. Further ahead, the Government intends to conduct a review of a broad range of commercial landlord and tenant legislation including “the Landlord & Tenant Act 1954 Part II, different models of rent payment, and the impact of coronavirus on the market”.
If you require further information about anything covered in this briefing, please contact James Maxwell or your usual contact at the firm on +44 (0)20 3375 7000.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, April 2021