Nightmare on Elm Street

If there’s something strange in your neighbourhood, who ya gonna call?” Peter, Ray, Egon? What about your solicitor? Upon purchasing a property, it would be unsettling to discover an unexpected house guest at your new abode. Some buyers may consider it a “treat” and invite the presenter of “Most Haunted” to visit their home, creating a tourist attraction, and maximising financial return from human curiosity. I imagine that the majority of buyers however would want Casper to leave immediately, however friendly he may be.

Does the buyer have any comeback against the seller of the property? One may argue that “vacant possession” has not been granted. However, a seller has limited control over the presence of a ghost, in the same manner as they have limited control over an unwanted house burglar.

The onus is upon a buyer to satisfy themselves on the heritable property that they are about to purchase. Lawyers use the term “caveat emptor”, meaning “buyer beware”. During a property transaction this implied legal position is varied according to the terms of the contract (“the missives”) entered into between the parties. It is standard to include a condition that the seller will warrant that, so far as they are aware, there are no structural issues with the condition of the property or timber problems such as wet rot, damp, or infestation. Where problems are disclosed, either by the seller in the Property Questionnaire or indeed by the surveyor in the Home Report, the solicitor will recommend that the buyer instructs a specialist contractor to inspect the property and provide advice on any issues noted and the estimated costs of repair. There is no requirement within a standard contract to disclose the presence of paranormal activity and I have yet to see an additional clause added to a contract by a purchasing agent. However, one of my colleagues has read a clause within a Home Report highlighting that there was local knowledge that the property had a history of things that go bump in the night.

Under the Consumer Protection from Unfair Trading Regulations 2008 there is a duty of care upon estate agents to advise potential purchasers of any material information that would affect an average person’s decision to purchase a property. Of course a seller could argue that they were not aware of the spooky presence and that they do not have the “Sixth Sense” of the buyer and therefore it may be difficult to prove otherwise.

The responsibility remains with the buyer to ask the pertinent question of the seller at the time of offering for the property. In the same light, as asking if any of the neighbours partake in a seasonal National Lampoon’s Christmas Light exhibition on the exterior of their house.

Happy house haunting hunting!

Joanne Grimmond
Partner – Property

 

Land and Building Transaction Tax

Following on from previous blogs regarding the LBTT, which comes into force on 1 April 2015, I would advise that the Scottish Government has now released the rates and bands.  As readers of previous blogs will know, the LBTT replaces Stamp Duty Land Tax in relation to transactions involving land in Scotland.  The LBTT is a progressive tax which means that slices will be taxed at different rates depending on the bracket they fall into, very much like Income Tax, rather than SDLT which was a slab tax. 

I would advise that the residential and non-residential rates are as follows:-

Residential Rates

Purchase Price up to £135,000 – LBTT Rate – 0%

Above £135,000 to £250,000 – LBTT Rate – 2%

Above £250,000 to £1m – LBTT Rate – 10%

Above £1m – LBTT Rate – 12%

Non-Residential Rates

Purchase Price up to £150,000 – LBTT Rate – 0%

Above £150,000 to £350,000 – LBTT Rate – 3%

Above £350,000 – LBTT Rate – 4.5%

I have been advised that the price at which SDLT and LBTT produce the same liability on a residential purchase is £324,285, with prices below that amount seeing a saving under the new rates, whereas prices above that level will be taxed more.  For interest, a purchase at £200,000 would currently generate a SDLT charge of £2,000.   Under the new regime, this will incur a charge of £1,300.  On the other hand, a purchase of £500,000 currently attracts an SDLT charge of £15,000 but under the new rate this will be £27,300.  In relation to commercial transactions, the point at which LBTT exceeds SDLT is a purchase price of £1.95m.

Whilst I welcome the introduction of a progressive rather than slab tax, I am concerned that the rates are onerous and will have a more extreme negative impact than the positive impact that will apply mainly for purchases between £130,000 and £250,000.   I would have preferred to see more bandings with a more gradual rate of increase.  I suspect that the new LBTT will have a significant impact in slowing down the mid-market purchases and I hope that the Scottish Government review these rates and banding levels sooner rather than later.

Lindsay Darroch
Partner & Head of Property

Scottish EDGE 2014

I am delighted to support Scottish EDGE which is a Dragon’s Den style competition for ambitious entrepreneurs who wish to grow their businesses.  EDGE stands for “Encouraging Dynamic Growth Entrepreneurs”.   Companies that demonstrate the most potential can win awards of up to £100,000 and access additional support for their business.   I have been involved in the judging round which entailed going through applications and listening to presentations and then judging accordingly.  It was a very intellectually rewarding and inspiring experience.  I am looking forward to the final round of the competition in early December when the finalists will make a pitch to a panel headed up by Sir Tom Hunter, with the winner being announced on the night.  There is also a young EDGE category specifically for those budding entrepreneurs in the 18 to 30 age group.  For more information, I would refer you to the Scottish Enterprise website.

Lindsay Darroch
Partner and Head of Property

Scottish Investment Forum

 
I spent a very interesting and informative day at the UK Property Professionals Scottish Investment Forum which was hosted at the stunning DWF offices at the Walkie Talkie building in Fenchurch Street, London.
 
UKPP had brought together a very impressive panel which consisted of Sue Bruce, the Chief Executive of Edinburgh Council; Anne Murray from Glasgow Council; Simpson Buglass, a Partner at Graham & Sibbald; Tim Allan, CEO of the Unicorn Property Group and David Lockhart, CEO of New River Retail. 
 
The first four speakers each presented the case for investment within their own city and this was followed by an open session with questions from the audience. It was great to see so many people in London interested, directly or indirectly, in investing in the Scottish property scene. 
 
Here at Blackadders, where we are currently east coast dominant with offices in Aberdeen, Dundee, Edinburgh, Perth, Forfar and Arbroath (watch this space for further westward expansion!), we pride ourselves in being involved in property transactions throughout the whole of Scotland for clients based throughout the world. It was therefore very interesting for me to hear the different views and ambitions in relation to the Scottish property investment scene.  I was particularly proud to see my home city of Dundee represented at such an august event and although I have seen the digital video of the Waterfront development several times, I still find it very impressive and extremely exciting for Dundee.
 
I am very much of the view that property investment, both residential and commercial, will  continue to attract an ever increasing amount of interest now there is post Referendum certainty and the economy continues to improve.
 
Should anybody wish to discuss property investment matters or require more information about UK Property Professionals then please do not hesitate to contact me.
 
Lindsay Darroch
Partner and Head of Property

ASSOCIATION OF SCOTTISH BUSINESS WOMEN – AWARDS DINNER 2014

I had a very enjoyable evening at the ASB National Business Awards Dinner 2014 last Friday.  The Awards Dinner was very enjoyable and afterwards I had the privilege of presenting the ASB Employee of the Year Award to Samantha Stewart of Clean Bee.  It was great to see so many individuals and businesses recognised for their contribution and a big congratulations to all those who took part. 

I would also like to congratulate the organising committee for a very enjoyable dinner and a special well done to Lynne Duffus who ensured that the evening crackled along with fun and good spirits.

The above photo shows all of the Judges that were presenting an Award in the evening.

Lindsay Darroch 
Partner – Head of Property