Brian Lack Property Guide

Two aspects of property purchase in the UK can confuse those not familiar with the property market here. These are the concepts of leasehold and freehold and the tax implications of property ownership and rental.

Freehold Property

A freehold property is one where the buildings and land are both owned outright.

Leasehold Property

A leasehold property is one where the owner has granted a lease on the buildings (and land) for a fixed period of time, which can range from a few to 999 years.

The purchaser of the leasehold is entitled to the use and occupation of the property for that period in accordance with the conditions specified in the lease. Subject to any applicable statutory protection, the property reverts to the freeholder on expiry of the lease.

The Leasehold Reform, Housing and Urban Development Act, introduced in 1993, gives qualifying leaseholders the right to extend their leases for 90 years or in certain conditions to purchase the freehold.

Much of London's property is leasehold, and values can vary according to the length of the remaining term. The legislation is complex, and purchasers who are concerned with leaseholds are advised to discuss the ramifications with one of our expert directors.

Capital Gains Tax

A person who buys a second property, which is not to be used as a principal or main residence, may be liable for capital gains tax.

A person who is not "resident or ordinarily resident", as defined by the Inland Revenue, in the UK is not liable to capital gains tax on any profit made on the sale of a property, provided he meets the qualifying criteria which include the provision that the property is not the individual's principal or main residence and that the owner does not deal in property. Again, it is advisable to consult your negotiator on this point, should it be likely to affect you.

Income Tax

This may be affected if you let your property and information is available free from our offices.

Council Tax

This is a charge levied by local government authorities in order to finance the local infrastructure and amenities such as collection of waste, street lighting or sports facilities. It is assessed by reference to the value of the property and on the number of people resident in the property. Brian Lack & Co can give you more precise details of the amount of the charge.

Stamp Duty

Stamp duty is payable on the purchase of a property over a certain value and is calculated as a percentage of the full purchase price. Your local office will advise you of current rated and thresholds

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The services of other professionals may also be valuable in the matters of surveying, financing and conveyancing:

Surveys

A buyer of a property may wish to be assured that the buildings are structurally sound. If the property is being purchased through a building society or other institution, they are likely to have their own survey carried out, but such a survey may be restricted to certain criteria stipulated by the financial institution and the information gained may not be conveyed to the individual. Thus many people prefer to commission a survey of their own in order to assess any necessary repairs or structural problems which may not be immediately apparent. Reports of varying nature and depth on the condition of the building, its services and fittings can be provided. In this event, Brian Lack & Co can refer you to suitable chartered surveyors without any obligation on the buyer's part to accept their services.

Finance

Similarly, if finance needs to be arranged for the acquisition of a property, whether for use as a residence or solely for investment, we recommend John Charcol, London's largest independent broker, or Hill Samuel in the Far East, but there is no obligation to accept their services.

Conveyancing

If you are buying or selling a property, you may well wish the formal conveyancing to be carried out with the assistance of a solicitor. This is not essential - conveyancing forms can be purchased from stationers. However, many people fin this too time consuming or the legalities to complex. If you wish to use the services of a solicitor, we will be pleased to give you some names and addresses. Of course this does not prevent you from choosing your own solicitor.

Local Information Links

The following web sites may also be of interest to you...

• London Tube Map
• London Bus Page
• Welcome to London
• Hampstead and Highgate Express (Local Paper)

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