This week’s Law Society Gazette includes a Warning on Identity Theft, reporting on a case in Bolton where the law firm SK Solicitors says that suspected property fraudsters or money launderers have been using fake notepaper to pose as and transact in the name of the firm.

Creating fake headed notepaper on a PC is a simple task. In the article, Law Society chief executive Desmond Hudson warns solicitors to ensure that they check the identity of a firm with the Solicitors Regulation Authority if they have concerns. Of course, checking on the SRA website will only confirm that the law firm with whom you are apparently dealing does indeed exist, as does the solicitor apparently on the other side of the transaction. It will not reveal that the person with whom you are dealing is an imposter. Lawyers need to look further for signs of fraud. The Law Society’s Practice Note on Mortgage Fraud warns that “Some fraudsters will try to assume the identity of professionals who actually exist. You should check that both the details and the final destination of documents match the details in the directory. You may consider contacting the firm directly by the contact details on the registry if you have concerns about the bona fides of the representatives on the other side to the transaction, particularly if there is a last minute change of representative.” Conveyancers should also be particularly vigilant in relation to email addresses that appear at odds with the firm’s name. Questions should be raised where a conveyancer uses a commercial email account (e.g. hotmail, yahoo, btinternet) that is not associated with the firm’s domain name, or name generally.

In Day & Anor v Hosebay Ltd [2010] EWCA Civ 748 (an appeal conjoined with Howard de Walden Estates Ltd v Lexgorge Ltd) Lord Neuberger MR has disagreed with earlier comment he himself made regarding what constitutes a “house” for enfranchisement purposes under the Leasehold Reform Act 1967, but has kept the door open for individual and corporate enfranchisements claims in relation to buildings such as town houses, now used for office purposes, but not sufficiently adapted away from residential design.

As forewarned in this month’s CPI Update, the Government has now made final The Competition Act 1998 (Land Agreements Exclusion Revocation) Order 2010 which revokes The Competition Act 1998 (Land Agreements Exclusion and Revocation) Order 2004 (SI 2004/1260) with effect from April 6, 2011.

The original 2004 Order excluded land agreements from the prohibitions on anti-competitive agreements imposed by section 2 of the Competition Act 1998 – known as the “Chapter I Prohibition”. By revoking the exclusion, land agreements will soon come within the Chapter I Prohibition in the Competition Act 1998. If an agreement falls foul of the Chapter I Prohibition, it will be unenforceable. Land agreements such as covenants restricting use after a sale, or developer-landlord agreements to restrict use of certain parts of new developments, or lease restrictions protecting a landlord tenant-mix policy may need to be looked at in the light of the Chapter I Prohibition.

The OFT says that it will publish guidelines this autumn on the application of the Competition Act to land agreements to assist businesses in the self-assessment of their agreements.

The Mortgage Repossessions (Protection of Tenants etc) Act 2010 (Commencement) Order 2010 brings
The Mortgage Repossessions (Protection of Tenants etc) Act 2010 into force on October 1, 2010.

This Act protects residential tenants of repossessed properties where a borrower had let the property without having obtained the lender’s consent. In such circumstances, the Act allows a district judge to delay repossession of the property for up to two months, to give the tenant time to relocate.

Under section 1, if a mortgagee, under a mortgage of land which consists of or includes a dwelling-house brings an action (other than an action for foreclosure) in which the mortgagee claims possession of the mortgaged property, and there is an unauthorised tenancy of all or part of the property, then when making an order for possession, the court may, on the application of the tenant, postpone the date for delivery of possession for a period not exceeding two months. Further, a tenant may apply to court to postpone the execution of a possession order for an equivalent period. Section 2 of the Act prevents the execution of an order for possession without notice first have been served at the property.

The July/August 2010 edition of the Commercial Property Information Update is published today on this website.

We will not be getting to hear the views of the Court of Appeal on the fundamental issues of guarantor liability under the 1995 Act considered by the High Court in Good Harvest Partnership LLP v Centaur Services Ltd [2010] EWHC 330 (Ch).

Christian Metcalfe's EG Property Blog reports (see "AGA saga case settles - Landlords harumph" that the case has settled this week out of court.

So we are left with the High Court's decision in this case - although that is not necessarily an incorrect view of the unsatisfactory workings of the 1995 Act. Debates will rage on...

VAT rate changes have been frequently encountered in recent times - from 17.5% to 15% to 17.5% and now again (on January 4, 2011) to 20%. Detailed analysis of the property implications of the rate change will appear in this month's CPI Update later this week. The rate change impacts on rental payments, rent deposits, SDLT calculations, contract deposits and completion balances. HMRC guidance on the effects of the rate change in all walks of life can be seen at the HMRC website under the heading Increase in the standard rate of VAT to 20 per cent.

VAT and Property
12.30pm, Monday 28th June 2010
Whether or not George Osborne raises the current rate of VAT this week, a review of how VAT affects property transactions is always essential. This online seminar will cover:
- What is standard-rated, what is exempt, and what is zero-rated?
- What are the principles of charging VAT, and how do VAT rate changes affect transactions?
- How does the option to tax work following the June 2008 changes?
- How does VAT affect rents, service charges, costs payments, rent-free periods, reverse premiums, inducements?
- What is a TOGC and what is not?
- How does VAT affect road dedications, section 106 agreements, overage agreements, options to purchase, easements and covenants?

If you wish to join, use the contact button above.

For all online property seminars, see http://propertypsl.webex.com/

HMRC has a section on its website called "Spotlights". HMRC says that, in Spotlights, it will "Provide some advice on tax planning to be wary of, listing some indicators that we see as suggesting that a scheme may involve tax avoidance and which we are likely to investigate."

One of the tax planning schemes HMRC places in the spotlight is sub-sale relief. SDLT sub-sale relief, or, rather, sub-sale treatment of property transactions, is available under sections 44 to 45 of the Finance Act 2003 (as amended). In general terms, SDLT treatment is achieved through the simultaneous completion of the main contract and the sub-sale contract, sometimes by way of a direct transfer from top to bottom, but often also by way of simultaneously completed transfers from top to intermediate buyer, and from intermediate buyer to sub-buyer. HMRC warns however against the abuse of sub-sale treatment where "an intermediate sale, often on the same day, is introduced into the arrangements with the sole intention of removing the true purchase price from tax." Artificial sub-sales at a lower price had been used in the early days of SDLT as a means of tax avoidance. However, since December 2006, such avoidance devices have run up against the very wide anti-avoidance provisions now to be found in section 75A Finance Act 2003 which was introduced in part to ensure that a sub-sale arranged at a price lower than the main contract price would be charged to SDLT at the higher price.

HMRC says that "Where HMRC find property sale arrangements that have been artificially structured to avoid paying the correct amount of SDLT these will be actively challenged, through the courts where appropriate."

There are only three days left to listen again to last Friday's You and Yours programme on Radio Four, but in this programme - see http://www.bbc.co.uk/programmes/b00slb1k#p0089w07 - there is an interesting discussion of the possibility of an affordable housing developer having to demolish houses on land that becomes registered as a town or village green after development has commenced. Is this the right outcome? DEFRA thinks so. Its published view of the position is as follows:

“What happens if a landowner decides to develop the land before an application for registration is made? It is for the landowner to decide whether to go ahead and develop his land. In the vast majority of cases, the landowner will know whether the past use of the land is capable of supporting a claim for registration as a green, and may act accordingly. In those cases where doubt may arise, section 15 ensures that the landowner may confidently proceed without risk of an application two years after any use of the land has been effectively challenged (as a transitional measure, a period of up to five years will apply from 6 April 2007 in relation to any effective challenge made before that date).

The courts have ruled that land does not become a green until it is actually registered, and the 19th century statutes protecting greens are unlikely to apply to works or encroachments that were made prior to registration. However, if building work has gone ahead and the land is subsequently registered, it seems that the local inhabitants will have recognised recreational rights over the land and it may be that the courts will have to determine how such rights can lawfully continue to be exercised where the works interfere with such use. Depending on the circumstances it is, in our view, possible that the building works would eventually have to be removed.”