Tips for parents helping their child onto the property ladder

Helping your child onto the property ladder has become a natural and common thing to do these days. 

There is however more to this than simply handing over the cash.  In this article  we look to highlight some pointers which every parent should keep in mind when planning to provide financial assistance. 

The first point, and one which is pretty fundamental, is to consider whether you can purchase the property outright.  If this is not possible then you will need to do some research to find the best mortgage product available.  Lenders are more vigilant than ever during the mortgage application process  and it is therefore essential to be honest about your financial circumstances. Don't exaggerate your income to secure a larger mortgage. If you are helping with a gift and your child is applying for a mortgage make sure they disclose your gift to the lender.  

You may be  advised to make sure you put your names on the title deeds.  You will need to ensure the property is registered at the Land Registry  with you and your children holding as tenants in common.  This means  in the event of the death of one of the owners the deceased’s owners stake in the property will pass in accordance with his or her will.  So make sure you also update your will. Also keep in mind what will happen to the property and your child’s home if you were to die. 

There will if you are named on the title deeds be tax implications so make sure you talk through your plans with a tax expert before you commit. 

If you don't wish to be named on  the deeds then make sure your intention when making the money available is clear.  Is it a gift or a loan? If its a loan will you be charging interest?  

Even though they are your children you will need to seek independent legal advice. See a solicitor and get a legally binding agreement drawn up. To safeguard a loan or investment, make sure it stipulates the nature of any arrangement and steps are taken to ensure the property can not be sold without your consent.  Keep in mind that if you are making a gift and not taking a stake in the property your child’s solicitors will require you to provide evidence of identification and the source of funds which you will be using. 

There are other options available.  You could offer to be a guarantor for your child to get a mortgage.  You could look to remortgage your property.  Its best to explore all options with an independent financial advisor. 

Finally  take care - don’t put yourself in a financially risky predicament by overextending yourself and don't assume that mortgage interest rates will remain at the same level. You shouldn't rely on your current good relationship with your child – things can go wrong. 

MJP Conveyancing are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidp@mjpconveyancing.com

Understanding Leasehold title plans

In October 2014 the Land Registry changed its policy on how it creates Leasehold Plans.

Before the 20^th October the Land Registry looked to replicate the intricate details from the large leasehold plans showing the precise layout of property at a large scale.

The problem with this was that this was often potentially misleading when considering the smaller scale Ordnance Survey maps used by the Registry.  

A review of this practice revealed a variance in approach and for this reason a change in policy was needed to make sure that the focus on the mapping of leasehold floor levels was put back on the lease plan.

The new policy still requires the Registry to show the extent of the land in a lease but when it comes to dealing with larger developments this is more likely to be recorded on the landlord’s title with the tenant’s title plan showing only the outline of the building as shown on the Ordnance Survey Plan

By adopting this new approach the Registry hope it will be easier to understand the position of all the leases granted out of a registered title in relation to each other on one title plan.

Completion of a leasehold floor lever registration, according to the Registry, without any limitation in the extent of other rights, interests demised, guarantees the title granted to the tenant notwithstanding how the red edging on the title plan is drawn.

However these changes in policy will no impact on the results issued on searches of the index map, 0S2 applications and a Map Search.

In practice we will be seeing a change in the note attached to the tenant’s title plan.  This is now likely to record that the land will lie within the area edged red but which is more particularly described in the lease or leases.

None of these changes impact on the need to submit a Registry compliant plan when registering a title for the first time - that is making sure the following requirements are met:

• a site plan showing detail in relation to the Ordnance Survey map

• plans of each floor level

• a recognised scale for both the site plan and the floor level plans

• a North point

• clear edging showing the land demised by the lease. The location plan and the      detailed floor level plan can be separate plans.

The Veyo revolution is a non-starter

I read recently that the Law Society joint venture Veyo intends to bring residential conveyancing into the 21^st century.    A revolution is on its way?  Well, this is what the Law Society would like us to believe.

So much so Veyo has and continues to spend a vast amount of money on its attempt to convince professionals and the homeowner that despite working within the tight constraints of an archaic conveyancing system, which has more or less remained untouched since the average weekly wage was about £5, its online portal with functions to allow a client to communicate with his or her solicitor without picking a phone up, will magically speed up the conveyancing process.

I am not sure whether its naivety or sheer arrogance on the part of those behind Veyo, but one thing is for sure, the product which has yet to materialise, is not, despite the claims to the contrary, a magic bullet to cure what are and continue to be a fundamental flaws with the home selling and buying process as well as the approach adopted by some conveyancers operating within it.

To be fair to Veyo there is a lot to be said for highlighting to some conveyancers that the time is now to ditch the pigeon post, to question whether there really is a need to operate with secretarial staff, and to provide a service which allows online collaboration between conveyancers and online interaction with the client.   

Not only are these changes essential to be able to compete with volume conveyancers they should also, per se, shout out as making complete financial sense.   Conveyancers who are looking to survive the constant onset of challenges must make these changes soon or face extinction.

The claims made by Veyo to the consumer that is holds the answer to the long delays and frustrations some home sellers and buyers experience are disingenuous in the extreme.     Yes, I accept there is a need for an improved and more transparent line of communication between those involved in the process especially with the client, but unless the philosophy and approach towards conveyancing changes no online portal on its own bring about the changes which are desperately needed to ensure both professionals and homebuyers/sellers are able to enjoy a less stressful conveyancing process.

There is no sign that with an election looming of any of any move by the main political parties to bring in changes to the conveyancing process.   The shambles surrounding the introduction and withdrawal of the Home Information Pack debacle has clearly taught politicians that changes to land law and processes is a total ‘no go’ area. There is no political appetite for change and we are therefore resigned to the fact that the system which we have is unlikely to be reformed probably for a further 100 years!

So where does this leave the homebuyer/seller? Is Veyo going to turn out to be the saviour, the consumer champion?   This is their idea though I suspect at best history will show it was the catalyst which the conveyancing industry needed to spark the fuse for long overdue enlightenment.

Veyo and other IT providers can provide the tools to assist the conveyancer to make changes, but what they cannot do is force some conveyancers into adopting the changes in their own processes and approach to work which are required before significant improvement will be seen.

So what is needed to start the revolution?

The starting point is the need to lose the legacy which holds a number of conveyancers back.   Just because it is the tradition do certain tasks in a particular way does not mean that way is the only way or is indeed financially efficient.  For example, we use our own in-house developed software to engage collaboratively with the client and the buyers solicitors when going through the additional enquiry process.  We invite clients and the solicitors to engage in the process.  Significantly we have no trouble with the client but looking to engage the buyers’ solicitors has proved far more problematic.  ‘Can we please ask you to send to us your replies on paper’, is often the response. Others say ‘we are unable to access the replies’, which is often code for ‘ We can’t be bothered to go on line to see the replies!’.

Another legacy is the long flowery letters which the dutiful secretary has painstakingly typed.  Why?  Lawyers should all be capable of writing in succinct and concise terms and what is the point of dictating and having typed information which can be standardised and communicated in template electronic notes? 

How may conveyancers scan their post and other written communication?  The cost of the scanner is reasonable and by operating with an electronic file is not as alien as some may believe. The problem is there is no mind set or ambition to change to explore innovation of this type.

Veyo at the end of the day has the right ambition and reflects the objectives and outlook of my business and many other ‘21^st century’ conveyancing operations, but unless there is a major sea change in the way in which the majority of other conveyancing business are run, the revolution it is promising is unlikely to materialise.   The reality is that Veyo and other innovative conveyancing portals are currently ahead of their time.

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Clients Guide on what to check with their conveyancer when purchasing a leasehold property

You instruct a conveyancer to act and look after your interests when purchasing a leasehold property.   You go to that conveyancer to ensure he exercises the skill and care required to ensure that the property you are purchasing can become a home free of legal issues.  

As part of that due diligence process your conveyancer will send to you information about the lease as well as a copy of the lease for you to read through.   He will if he does his job correctly identify what might be wrong with the lease and what he suggests should be done to sort any problems.

This may all be very daunting and in effort to help you understand what to look for and what to query if your conveyancer fails to cover an aspect I have set out below some ( and it’s not intended to be an exhaustive and comprehensive list )  common points to keep in mind:

Have you been provided with a completed copy of the lease?

Has your copy been signed?

How many years does the Lease have to run?  If the remaining term is under 80 years you should seriously consider pulling out unless the seller is prepared to arrange for the lease to be extended before you purchase.

Does the property description in the lease mirror the property you are looking to purchase.  Check the lease plan against the floor layout shown in the sale particulars.  Take the plan and carry out a physical inspection of the property to check for discrepancies.

If you are told there is a garden and or car parking space then make sure this is included as part of the description of the property you are purchasing.

What parts of the property and the amenities are you required to share with other tenants?

Is there a right to pass to and from the property from the closest public highway? If not you may find that someone else could legally prevent you from accessing the property.

How much is the annual ground rent and service charge – can you afford these remembering they can increase depending on the clauses in the lease and the expenditure incurred by the landlord in the upkeep of the building and communal areas.

Check the rent review clause - the ground rent might only be £250 per annum at the time of purchase but this could by the end of the term be as much as a million pounds per annum!

Is there a management company and if so is it properly run and has accounts to show that it takes its responsibilities seriously.

Is the property adequately insured? 

What are the restrictions on use of the property?  Can you sub-let for instance and if so what conditions have to be met?

Even though the landlord is responsible for the upkeep of the property you should always get a survey undertaken since if there is major work required you and the other tenants will be required to contribute to that cost however much the expenditure might be.

Finally do consider carefully whether a leasehold property is for you  - many conveyancers including myself advise clients not to purchase this type of property unless there are very compelling reasons so to do. 

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

What is the Lender Exchange and how does to provide benefit to conveyancing clients?

The Lender Exchange is a service designed by Decision First to aid communication between solicitors and lenders. It is intended, writes Katie Easter, Trainee Solicitor with MJP Conveyancing, to reduce the risk of fraud by providing a secure portal for exchanging information. 

The lenders currently working with lender Exchange are Lloyds Banking Group, Royal Bank of Scotland Group, Santander and HSBC Bank.

What are the benefits for clients?

The benefits of Lender Exchange include reduced administration which is designed to prevent delays for clients. The system enables lenders to send mortgage offers to solicitors electronically which is much quicker than more traditional post or Document Exchange. At MJP Conveyancing we are well equipped for receiving documents electronically which means that we can deal with documents received through Lender Exchange efficiently.

Mortgage offers are usually accompanied by forms such as Mortgage Deeds which we provide to our clients for their signature. Prior to Lender Exchange it was not uncommon for offers to be sent without these documents which led to delays for clients when solicitors had to request the forms separately. A function of Lender Exchange is to make standard documents such as Mortgage Deeds and Consent to Mortgage forms always available to be downloaded. By downloading forms manually, solicitors can help to prevent delays.

Although clients may be unaware of Lender Exchange, they are benefitting from the system. Waiting for lenders to produce mortgage documents can cause unnecessary stress and delays for clients. Lender Exchange represents a new means of communication which is likely to prevent these delays.  

                

MJP Conveyancing are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk