Extortionate demands hold us to ransom
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POINTS OF LAW
We own a semi-detached rural property, originally bought from a large estate in the late 1970s, where we have lived for the past seven years. The estate still owns the property next door and has the benefit of a restrictive covenant over our land, ruling out any development without the estate owner’s written consent. There is no mention in the covenant that we should make a payment in exchange for approval. Last year, we decided to extend our house slightly and build a garage on to the side. We discussed the proposal with the estate owner and he said that he had no objection. Later, his agent wrote to us confirming this but adding that we would need to pay £700 to acquire his written consent. The agent also asked for £200 as an “administration fee”, although no details were given. Surely they are not allowed to extort money like this? We feel we are being held to ransom.
David Fleming writes:
Covenants of the nature you mention are quite common. Usually, the land of the person who took on the covenant has long since been sold off and it is difficult to find out who, if anyone, now has power to approve the plans for the work which the owner of the land – the subject of the covenant – wishes to carry out. At least you do not have this problem.
Whether payment can be demanded depends on the construction of the covenant. Fortunately for you, a case called Sims v Mahon, decided by the High Court in 2005, says that in covenants of this nature there is generally an implied term that consent to the works cannot be unreasonably withheld. The judge expressly stated that consent could not be refused on the basis that the covenantee did not wish any building whatever, or could reject plans on grounds unrelated to the purpose for which the power had been given. For example, he could not refuse if he did not like his neighbour or wanted to extract a monetary price for his consent. Accordingly, I think you are justified in refusing to pay.
Having said this, if your neighbour has incurred reasonable professional fees in considering the plans, you would be liable to pay those. Frankly, I do not believe that £200 is an excessive fee for approval of the plans.
David Fleming is head of property litigation atWilliam Heath & Co.
I have a 4m x 3m conservatory which has no central heating and I would like to make more use of it in the winter. To do this, I plan to temporarily fix fire-retardant polystyrene sheets either as a flat ceiling at eaveslevel or as a sloping ceiling under the PVC roof panels. Which would be most sensible?
David Snell writes:
The trouble with many conservatories is that they are really only suitable for occupation during the milder months. At cold times and in the very hottest weather they are uninhabitable. Those that have them are often reluctant to accept these limitations and you get what you are trying to do, a “lash-up” solution that tries, and fails, to turn it into an extension.
Wherever you place this boarding, it will create problems unless it is insulated and a clear gap is left for condensation. That is not easy because there needs to be a clear passage of air from eaves-level to ridge and the construction of most conservatories mitigates against that.
What you suggest is a temporary solution to an intractable problem and you may well find that, even with the boards, the room is still too cold to use without quite a lot of heat being pumped in. Whatever you do, do not connect the heating to the main house system, as your bills will soar. Keep any heating independent and controllable for the times when you use the room.
David Snell is contributing editor to ‘Homebuilding & Renovating’ magazine and author of ‘Building Your Own Home’, available at £25 plus £2.25 from 0870 155 7222.
My local planning department started proceedings against one of my neighbours, who built a construction in their back garden big enough to warrant planning permission and building regulations approval, which they did not seek. Indeed, I understand they have ignored all communication from the planners.
I was advised that an enforcement notice was to be served and that they would have to take it down. However, out of the blue, a manager for the department said he wished to see the construction for himself. On viewing it, he said his department would not proceed with the enforcement action, stating that “he had to be mindful not to misuse public money” and “the fact that they are in breach of planning requirements is insufficient reason to carry on”. Surely this cannot happen?
John Winter writes:
Your neighbour seems an unattractive person and one feels that it would be good for him to get his comeuppance. But the owner has rights as well as the authority. The local council can use its enforcement powers to remove a building erected without consent, but it is not obliged to do so. I do not know what happened when the official visited the site, but one can only surmise that what he saw did not strike him as so seriously wrong that enforcement powers should be used.
Local authorities are hesitant to require the demolition of buildings. They often find the press takes the side of the owner and the local authority becomes unpopular. The local authority is correct in stating that a breach of planning requirements is insufficient reason to require demolition.
John Winter runs his own architectural practice.
My husband and I are separating shortly. We own a property jointly, which is on the market and we are about to exchange contracts with the purchasers. My husband wants to separate without involving lawyers, splitting the proceeds from the sale of the house between us and moving on. There is not much else to divide up except his pension. He is suggesting that he would continue to support me. Both the children are grown up and working. We are both proposing to buy a smaller property with the proceeds of the sale of our current house.
However, what happens a few years down the road when one or both of us decides to sell our new property? I am under the impression that a married couple can get only one relief from Capital Gains Tax (CGT). Since we would still be regarded as married by the law, would we each be entitled to relief if we are living separately?
Maggie Fleming writes:
In the situation you describe, full principal private residence relief would be available on the sale of either or both properties. This is because, for CGT purposes, it is the date of separation that is important, not divorce. You are treated as separate individuals, each entitled to your own qualifying residence, if the marriage has broken down and there has either been a formal separation or circumstances suggest that the separation is likely to prove permanent.
Furthermore, any transfers between you in the tax year of separation are still covered by the inter-spouse exemption. The problem that some couples face is that they reach agreement on the division of their assets in a tax year after separation. As they are separated, the transfers are no longer exempt and, as they are still married, the law treats them until divorce as “connected persons” and deems all transfers to take place at open market value. This can give rise to substantial CGT charges.
It is a worth noting, however, that the rules are different for Inheritance Tax (IHT). For IHT it is only the date of divorce that matters. The IHT exemption for transfers to a spouse, either in life or on death, continues until divorce. These rules now apply to civil partners also.
Maggie Fleming is a director of Isis Financial Planners and a member of the Chartered Institute of Taxation.