Residential property law refers to the legislations governing owning, buying, selling, transfer, mortgaging, division and taxation of residential property in UK. Although you can rely on an experienced attorney for interpretation, citizens are consistently encouraged to ensure that they all comprehend the critical basics of the law. It is only by doing so that you’ll understand what the law encompasses, your duties as a citizen in implementing it and how to avoid being on the wrong side of the law.
Where It Applies
The legislations seek to comprehensively address all the primary issues relating to residential property. One of the most critical issues of course, is tenant-landlord relation. The landlord and tenant act of 1954 systematically details the rights of both parties and how they will relate in regards to the property. Before the legislation was enacted, tenants complained of constant harassment from landlords. Landlords reportedly run their properties according to their by-laws, most of which were considered draconian by tenants. Additionally, rent was sorely dictated by landlords who were free to raise or lower them any time they wanted to.
Since its enactment, the relations between landlords and tenants have been streamlined. It protects both parties to avoid disputes and ensure that tenancy is conveniently managed. In case of any dispute, the landlord or tenant is allowed to use a property attorney to file a case against the other party to resolve the dispute on grounds of the act.
Another critical area that is governed by residential property law is the writing and executions of wills involving residential property. The law stipulates how the wills should be written, updated and implemented by relevant parties. This has consequently helped resolve many conflicts involving wills over property in UK courts.
The residential property law has also proven to be vital in the transfer and sale of residential property. It clearly indicates the terms of sale and how the transactions should be handled and conducted. In case of property transfer, the legislation stipulates that this can only be done in the presence of witnesses and evidenced by contracts overseen by commissioners of oaths.
Finally, another important area governed by the residential property law is tax on residential property law. The law not only ensures that everyone is taxed accordingly, but also stipulates the precise rates on different types of properties to ensure that taxes are paid fairly. Wealthy individuals who invest heavily in residential property are required to pay significantly higher taxes compared to mid and low income individuals.
Since wealthy individuals use investment companies to purchase and manage residential property, the law has special requirements for taxes remitted by such companies. According to the law, such property is documented as owned by ‘non-neutral’ persons and is subjected to higher taxes compared to regular property owned by single parties. The ‘neutral-persons’ ‘taxes however, do not have a flat rate. The amount paid depends on the value of the property. If the value of any residential property exceeds 2 Million pounds, it is further taxed according to the special annual tax on developed dwellings. Properties worth less than 2 Million pounds on the other hand, are only required to stamp duty land tax, which is popularly referred to by authorities as the SDLT. The only residential properties exempted from this are ones which have a value of less than £125,000.
The heaviest stamp duty land tax charges on property owned by individuals are levied on residential properties valued at more than £2 Million. While individuals pay a standard SDLT rate of 7% for such property, companies are required to pay 15%, which is more than double. The only tax benefit of owing property through a company is being exempted from inheritance tax particularly for non-UK individuals.
As an investor or property owner understanding the residential property law will therefore help you pay your taxes diligently after assessing the value and type of your property. It will also help you effectually manage property sales and understand the rights of your tenants in case you lease your property.
Nigel Walters is an experienced investment blogger who has a keen interest in property, stocks and investments. He writes for a number of magazine’s and blogs such as innovo property in his spare time.