A leasehold interest is considered a “wasting asset”: its value will almost always reduce over time and will eventually revert to the landlord. Until now, an individual’s right to a lease of their flat, has been governed in the main by the Leasehold Reform Housing and Urban Development  Act 1993. A leaseholder has been compelled over the passing of time to request a longer lease in order to increase/preserve value in the flat. The 1993 Act offers  a term equal to the unexpired term of the existing lease plus a further 90 years, at a premium to be determined usually between the landlords and tenants valuers based on both negotiation and valuation principles prescribed by law, and  at a peppercorn (nil) rent, otherwise on the same terms as the existing lease subject to certain exceptions.

But with the advent of the long-awaited Law Commission Report issued last year, all this was set to change. The impetus behind the reform was the sense that the current system was “unfair”, “uncertain”, “too expensive” and “complicated”. It is made all the more significant when one considers that it is estimated that “there are over 4.2 million leasehold properties in England alone, comprising 18% of all housing stock. Indeed,  other estimates, suggest that there are far more leasehold owners than these statistics suggest.

Earlier in the year, housing minister  Robert Jenrick’s  made an announcement bringing the reforms back into sharp focus. In the wake of this  many leaseholders and landlords alike will have been left wondering how to respond to or deal  with their leasehold assets, whether on the landlord or tenant side of the coin.

Leaseholders may think they should hold off extending their lease until the law reform comes into before parliament and gets enacted in legislation. The important point to note however is that not only is the precise timescale for the proposed reforms uncertain, the reforms are also likely not going to affect all leaseholders equally, and therefore a “one size fits all” approach is not appropriate.

The proposals for all residential units are as summarised as follows:

• Abolish the two year ownership rule, allowing any leaseholder to apply for a lease extension, instead of waiting until they have owned their property for two years when the premium will have likely increased.
• 990 year extension. The landlord will retain the ability to take back the property on the grounds of re-development in the last 5 years of every 90 year period, subject to certain requirements.
• New right for leaseholders with very long leases or onerous ground rents to buy out their ground rent or long leases separately rather than having to do both.
• Marriage value, currently payable on leases less than 80 years, which assumes that the value of one party holding both the leasehold and freehold interest is greater than when those interests are held by separate parties, is likely going to be removed from the premium calculation although this is not yet 100% certain.

Broadly speaking, this places  leaseholders into three following camps:

1. Leaseholders who may not necessarily be impacted in a huge way by the reform and may consider carrying on as normal for the time being in making new claims and progressing with existing ones;
2. Leaseholders who see some clear benefit in holding off for a while at least until things become clearer with regard to this new regime that’s being proposed;
3. Leaseholders who fall in between camps 1 and 2

Which camp any given leaseholders fall into varies depending on the precise length of lease, value of property, level of ground rent and personal circumstances. For example, if you have a  lease of over 80 years and ground rents are not massively onerous, there may not in fact be a huge material benefit save for fees savings, when considering the fact that the premium is getting greater over time it will take to get the reforms through. Equally, in a lease under 30 years the reversionary value has the most impact in determining the premium due and therefore it is unlikely that the abolition of marriage value will have a huge impact when balanced against the rate of ever increasing reversionary value over the effluxion of time.

What is safe to say is that a leaseholder can only really determine whether or not it is worth extending now or later by engaging specialist valuation advice and legal advice.

If you are a freeholder or leaseholder and would like advise on this issue and the potential impact on you please do not hesitate to contact Gary Green of our Property Department on 020 7625 6003 or email her at g.green@fgdlaw.co.uk

As examined in Part 1 of this Series, one of the factors the Court must have regard to when exercising its powers to make Financial Orders on Divorce, is the “duration of the marriage”.  In cases where the marriage has been extremely short, the Court may order no financial provision at all: whereas, after a lengthy marriage the starting position will be to divide everything equally.

This is an approach that most people would agree with, but inevitably it is not always that simple.  You might assume that a marriage lasting just a few years would be treated as a short marriage, but that may not necessarily be the case if the parties have lived together before ‘tying the knot’.

In the case of GW v RW (2003) EWHC 611 (Fam) the Judge stated:

“I cannot imagine anyone nowadays seriously stigmatising pre-marital cohabitation as “living in sin” or lacking the quality of emotional commitment assumed in marriage.  Plus, in my judgment where a relationship moves seamlessly from cohabitation into marriage without any major alteration in the way the couple live, it is unreal and artificial to treat the periods differently.  On the other hand, if it is found that the pre-marital cohabitation was on the basis of a trial period to see if there is any basis for later marriage then I would be of the view that it would not be right to be included as part of the “duration of marriage”.”

A marriage lasting just a few years that is preceded by 10 years of seamless cohabitation would therefore be treated as a long marriage.  This can have a significant impact on the financial orders made, as not only will a Court start from a position of equality between the parties, but the property and wealth accrued during the 10 years of cohabitation will also be treated as forming part of the marital pot to be shared between them.

The duration of the marriage is just one of many factors to which the Court must have regard.  The Court is also required to give first consideration to the needs of any child(ren) of the marriage and also to take into account all the circumstances of the case.  Therefore, in most cases, the duration of the marriage is unlikely to be a determinative factor in the Court’s decision-making process, particularly if there are insufficient assets to meet the parties’ needs.

If you would like advice on this newsletter or family issues generally, please do not hesitate to contact Priya Dhokia of our Family Department on 020 7625 6003 or email him at p.dhokia@fgdlaw.co.uk

As examined in Part 1 of this Series, one of the factors that the Court takes into account when making Financial Orders is the standard of living enjoyed by the family before the breakdown of the marriage.  This factor was explored in the recent case of AF v SF [2019] EWHC 1224 (Fam).  In this case the parties started cohabiting in 2002, married in 2004 and separated in 2017.  They had two children together aged 14 years and 12 years.

The wife gave up a good career to care for the parties’ children.  The wife petitioned for divorce and made an application for financial remedies.

The family wealth was derived very substantially from the husband’s family.  It was held in a trust structure of which the husband and other family members were life tenants.  His notional share was £106 million.  The trust fund generated a very significant income for the husband, likely to be £1.19 million per annum over the next 5 years.

The parties had accordingly enjoyed a high standard of living during the marriage.  The husband had £5.5 million of non-trust assets, some of which were needed for legal costs.  The wife had funds of £215,513 and a small pension.

The wife asserted her needs at the rate of almost £19 million, with an annual budget of £352,992.  The husband offered £2.88 million.

The Court awarded the wife £7 million, including the former matrimonial home and a lump sum of £4.25 million, of which £1.75 million was to come from the funds frozen in the husband’s accounts and the remainder to be paid over 5 years with the wife to receive additional reducing maintenance over that period.  The wife’s reasonable income needs were assessed to be £175,000 per annum, rather than £352,992.

The Court concurred that the standard of living during the marriage is a relevant consideration, but it is not a lodestar.  It was noted in this case that there needed to be consideration given to whether the standard of living was excessive, particularly if there was overspending.  It was also noted in this case that the parties cannot expect to live at the same standard completely as during the marriage but that of what is reasonable.

If you would like advice on this newsletter or family issues generally, please do not hesitate to contact Panay Vassiliou of our Family Department on 020 7625 6003 or email him at p.vassiliou@fgdlaw.co.uk

There has been considerable debate about whether or not employers can force their employees to take the COVID-19 vaccine. Pimlico Plumbers recently announced that they intend to modify their employment contracts to include a requirement that all new hires must be vaccinated against COVID-19.

The debate raises important legal questions that employers and lawyers will have to get to grips with over the coming months – can employers force employees to take the vaccine? in other words is it a case of no jab, no job?

Looking at it from a commercial point of view, Pimlico Plumbers say that the policy would go a long way to protect their customers and that when offered the choice, customers would rather have someone who has been vaccinated, enter their homes, than someone who has not been vaccinated. Consequently, having vaccinated employees could promote customer confidence and give the company an edge over its competitors.

From an employer’s perspective, they say that they have a duty of care towards safeguarding their employees and that the introduction of this new policy would merely fulfil their legal obligation during the global pandemic.

However it is not as simple as this. Although legally, there is nothing to prevent employers from inserting a ‘no jab, no job’ clause in employment contracts, for new hires, employers cannot currently force existing employees to take the vaccine. So the introduction of this new policy could carry great risk for employers.

Ultimately employees are entitled to refuse the vaccine for all sorts of reasons, which for example include religion or belief, pregnancy, disability or other medical grounds. Employees may be able to bring legal claims where such rights are denied.

Pimlico Plumbers have said that in relation to existing employees, they are not putting anyone under pressure, to have the vaccine and that most of their employees approve the policy. The firm has even offered to pay for private vaccinations (when available) and travel costs, in order to safeguard their employees and have said that this would be done during the firm’s own time, an approach which has been welcomed by existing employees.

Whilst businesses appear to be seeking ‘no jab, no job’ contracts, the safest option for employers, at the moment, is to promote the vaccine roll-out and incentivise employees to take it, rather than forcing or pressurising them to take it.

If you have any queries about this issue or other employment matters, please contact Raj Dhokia in our Employment Department by telephone 020 7625 6003 or by email r.dhokia@fgdlaw.co.uk

Clients regularly will ask and seek advice as to how the assets of the parties’ marriage will be divided.  When deciding what Orders to make, the Court has a very wide discretion. Whilst the starting point is an equal division of the assets, the courts can depart from equality, by taking into account a number of factors.  By Section 25 of the Matrimonial Causes Act 1973, all the circumstances of the particular case must be taken into account and first consideration must be given to the welfare of any minor child of the family who has not attained the age of 18 years.

Section 25 directs the Court to have regards to the following matters:

• The income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future (including any benefits under a pension scheme which a party to the marriage has or is likely to have), including in the case of earning capacity, any increase in that capacity which it would, in the opinion of the Court be reasonable to expect a party to a marriage to take steps to acquire;

• The financial needs, obligation and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

• The standard of living enjoyed by the family before the breakdown of the marriage;

• The age of each party to the marriage and the duration of the marriage;

• Any physical or mental disability of either of the parties to the marriage;

• The contributions which each of the parties has made or is likely in the foreseeable future to make, to the welfare of the family including any contribution by looking after the home or caring for the family;

• The conduct of each of the parties if that conduct is such that it would in the opinion of the Court be inequitable to disregard it.

• In the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit (for example, a pension) which, by reason of a dissolution or annulment of the marriage, that party will lose the chance of acquiring.

Therefore, as can be seen there are many factors that the Court needs to consider, and each case will need to be assessed having considered the parties financial resources in order to advise clients.

If you would like advice on this newsletter or family issues generally, please do not hesitate to contact Priya Dhokia in our Family Department on 020 7625 6003 or email him at p.dhokia@fgdlaw.co.uk

In line with government guidelines regarding COVID-19 Freedman Green Dhokia are mindful of protecting the health and safety of their employees, clients and partners. Our lawyers are however available electronically and on the phone to continue working on existing cases and to provide the advice you require. They can be contacted on the office number – 020 7625 6003 – or by email at info@fgdlaw.co.uk.

Solicitors acting in connection with the execution of Wills and in the administration of justice (e.g. Court and Tribunal hearings ) are deemed ‘key workers’.

During these difficult times instructions for your Wills can be taken via email to facilitate the process. When clients have approved their draft Wills the engrossed Wills will be sent to them with directions for signing. The firm may have up-to-date ID for existing clients, but for new clients we would at this time accept scanned copies of their ID .

Do not hesitate to contact Iain Monaghan to do or amend your Will by telephone 020 7625 6003 or by email: i.monaghan@fgdlaw.co.uk

Thank you for your support and understanding in these unprecedented times. We are keen to continue providing you with the exceptional level of service we are renown for and hope you and your families will keep safe and well.

IR35 – designed to assess whether a contractor is genuine or a “hidden” employee for tax purposes – is currently highly topical as the rules that have been in force in the public sector since 2017 will apply to the private sector from 6th April 2020.

There has been some confusion , with media reports showing high profile personalities ‘losing IR 35 tax tribunal case’ such as TV presenter Eamonn Holmes (see https://bit.ly/2PyA7YF) to former financial secretary to the Treasury, David Gauke, saying ‘IR35 won’t be watered down’ (see https://bit.ly/39kkRGA), and now comments that ‘Government confirms ‘light touch’ tax rollout’ (see https://bit.ly/2T57F2T).

We hear alarming news of businesses removing their contractors, outsourcing abroad and projects about to come to a standstill…

Before panic sets in, whether you are an employer, contractor, recruitment agency or umbrella company it is important that you are clear whether the rules apply to you or not, and what you need to do next.

IR35 rules will apply if a business meets 2 or more of the following conditions:
– turnover above £10.2m
– employing more than 50 people
– balance sheet above £5.1m.

If you run a small business, you can probably relax.

In general, a contractor should be fully independent, have a right of substitution and does not work under the client’s direct supervision. It is well worth taking the CEST test on HMRC’s website to check where you stand – as an employer or a contractor – see https://bit.ly/385bmtK.

The changes mean businesses will now have to assess if a contractor (whether engaged as an individual or through a personal service company) would be an employee if they had been directly engaged. If so, it is the business that will liable to pay tax and NIC’s to the HMRC. This a reversal of the current situation where the contractor assesses and accounts to the HMRC.

There are also implications under Employment law with contractors acquiring new statutory rights (e.g. holiday and sick pay, minimum wage, pension, unfair dismissal, etc)

If you are unsure and need guidance do not hesitate to contact our Commercial and Employment Law Partner, Raj Dhokia, at r.dhokia@fgdlaw.co.uk or on 020 7625 6003.

We should all have a will – to make it easier for those left behind, to ensure assets are distributed according to the deceased’s wishes and, for those with young children, to appoint guardians.

Some good news:
The much talked about increase in Probate fees was abandoned by the Government last October. This would have amounted to a ‘death tax’ of up to £6,000 on grieving families.
Probate costs remain at a flat application fee of £215, or £155 if a lawyer applies on your behalf.

The bad news:
Recent research has revealed that 54% of UK adults do not have a will, and nearly 60% of parents of young children do not have a valid will – meaning they either do not have one at all, or the will they do have is out of date.
If people die with no will, complex rules of intestacy will apply, and their estate may not be passed on to whom they would have wished. People such as unmarried partners (sometimes wrongly called ‘common-law’ partners), relations by marriage (e.g. stepchildren), close friends and carers will certainly not inherit anything.
A vast number of people also omit to review their will after key life events such as getting married, divorced, or becoming a parent. In the latter case this means that no plans are made with regards to guardianship or appointment of trustees to handle the inheritance money should both parents die whilst the children are below the age of 18.

More bad news:
A Government report indicates that nearly 75 percent of people think that their partners or close family members can automatically make decisions on their behalf if they are not able due to physical or mental illness (such as spending weeks in a coma in hospital after a car crash or suffering from dementia).
Only a Lasting Power of Attorney (LPA) appointing someone you trust, gives those appointed – also known as attorneys – the legal ability to make decisions on your behalf. There are two types of LPA’s: one covering health and welfare; the other covering property and financial affairs – they are two distinct documents, but you could appoint the same trusted people if you chose to.

So, here are some suggested actions for 2020:

• Check if you have a will, and if you do not, consider making one.
• If you have a will, check when it was last updated
  • Does it still reflect your wishes?
  • Are your beneficiaries up to date? Especially if you now have children, or have moved in with your (unmarried) partner
  • Are you happy with the Executor(s) of your will?
• Give serious consideration to whom you would appoint as your attorney(s) – both for financial and welfare purposes – should you be unable to make decisions.

It may not be the most cheerful of topics, however putting this side of your affairs in order will give you and those you care about peace of mind. Estate planning is especially important with today’s complex family structures.

Whatever you decide to do, make sure that sure that you take sound advice so that all papers are drawn and witnessed properly, and that your will is legally binding and cannot be contested.

Do not hesitate to contact our Private Client Department if you need any assistance – tel: 020 7625 6003 or info@fgdlaw.co.uk

Our offices will be closed from 12pm on Tuesday 24 December 2019 and will then re-open at 9am on Thursday 02 January 2020.

Thank you for your support in 2019 and we look forward to seeing you and working with you in 2020.