Given all the current news showing the flooding crisis in the UK at the moment, it shows more than ever the need to consider flood risk when purchasing a property.
The issue of insurability of properties is now a high profile issue which can potentially affect the cost you must pay to insure your home.
The Environmental Agency assess that 1 in 6 properties are at risk of flooding. The most common types of flooding are:-
- Surface water flooding - occurs when heavy rainfall overwhelms the drainage capacity of an area.
- Sewer flooding - occurs when sewers are overwhelmed by heavy rainfall or when they become blocked.
- Groundwater flooding - occurs when underground water levels rise above surface level. This is most likely to occur in low lying areas underlain by permeable rocks.
- River flooding - occurs when a watercourse cannot cope with the water draining into it from the surrounding land.
- Coastal flooding - results from a combination of high tides, low lying land and, sometimes, stormy conditions.
ORJ Solicitors recommend that a Flood Risk Search is obtained when purchasing your property. This will give further details as to insurability, based on the level of flood risk. This search will also assess the risk of flooding from river, coastal, groundwater and surface water sources and will determine whether the property is in or within:
a. 250m of an area affected by flooding (Zone 3) or extreme flooding (Zone 2)
b. 250m of flood defences or area defences
c. National Flood risk assessment (NaFRA)
Furthermore, the report will identify where groundwater flooding could potentially occur based on the underlying geological conditions.
We also recommend that you sign up for flood warnings at http://www.environment-agency.gov.uk/homeandleisure/floods/31618.aspx
Finally, we would strongly recommend that you always make enquiries with insurance companies as to cost and insurability before you legally commit yourself to your purchase.
Tania Zompi
www.orj.co.uk
Working in a busy Conveyancing team at ORJ Solicitors we often get asked about the relevance of the searches that we carry out, one of which is relating to the coal mining searches.
If you have found that dream home to purchase, your main concern may simply be when the moving date will arrive. It must be stressed however that even if a property appears perfect on the surface, there may be hidden issues not immediately apparent from an initial inspection. A prudent buyer should always have various searches carried out against a property before taking the final plunge.
A coal mining search will often be essential for anyone buying a property in an area with a history of coal mining. Surface and underground coal mining played a huge part in the industrial history of Britain, a role which continues today. Previous coal mining activity can pose various risks when you are planning on purchasing a property. A house may have been built over or near to old coal mineshafts and there may be a risk of subsidence (the gradual caving in or sinking of an area of land). In Cheshire, brine has been extracted by a pumping process for several centuries. Underground cavities created by the pumping may ultimately collapse, causing serious damage to any property above. Cases are often reported of old mine shafts collapsing due to not being capped or filled-in properly and causing serious damage to houses. There may also be environmental issues, such as soil contamination, mine gas emissions and the build-up of dangerous elements.
Because of these risks, it is vital that a mining search is carried out when purchasing a property in an affected area. If you are having a mortgage, your lender will insist on having the search carried out in order to protect their interest in the property. The value of a property can seriously diminish if previous mining activities are discovered and buildings insurance premiums are also likely to be affected.
Mining reports are prepared by the Coal Authority. The Coal Authority owns the vast majority of the coal in the UK (along with former coal mines) and is responsible for licensing coal mining in Great Britain. The Coal Authority Report reveals information regarding any past, present and future mining and highlights any environmental and stability risks which could affect the property. The search also provides details of any subsidence remediation claims, shaft locations, reported hazards and mine gas emissions. Mining reports cost approximately £35 and are generally prepared relatively quickly (usually less than a week).
For an additional fee, the Coal Authority can also provide a supplementary Mine Entry Interpretive Report. This report goes into greater detail regarding any mine entries revealed and highlights the likelihood of mining subsidence damage arising as a result of the entries. The Interpretive Report also provides details of any remedies available for subsidence damage.
The Coal Authority website contains further useful information and has an interactive map which can be used to determine whether the property you wish to purchase is located in an area with mining history. The website could aptly be described as a mine of information!
When purchasing a property, your Conveyancing Solicitor will advise you whether a mining search is needed. Once the search has been obtained, your Solicitor will explain the results to you. In the majority of cases, the search will not reveal any serious issues but will importantly provide you with peace of mind and satisfy your mortgage lender.
Find out more - http://www.orj.co.uk/residential-conveyancing.php
Enterprise Management Incentive (EMI) options are a type of discretionary share option scheme commonly used by smaller private trading companies to incentivise and retain key employees. EMI options are HMRC approved and provide excellent tax benefits for both employees and employers alike.
EMI qualifying criteria for the company
EMI’s are subject to various qualifying criteria. To qualify to grant options, a company must be an independent trading company (it must not be a 51% subsidiary) with gross assets of no more than £30 million (at the time options are granted) and a workforce of no more than 250 employees.
It must carry on a qualifying trade on a commercial basis with a view to making profits. In terms of a qualifying trade it should not consist substantially (ie more than 20% of turnover) of certain excluded activities. Broadly these include providing professional services, property development or dealing in securities or other financial instrument or managing property (including nursing homes or residential care homes). ORJ Solicitors can advise you on whether your company meets the relevant qualifying criteria and an alternative employment incentive schemes if you do not.
EMI qualifying criteria for the employee
The employee must satisfy the relevant working time requirement. Three different descriptions of employee can satisfy the requirements to receive EMI options:
1) Employees who are required to spend more than 25 hours a week in the business of the EMI company, regardless of whatever other economic activity they are required to undertake.
2) Employees who are required to spend an average of less than 25 hours a week in the business of EMI company if the employment makes up on average at least 75% of the employee’s working time and who are also self employed or work elsewhere.
3) Employees who have no other renumerative employment or self employment no matter how little time per week they required to spend in the business of the EMI company.
Benefits of EMI’s to qualifying employees.
Employees satisfying the above criteria may be granted the right to buy shares up to the value of £250,000 at a price fixed at the date of the grant. There is a total limit of £3m that can be subject to unexercised EMI options. There is no limit to the number of employees that can be granted options provided the overall limit is not exceeded. No tax or national insurance contributions are payable for either the grant or exercise of the option, provided the exercise price meets or exceeds market value at the date of grant.
The shares themselves can be with or without restrictions (including non-voting) but must be fully paid up. Performance conditions (set at the date of grant) can provide tangible medium or long term incentives (typically targeted to be achieved 3 – 10 years from the date of grant).
If you are looking to incentivise and retain key stakeholders in your business an EMI could prove ideal. For more information and expert advice on setting up and managing an EMI scheme get in touch with the experts at ORJ Solicitors. We can also review existing incentive schemes or bonus arrangements currently in place to ensure they are tax efficient and achieve your commercial objectives. We are also able to provide expert advice on buyback procedures should any of your key employees wish to exit the business.
At ORJ Solicitors we have seen an increase in the number of buyers looking to purchase a repossession property and the guide below highlights that there are some considerations to take into account when buying such a property. Since the economic downturn there has been a noticeable rise in the number of repossession properties being offered for sale. Essentially, a property may be repossessed by a mortgage lender (the Bank) if the homeowner fails to keep up with mortgage repayments as they fall due. Whilst there are companies which purport to be specialists in the sale of repossessed properties there are plenty of repossessions advertised through estate agent and auctions.
Do your homework:
Whilst buying a property can be stressful at the best of times, buying a repossessed property can be even more harrowing with the imposition of strict deadlines and the all too familiar possibility of being gazumped!
We all love a bargain, but buyers should be careful not to fall into the myth that all repossession properties are being sold at a knock down price. Even if the price tag is “too good to be true...” buyers should always be prudent and carry out research before making an offer. Your due diligence need not be expensive or be laborious; conducting a search of the web may give you an indication of prices of similar properties for sale advertised or even allow you to compare previous property sale prices by carrying out simple online valuations. These initial investigations coupled with a viewing of the property should give you a clearer indication of whether the property is a bargain or whether you’d need to be a DIY enthusiast with deep pockets, and the willingness to take on a challenge.
Making an offer:
Once you’ve done your homework (including working out your finances) you should not delay in making an offer. You must be mindful that the Bank is under a legal obligation and has a duty to obtain the best possible price - even if your offer is the first or only offer. Once your offer has been accepted it is usual for the Bank to impose strict deadlines, commonly a buyer will be given 28 days to exchange contracts. Once your offer has been accepted it is imperative that you instruct a Solicitor to act for you in your purchase. The sooner you instruct a Solicitor, the quicker searches can be put in hand and well ahead of the deadline to exchange. If you are taking out a mortgage it would also be wise to ask the Solicitor whether they are also on the panel for your mortgage lender. If they are not, it is likely a separate firm will act for your mortgage lender which is likely to cause delays in meeting that all important deadline. Buyers must always remember that speed really is of the essence. Whilst your offer may have been accepted, the Bank will never agree to take the property off the market. It is therefore important that you are aware that you could be gazumped at any time before contracts are exchanged, even if you have paid for searches and surveys.
Condition of the Property: Buyer beware
When purchasing a property in England and Wales the basic principle of “caveat emptor” (let the buyer beware) applies, whether your purchase is a repossession or not. In short, the onus is firmly placed on you the buyer to carry out all necessary inspections and surveys before buying. The seller is under no duty whatsoever to reveal any physical defects in the property, as it is your responsibility to discover them. There should be no delay in making your investigations as on exchange, you are deemed to have accepted the property in its present state and condition. Often repossession properties are in poor condition. Therefore, your investigations are even more important as the Bank is unable to provide any answers that a regular seller may be able to provide.
A prudent buyer should always have the property surveyed by a Chartered Surveyor (as opposed to a valuation) and have the services (eg. central heating, electrical wiring, plumbing etc.) inspected and, if need be, tested by an expert prior to the exchange of contracts. You should note, if you are having a mortgage, that a lender's valuation will be carried out for the lender's purposes only and not for you. If the lender's valuer has made a mistake, you will rarely be able to pursue an action against that person. In any case the lender's valuer is employed to consider whether the property is worth more than the amount to be lent on mortgage and not whether the property is worth what you propose to pay for it.
Completion and beyond
Once you have exchanged contracts, you are legally bound by contract to complete the deal. Usually, the Bank will require completion to take place within 7 days of exchange and it is therefore important to ensure the balance of monies required from you to complete the purchase are with your Solicitor in good time. It is also essential that upon exchange your home insurance is in force as under the terms of the contract it is likely that any ‘risk’ will pass to you the buyer. On completion, your Solicitor will transfer the purchase monies to the Bank’s Solicitor. Your Solicitor will call you to confirm completion after which the selling agents will release the keys to you. Once you have the keys to your new home, you will need to deal with any disconnected utilities and make the necessary arrangements to have the accounts transferred into your name. In addition, it would be sensible to change the locks and when doing so unscrew the letter box to allow the postman to deliver your post!
At ORJ Solicitors our conveyancing team have developed a great reputation in Stafford as well as across the country. We understand that moving home is a life changing experience for you and your family and we will advise you every step of the way. Every single home sale, home purchase and remortgage is different which is why our dedicated and approachable residential conveyancing team take the time to understand what you want. For a no obligation quotation tailored to your requirements please contact our conveyancing team on 01785 223440. For more about ORJ Solicitors and the conveyancing work carried out,please follow the link: www.orj.co.uk/residential-conveyancing.php
