I am looking to purchase a home in the Knightsbridge area of London. I am concerned that information in the public domain about my net worth and the recent sale of one of my businesses for an impressive return will materially impact my negotiations in the purchasing process. I am considering buying a property anonymously to address this. Is this advisable? Are there any legal considerations I need to be conscious of?
Parminder Sidhu, partner and head of residential property at Wedlake Bell, says good luck with the search for a new home. I hope you are successful in finding the perfect property.
Like solicitors, estate agents must comply with the UK’s stringent anti- money laundering regulations. You can begin negotiations fairly anonymously, perhaps through a buying agent, but you will eventually be asked to provide evidence about your “source of wealth” and “source of funds”. Estate agents also need this to ensure they are dealing with a credible buyer. Bear in mind that estate agents are representing the sellers, and might use this information to a seller’s advantage to try to achieve a higher price.
It is worth mentioning that when you buy property in England, Land Registry records must be updated. These records are publicly accessible and include details of the price paid, the name of any mortgage lender and the names of all purchasers. The records will not include details about your net worth, but inferences may be drawn about the wealth of someone purchasing in Knightsbridge, where the average price for a house can be upwards of a few million pounds.
You do not have to buy a property in your own name. The two most popular options include buying through a company, or through a trust (the trustees might buy on your behalf). The estate agent, however, will still want the company or trustees to provide evidence of the source of funds for the property purchase. Therefore, it will be difficult to keep your funding confidential.
If you choose to buy a property through a company, its details (whether overseas or UK-based) will need to be registered with Companies House, whose records are also public. In England and Northern Ireland, you have to pay a higher rate of stamp duty land tax if you buy through a company and the additional cost might impact your negotiating position.
You could also buy through a trust, and keep a record with the trustees showing that you are the beneficial owner, being the person entitled to all of the financial interest in the property. Restrictions can be registered with the Land Registry to warn future purchasers about beneficial owners and prevent trustees from selling a property without your knowledge and consent. A UK trust would also need to be registered with HM Revenue & Customs and tax would be payable during the life of a UK or overseas company, as well as a trust.
There are tax and inheritance planning points that you might not have thought of. You should speak to a solicitor before you start looking for a new home. They can discuss in more detail options as to anonymity, and advise on the best way to own your property, whether in your own name, with a partner, as a company or trust.
My tenants will not leave. What can I do?
I am an accidental landlord, having kept my flat to make the purchase of my family home simpler. My first tenants have been very unhappy after experiencing difficult conditions due to leaks from above that went unresolved by the freeholder. They therefore were not happy paying the full rent, and after rejecting a huge discount I offered, I have served them with a section 21 notice. However, they are not engaging with the managing agent, and I don’t know if they will leave, with rent owed. What should I do?
Neli Borisova, commercial litigation associate at JMW Solicitors in London, says being a landlord can be a lot more complex and onerous than might appear at first, especially when it’s not planned. It is always a good idea for a new landlord to engage the services of a reputable managing agent.
You owe your tenants a duty to maintain the property in a good and habitable condition. In your situation, your compliance with your obligations has been obstructed by the freeholder’s failure to resolve issues with the leaks but those obligations remain. This has caused a breakdown of the relationship with your tenants. Unfortunately, this is not an uncommon situation, and terminating the tenancy may be the only sensible solution.
You have initiated the process of termination by serving the correct statutory notice. Providing this is valid, a section 21 notice will require the tenant to leave the property by a specific date. This notice does not terminate the tenancy agreement, which will be in force until the tenant leaves, or a judge makes a possession order. If your tenant does not leave when the notice expires, you will have to go to court to obtain such an order. This can take more than six months and can cost several thousand pounds, especially if the tenant challenges your claim.
As there are rent arrears, it may be more beneficial to reach an agreement whereby they leave and you agree to wipe out the arrears. This is often a more time and cost-effective solution than going to court. In such proceedings, tenants may also claim damages for disrepair caused by the leak, which are calculated based on the rent they pay you.
Our next question
I thought I understood the blockchain and assured my wife that buying digital assets was a good way to diversify our joint assets — but now I fear we’ve been scammed. I feel like a total fool. Kicking myself won’t get the money back and I need to recover the approximately £80,000 invested. Our local police are not interested and I fear it will be hugely expensive to instruct lawyers. Can you tell me where I start the process of recovery?
In all cases you are entitled to make a claim against your freeholder. Just like you they have obligations set out in your lease. If you have reported the leaks promptly and provided access, the freeholder is liable for the loss and damage you sustain due to their failure to comply with the lease.
Compensation to you would be calculated on the rent that would have been payable if the property was rented on the short-term rental market, which should balance out the losses from your tenants and any sums you might owe them.
Even if you obtain a money judgment for the arrears and a possession order, enforcement can also be tricky where the tenants do not own any assets or have cash to pay.
If an agreement cannot be reached, you should seek legal advice before going to court where costs will escalate and before it is too late to make a deal, which will save you time, stress and money.
The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.
Do you have a financial dilemma that you’d like FT Money’s team of professional experts to look into? Email your problem in confidence to money@ft.com.
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