Huge increase to skilled worker visa salary threshold takes effect

As of 4th April 2024, some big changes to the skilled worker route came into force. Most foreign workers will now need to earn £38,700 to obtain a skilled worker visa. This is a huge increase to the skilled worker salary threshold from the previous requirement of £26,200.

These changes were initially announced in December last year as part of the government’s 5-point plan to reduce net migration. Part of this plan has now come into force. Current holders of the Skilled Worker visa will not be affected by the new income requirement and can rely on previous levels.

We anticipate that this change will have a huge impact on net migration. For many small businesses, it may too be costly to sponsor a foreign worker with an annual salary of £38,700 and considering other costs associates with sponsorship.

Another change is the introduction of a new Immigration Salary List, which replaces the Shortage Occupation List. Those who are applying for select jobs which are listed in in the new Immigration Salary List will need to meet a lower salary threshold. This is due to the jobs being in a shortage in the UK. The new list contains fewer positions which are considered in shortage.

The UK Immigration Salary List can be found here: https://www.gov.uk/government/publications/skilled-worker-visa-immigration-salary-list/skilled-worker-visa-immigration-salary-list

Meanwhile, the widely reported change to the income requirement for family related visas is due to come into force on 11th April 2024.

Have questions? Get in touch today!

Call us on 020 7928 0276, phone calls are operating as usual and we will be taking calls from 9:30am to 6:00pm.

Email us on info@lisaslaw.co.uk.

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James Cook

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A Guide to Anti-Money Laundering (AML) Checks for Homebuyers in the UK

In the UK, property buyers must adhere to stringent anti-money laundering (AML) regulations. The intention of this is to prevent the misuse of the property purchase for illicit financial activities by criminals. Understanding and complying with AML checks are essential for a smooth mortgage application process.

Money laundering is used by criminals to hide the origins of illegally acquired money in order to make it seem legitimate. The National Crime Agency estimated in 2019 that serious and organised crime costs the UK economy at least £37 billion a year.

As a result, money laundering is taken very seriously due to the frequency with which criminals attempt to purchase property to ‘clean’ the proceeds of criminal activities. The UK is particularly vulnerable to money laundering due to the size of the property market and the sums of money involved when it comes to property assets.

If you are thinking about buying a property, it’s a good idea to ensure that you are prepared to be able to prove your identity, that you can prove you have the funds required to purchase, and that you can prove where the money comes from.

Let’s discuss the various stages of AML checks, why they are important, and what information you need to provide.

What information do you need to provide in AML checks?

Homebuyers need to provide a range of information when it comes to the mortgage process. The three stages of AML checks include proof of identity, proof of funds and source of funds. This is a legal requirement for your solicitor when you are buying a property.

Proof of identity

Perhaps the most basic thing you need to prove when you are buying a property is that you are who you say you are.

Name
Date of birth
Current address

You can use any of the following documents to prove your name and address:

A current passport
Residence permit
UK/EU driving license
A recent bank statement
A recent mortgage statement
Your biometric residence permit (BRP)
A recent tenancy agreement with your local authority
A recent utility bill
Benefits book/state pension letter or notification

Proof of funds

As well as proof of ID, you will also be asked to provide proof of funds at various stages in the process. So how can you do this? Let’s examine the different ways in which you are able to provide proof of funds when purchasing a property.

When you are buying a property, you will be required to prove that you have the money required to purchase the property. This is a requirement for your estate agents, lenders and solicitor/conveyancing agent. Failure to do so can mean that they could be fined or imprisoned.

A good way of proving that you have the funds available is to get a mortgage in principle agreement from your lender. This is done by filling out an online form which will then confirm your ability to afford a property. It may be a good idea to do this before you start the process of buying a property. Overall, the following are some of the best ways of providing proof of funds:

Mortgage in principle (MIP) agreement
Bank statement with required funds for buying with cash
Bank statement with required funds for buying with a mortgage
Letter of proof if the deposit is gifted
Evidence of a property sale being used to fund your purchase

Source of funds

Finally, there will also be a requirement for you to evidence your source of funds. This differs from proof of funds in that rather than simply proving that you have the funds, proving the source of funds means showing how you acquired the money for your deposit. So how can you prove the source of funds when buying with a mortgage? Here are some of the most common methods.

Personal savings

Personal savings are the most common way of putting down a deposit and usually consist of regular small payments from your salary of other types of income. As your conveyancer, we will usually require 6 months’ worth of bank statements. If you have savings in any other accounts, you will also have to provide the last 6 months of bank statements from these accounts.

Wills and Inheritance

Inherited funds from your family members, relatives and friends will be subject to the relevant documentation such as a copy of the will or a letter from the executors which confirms your entitlement.

Gifts from family or friends

Financial gifts are increasingly common given the current state of the housing market and the difficulties many people have getting on the property ladder. Naturally, your conveyancer/solicitor and lender will question a large lump sum of funds which arrives in your account. You will therefore have to both provide evidence that the money has come from a legitimate source, as well as that it was given to you of their own volition.

The person gifting you the money will be required to sign a declaration which confirms how much they have gifted you. They will also have to confirm that the funds are a gift and not a loan, as well as that the person won’t be entitled to a share of the property.

Different mortgage providers will have different requirements for gifted deposit so it is important to check this if you are receiving a gift to pay for your deposit.

Property sale

If some of the money comes from the sale of a property which has already been completed, we will usually require a completion statement to confirm that the sale has gone through. This will not usually be necessary if you are using us as your firm for both the sale and purchase.

Pension lump sum

When it comes to the use of a pension to pay for a deposit, a copy of your pension statement will be required, as well as a copy of your bank statement which displays the receipt of funds.

Winnings

Finally, if you are lucky enough to have won your money, either through gambling, the lottery, or through premium bonds, you will need to prove this by showing evidence of the winnings as well as your bank statement in order to confirm receipt.

Final thoughts

Please note that you may not be able to fund your purchase with funds from abroad, as the majority of countries not in the EU won’t pass the AML checks. You should check the position of your chosen solicitor on this matter as early as possible.

As a law firm with a dedicated conveyancing department, we have a number of qualified conveyancing solicitors and conveyancers. They will be able to guide you throughout the process, as well as provide more information about the areas covered in this article depending on your individual circumstances.

Looking to purchase a property? Contact us today!

Have questions? Get in touch today!

Call us on 020 7928 0276, phone calls are operating as usual and we will be taking calls from 9:30am to 6:00pm.

Email us on info@lisaslaw.co.uk.

Use the Ask Lisa function on our website. Simply enter your details and leave a message, we will get right back to you: https://lisaslaw.co.uk/ask-question/

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James Cook

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Home Office UK eVisa system is now live

Over the past few months we have been eagerly awaiting the implementation of an online UK eVisa system which will end the issuing of BRP cards. Many BRP card holders were wondering why, despite their visa being granted for longer, their BRP card had an expiry of 31^st December 2024. We explained that this was due to the upcoming implementation of an online visa system, known as an eVisa.

We can now confirm that this UK eVisa system is live. As a result, all holders of BRP cards are recommended to sign up to the eVisa platform. This platform will give you the right to live in the UK. As a reminder to all those with dependants, you must ensure that all members of your family register for the e-visa.

Although you can still use the BRP Card until the expiry date, after this all checks will be done using the online system.

What do we charge for eVisa registration?

We at Lisa’s Law are undertaking registration for an eVisa for a fixed price of £150 plus VAT. This fixed fee is set regardless of whether it for one person or for all the member of your immediate family.

Have questions? Get in touch today!

Call us on 020 7928 0276, phone calls are operating as usual and we will be taking calls from 9:30am to 6:00pm.

Email us on info@lisaslaw.co.uk.

Use the Ask Lisa function on our website. Simply enter your details and leave a message, we will get right back to you: https://lisaslaw.co.uk/ask-question/

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James Cook

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New passport fees: UK passport application fees to rise by 7% in April

From 11th April 2024, the UK government will introduce new passport fees for all applications made on and after this date, as announced by the Home Office and HM Passport Office on 20th March 2024.

The proposals, subject to parliamentary approval, include the following:

A standard online application made from within the UK will rise to £88.50 for adults and £57.50 for children.
A standard postal application will increase to £100.00 for adults and £69.00 for children.
A standard online application when applying from overseas will rise to £101.00 for adults and £65.50 for children.
A standard paper application when applying from overseas will increase to £112.50 for adults and £77.00 for children.

The increase aims to ensure that income from these applications better meets the cost of delivering passport and associated operations, reducing reliance on funding from general taxation, as stated by the government. The announcement also emphasises that “The government does not make any profit from the cost of passport applications.”

The new fees will contribute to the cost of processing passport applications, consular support overseas (including for lost or stolen passports), the cost of processing British citizens at UK borders, and to enable the government to continue improving its services.

Please note: the new fees apply to both new applicants and those renewing their passport. Typically, it takes up to 3 weeks for a passport to be issued if applied from within the UK, so it is advisable to apply in good time before travelling.

You can choose to apply online or by post. Currently it is £10.50 cheaper if you choose to apply online than by post.

Have questions? Get in touch today!

Call us on 020 7928 0276, phone calls are operating as usual and we will be taking calls from 9:30am to 6:00pm.

Email us on info@lisaslaw.co.uk.

Use the Ask Lisa function on our website. Simply enter your details and leave a message, we will get right back to you: https://lisaslaw.co.uk/ask-question/

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lisaslaw@web

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Lidl v Tesco – What does Tesco’s defeat mean for the future of the Tesco Clubcard?

Tesco has lost its appeal over a long-running trademark dispute with budget supermarket Lidl. The primary dispute in question concerned its use of a yellow circle against a blue background in its Clubcard logo. The decision in the Lidl v Tesco Court of Appeal case means that Tesco will now be forced into changing its Clubcard logo to one which looks less like Lidl’s main logo.

Anyone who uses Tesco on a regular basis will be well aware of the Tesco Clubcard. Originating in 1995, the Tesco Clubcard had 16 million Clubcard members in the UK as of 2021. Tesco introduced Clubcard prices in 2017, meaning discounted prices for those who use it. The current Clubcard logo featuring a yellow circle on a square blue background was introduced in September 2020. The Tesco Clubcard logo is therefore a ubiquitous presence in the lives of Tesco shoppers. The similarity of Tesco’s Clubcard Logo with the Lidl logo led to Lidl taking legal action against Tesco.

We previously covered the High Court case last year involving Tesco and Lidl in which the High Court found that Tesco had infringed both of Lidl’s trademarks in the use of its Tesco Clubcard logo. You can read more about that case here.

In this case, the High Court found that Tesco had infringed two trademarks, including Lidl’s logo containing the word LIDL (the mark with text), as well as the Lidl logo without the word (the wordless mark). Tesco did, however, succeed when it came to its counterclaim for a declaration that Lidl’s application for a trademark for the mark without text was made in bad faith.

Both sides appealed their respective decisions. Tesco’s appeal focused on their argument that the judge had erred in her findings of trademark and copyright infringement, as well as passing off. They also appealed the grant of an injunction based on their belief that the judge had erred. The case therefore proceeded to the Court of Appeal.

What did the Court of Appeal decide?

The Court of Appeal upheld much of the High Court judge’s decision, deciding that Tesco’s appeal in relation to trademark infringement and passing off was dismissed. The High Court judge had therefore not erred in her findings of infringement. Let’s examine each of the claims in detail, starting with trademark infringement and passing off.

Trademark infringement and passing off

The Court of Appeal were somewhat reluctant to uphold the decision made by the High Court judge when it came to the trademark infringement and passing off decision. However, Tesco’s appeal was dismissed in regard to trademark infringement and passing off. The findings of fact that enough consumers may be misled into believing that Tesco were offering a Lidl price match through the use of the wordless mark (the blue square and yellow circle) was upheld.

The trial judge did not consider whether the CCP signs (Tesco Clubcard symbol) conveyed the price matching messages to herself, instead, she used the evidence of consumers, surveys and internal warnings to come to the conclusion that Tesco’s Clubcard symbol did convey the price matching message.

The court stated that the findings by the High Court judge were “surprising” and that they were “at the outer boundaries of trademark protection and passing off”. Despite the senior judge on the panel stating his implicit disagreement with the decision by expressing his doubt as to whether he would have had come to the same conclusion, the judge outlined that it is not up to the Court of Appeal to “substitute our own evaluation”.

The reason for this is that it is very difficult to overturn findings of fact on appeal. In order to do so, it is necessary for the judge’s finding to be “rationally insupportable”. As the trial judge’s findings could not be faulted in law, this high threshold was not met by the Court of Appeal.

Copyright infringement

When it came to the copyright infringement decision, Tesco’s appeal against the finding by the trial judge was on two grounds. Firstly, that the Lidl logo (“the Mark with Text” ) was original so that the copyright subsisted. Secondly, they also challenged the finding of the trial judge that Tesco’s Clubcard logo (CCP signs) “reproduce a substantial part of the Stage 3 work” – which refers to the current Lidl Logo.

The simplicity of Lidl’s logo meant that their scope of copyright protection was also low. The Court of Appeal disagreed with the High Court’s findings, concluding that Tesco had not infringed the copyright in Lidl’s logo in the creation of its Clubcard logo.

The reason for this was that Tesco had not taken enough of the Lidl logo for it to be considered that a substantial part of it had been taken, as per section 16(3)(a) of the Copyright, Designs and Patents Act 1988. Both the shade of blue and the distance between the circle and the square in the Tesco Clubcard logo (CCP signs) was different from the Lidl logo (“the Mark with Text” ). The Court of Appeal therefore found that the only thing Tesco had copied was the “visual concept of a blue square surrounding (among other material) a yellow circle.

As a result, the conclusion by the Court of Appeal was that Tesco did not infringe the copyright in the Lidl Logo.

Lidl appeal against invalid registration of Wordless Mark

Finally, Lidl’s appeal against the finding that the 1995, 2002, 2005 and 2007 registrations of the wordless mark (Lidl logo with text) were also dismissed. The High Court held that Lidl had failed to provide evidence of its intention to use the trade mark other than to achieve wider protection.

When it came to its appeal of the trial judge’s decision, Lidl failed to identify any serious flaw in the trial judge’s reasoning. As a result, the decision of the trial judge that the wordless trade mark registrations had been filed by Lidl in bad faith was upheld.

Our thoughts

In conclusion, the Court of Appeal’s decision in the Tesco versus Lidl case reaffirms the complexities of trademark infringement, passing off, and copyright disputes. Despite Tesco’s appeals being dismissed, the case highlights the importance of robust evidence in such legal proceedings. Lidl’s success in demonstrating the impact of Tesco’s branding on consumer behaviour underscores the significance of meticulous evidence gathering. This case serves as a precedent, emphasising the evolving landscape of trademark protection and the imperative of vigilant trademark management for businesses.

Our law firm is equipped to assist clients in navigating complex intellectual property matters, offering expert guidance on trademark protection, passing off claims, and copyright infringement. With our tailored legal strategies, we help clients safeguard their rights and mitigate risks in today’s competitive market landscape.

Have questions? Get in touch today!

Call us on 020 7928 0276, phone calls are operating as usual and we will be taking calls from 9:30am to 6:00pm.

Email us on info@lisaslaw.co.uk.

Use the Ask Lisa function on our website. Simply enter your details and leave a message, we will get right back to you: https://lisaslaw.co.uk/ask-question/

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James Cook

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Lisa’s Law welcomes three new staff members to the firm

We are delighted to welcome three new staff members to Lisa’s Law Solicitors. Raymond, Sherry, and Issac all have extensive legal experience and bring a great deal of expertise to the firm. We are looking forward to their contributions to Lisa’s Law.

So without further ado, let’s introduce you to each of our three new starters.

Raymond

Raymond Chu joins the company as a Solicitor with over 30 years of post-qualified experience. He will primarily be responsible for commercial cases and the development of this practise area at Lisa’s Law.

Raymond began his legal professional career at Sinclair Roche and Denton Hall. He then became an infrastructure project finance banker before returning to private legal practice.

He has solid experience in commercial works, both contentious and non-contentious, including proceedings in the Royal Court of Justice and international arbitrations. His work also covers commercial crimes and regulatory compliances including conducting legal due diligence and advising on cross border transactions that are sensitive to controls and sanctions imposed by the US and the UK.

He is a petrolhead who enjoys spending as much time on car tuning and automobile events as at family and social occasions!

In terms of his ambitions, these are quite simple. Raymond dreams of the arrival of an era when every corner of the London Tube is covered by internet signals. I think we can all agree with that!

Sherry

Our second starter, Sherry, joins us as a legal assistant in the conveyancing team. Sherry is a graduate of the Chinese University of Hong Kong with a bachelor’s degree. She later completed her Legal Practice Course and Master of Laws at the University of Law in 2022.

Prior to joining Lisa’s Law, Sherry worked as a paralegal at a London firm specializing in conveyancing. While conveyancing holds her interest, she also seeks to explore other legal fields at Lisa’s Law. Her ambition is to qualify as a solicitor within three years.

Sherry is fluent in Cantonese, Mandarin, and English, with a basic understanding of Hakka.

Issac

Finally, Issac joins us as a legal assistant who will primarily be focused on Commercial Conveyancing. Issac achieved an LLB (Hons) from the University of East Anglia and is now pursuing a Legal Practice Course at the University of Law. He has internship experience at various reputable law firms in Hong Kong. Prior to joining Lisa’s Law Solicitors, he worked at a City firm and engaged with various areas of law, such as property, immigration, and criminal. However, he found himself to be most passionate about conveyancing.

Issac speaks native Mandarin and Cantonese, as well as English at a professional level. Outside of work, he enjoys playing the cello and going to the gym. He has also achieved the Duke of Edinburgh (Gold) Award.

Have questions? Get in touch today!

Call us on 020 7928 0276, phone calls are operating as usual and we will be taking calls from 9:30am to 6:00pm.

Email us on info@lisaslaw.co.uk.

Use the Ask Lisa function on our website. Simply enter your details and leave a message, we will get right back to you: https://lisaslaw.co.uk/ask-question/

For more updates, follow us on our social media platforms! You can find them all on our Linktree right here.

James Cook

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Exciting News: Applicants Now Eligible for 10 Year Settlement Despite Extended Absences!

If you have resided in the UK lawfully for 10 years then you are entitled to apply for settlement, commonly known as indefinite leave to remain. Meeting certain criteria, such as passing the Life in the UK test is essential, along with ensuring that your absences from the UK don’t exceed specific limits. So, when it comes to 10 year settlement, how much time can you spend outside the UK?

Well, until recently, applying for indefinite leave to remain based on a decade of residence was restricted if, within the past 10 years, you had:

Stayed outside the UK for more than 184 days on a single occasion.
Accumulated over 548 days of absence in total during the past 10 years.

However, in the latest Statement of changes to the Immigration Rules: HC 590, issued on March 14, 2024, a significant adjustment has been made. Effective from April 11, 2024, the introduction of Appendix Long Residence and the removal of paragraph 276, part 7 from the immigration rules will govern long residence applications.

No mention that absences cannot surpass 548 days

This regulatory update reflects meticulous scrutiny and review on our part. We carefully reviewed the proposed Appendix Long Residence and Appendix Continuous Residence, whereupon we made an insightful observation. While both appendices stipulate that absences exceeding 180 days will disrupt continuous residence, we noted a conspicuous omission of any mention that absences cannot surpass 548 days.

This revelation underscores our commitment to keeping up-to-date with changes in the law and meticulously analysing their implications. Moreover, it underscores our dedication to ensuring that our clients are informed of every opportunity available to them.

This development marks a significant shift, as many individuals were previously unable to apply for settlement due to absences exceeding 548 days over a 10-year period. As of April 11, 2024, applications can be submitted under the revised regulations.

Feel free to reach out to us today to explore your case further. We stand ready to provide comprehensive guidance tailored to your specific circumstances.

Have questions? Get in touch today!

Call us on 020 7928 0276, phone calls are operating as usual and we will be taking calls from 9:30am to 6:00pm.

Email us on info@lisaslaw.co.uk.

Use the Ask Lisa function on our website. Simply enter your details and leave a message, we will get right back to you: https://lisaslaw.co.uk/ask-question/

For more updates, follow us on our social media platforms! You can find them all on our Linktree right here.

James Cook

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Child custody – how is child arrangement decided?

When a couple decides to separate or divorce, a top priority should be the welfare of any children involved. In a high number of cases, this factor can leave parents at odds with each other and unable to agree on who should take custody of the child. Child custody is therefore a key consideration for many separating couples.

The main concerns often revolve around who the child will live with, if the custody will be split, and how the parents will be able to financially support the children between them. If the parents can agree on these factors, then it is far easier to avoid the courtroom. It is important to note that there are a few different options here, however there is no right or wrong choice. When it comes to child custody, what matters most is the best outcome for the child.

So, what are the different types of custody? And what happens if a couple can’t agree on child custody? Keep reading to find out more.

Types of child custody

Joint Custody

Joint custody is a relatively common solution when a couple who have had children decide to divorce or separate. As the name suggests, the parents share custody of the child, who will reside with both parents in their respective homes. With joint custody, the parents will also cooperatively make decisions about the child’s upbringing and welfare, much like when they were still married.

Equal responsibility for both parents in the form of joint custody is seen as the preferable option, as opposed to sole custody. Having access to both parents is usually seen as best for the child’s development. This allows the child to have easy access to both parents by making them properly involved in the child’s life.

Sole Custody

Sole custody means that only one parent has full custody of their child. This is often awarded in cases where the other parent is abusive or absent and is therefore a rarer solution than joint custody. The child’s other parent (sometimes known as the “non-custodial” parent) will have no physical nor legal custody rights over the child. They may be entitled to periods of visitation, however, (though these visits are often supervised, especially in situations involving domestic violence or child abuse).

Legal Custody vs Physical Custody

Legal custody is the authority to make decisions surrounding the child’s livelihood, for example which schools they go to. Physical custody differs from legal custody in that it involves the determination of where a child lives on a day-to-day basis. Parents can have both physical and legal custody, or in some cases they will have only one of these, and of course in other rare cases they will have neither. It all depends on the circumstances specific to that family.

How is the type of child custody decided?

If the couple can agree on who the child will live with, whether the custody will be split, and how the parents will be able to financially support the children between them then they should use a solicitor to make the agreement legally binding.

Our family law team has lots of experience when it comes to this and can guide couples every step of the way. Getting the agreement properly drafted and executed is always for the best, as while you may feel you are in agreement about your child right now, your ex-partner may change their mind in the future. If your agreement is broken, you may want to have the ability to enforce it.

Child Arrangement Orders

If the couple cannot agree on custody, they will have to go to court and apply for a Child Arrangement Order (CAO). This is the most sensible outcome in cases where an agreement cannot be reached outside of court.

A CAO is a legal agreement between the court and parents or guardians which determines what is best for the child. However, before applying to a court you must usually show that you have attended a meeting to decide whether meditation is the right course of action for you and your partner.

The CAO will officially determine where the child lives, what contact the parents can have with the child and any other specific needs the child may have.

What factors do the court decide on for a Child Arrangement Order?

The court will take a number of factors into consideration when deciding on the finalisation of a child arrangement order. In terms of the child themselves, these include the following:

The feelings and wishes of the child (taking into consideration their age and understanding)
The physical, emotional and educational requirements of the child
The possible impact on the child if their circumstances change
The child’s age, sex, background and any characteristics that the court considers relevant
Harm the child has suffered in the past or is at risk of suffering in the future
If each parent is capable of meeting the child’s needs

Additionally, the court must presume that involvement of each parent (of some direct or indirect kind but not any particular division of a child’s time) in the life of the child concerned will further the child’s welfare. That presumption applies if that parent can be involved in the child’s life in a way that does not put the child at risk of suffering harm. The court must also be satisfied that making an order is better for the child than not making an order at all.

How can parents increase their chances of getting custody?

Firstly, it is clear that good parents should be doing most of the below points by default. We understand that with work and external factors things can often get in the way of family life, but the best effort should always be made for the benefit of the child wherever possible.

Ultimately, the court will decide on what is best for the child, but they will certainly look kindly on the following:

Showing a strong relationship between you and the child: Going the extra mile to bond with your child, such as taking an interest in their extracurricular activities, attending their school plays or helping with homework.
Attending key events such as birthdays or religious ceremonies.
Make your home safe and appropriate for children.
Pay child maintenance on-time (if this has been arranged).
Show the other parent respect. This can go a very long way towards cementing a good representation for yourself.

Our family law team have extensive experience when it comes to child custody agreements and child arrangement orders, and will be able to assist you with agreements which are in the best interest of your child following a divorce or separation. Contact us today.

Have questions? Get in touch today!

Call us on 020 7928 0276, phone calls are operating as usual and we will be taking calls from 9:30am to 6:00pm.

Email us on info@lisaslaw.co.uk.

Use the Ask Lisa function on our website. Simply enter your details and leave a message, we will get right back to you: https://lisaslaw.co.uk/ask-question/

For more updates, follow us on our social media platforms! You can find them all on our Linktree right here.

James Cook

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Ground rent “not necessary” says CMA – will it be abolished for all leases?

The Competition and Markets Authority (CMA) has recently published its response to a government consultation examining ground rent reforms for existing leasehold properties. The CMA has concluded that ground rent is neither “legally nor commercially necessary”. They also stated that they do not see any “persuasive evidence that consumers received anything in return”.

In recent years, the government has often voiced their ambition to reform the leasehold system, with the Levelling Up, Housing and Communities Secretary Michael Gove previously describing leasehold as an “outdated feudal system that needs to go”. He has since been reined in by Downing Street, with the abolition of the leasehold system no longer on the agenda.

Instead, reform has focused more on some of the most conspicuously objectionable issues with the system, including ground rent reform, prohibition of new leaseholds for houses, and “making it easier” for leaseholders to purchase their freehold. The Leasehold and Freehold Reform Bill which is currently making its way through Parliament is designed to address these issues.

What is the issue with ground rent?

Ground rent in particular has been identified by stakeholders as an area in significant need of reform. While it was abolished for new leases in June 2022, existing leases still contain a provision for ground rent. But what is it?

Ground rent is a yearly charge paid by the leaseholder to the freeholder, the person who owns the land the property is on. The idea of ground rent is that the leaseholder is paying an annual charge for the privilege of living on the freeholder’s land. However, the CMA has concluded that it is not “legally nor commercially necessary”. Leasehold property holders pay an average of £319 in ground rent costs per year, totalling £447 million.

To make matters worse, many leaseholders have been stuck in contracts with rising ground rents which can double over time or increase in line with inflation. This can make it very difficult for leaseholders to sell or remortgage their properties.

To the surprise and consternation of many when they come to try and buy a flat, leaseholders do not own their homes outright. Instead leasehold is a form of home ownership which gives the leaseholder the exclusive right to live in a property for a fixed number of years. England and Wales are one of the very few countries in the world which still uses the leasehold system.

Dozens of freeholders have committed to making changes to the ground rent they charge since 2022, with the likes of Taylor Wimpey, Aviva and Persimmon all removing certain clauses which led to the doubling of ground rents payable by leaseholders. After action by the CMA, thousands of leaseholders who paid double ground rent have received refunds. All leaseholders will also have their ground rents return to the original fee amount which was charged when the property was first sold to them. These ground rents will no longer increase over time.

What reforms have been proposed when it comes to Ground Rent?

The Housing Secretary, Michael Gove, has proposed capping all existing ground rents to a peppercorn level, effectively zero. At the moment, while the capping of ground rents to a peppercorn rate has been applied to new leases, it has not also been applied to existing leases. This means that even if you bought a new lease from another leaseholder on or after 30^th June 2022, you will still have to pay ground rent.

While the current bill proposes reducing ground rent to a peppercorn subject to the extension of a lease (standard length of 990 years), further ground rent reform is subject to the aforementioned consultation. The government has stated that they will look to introduce a ground rent cap through the Leasehold and Freehold Reform Bill subject to the consultation.

In total, five proposals have been made regarding the best way to reform ground rent for existing leaseholders. These include:

setting ground rents at a peppercorn
putting in place a maximum financial value which ground rents could never exceed
capping ground rents at a percentage of the property value
limiting ground rent in existing leases to the original amount when the lease was granted
freezing ground rent at current levels

It is notable that none of the proposals made argue for the continuation of the status quo when it comes to ground rent, something which will be celebrated by leaseholders. Nevertheless, while the bill is currently making its way through parliament, the complexity of the housing market means that even once the bill does pass, it is difficult to say when the reforms will actually take effect.

Our thoughts

In the residential sector, ground rents exceeding £250 per year (or £1,000 per year in Greater London) can be problematic. If the leaseholder or future owners fail to pay this rent as per the lease terms, the landlord can take possession of the property more easily. This situation is treated like an assured tenancy, giving the landlord quicker ways to end the lease without going through the usual ‘forfeiture of the lease’ process. This could leave the leaseholder or the lender with no property rights. Lenders may be hesitant to provide a mortgage for properties with high ground rents.

The proposed changes would mean more security for homeowners and will boost confidence in new purchasers and lenders when choosing leasehold properties. The changes will make owning a home more affordable, less complicated, and fairer by preventing freeholders from unfairly increasing ground rent without benefiting leaseholders.

We hope it will bring a more healthy dynamic to the property market as this will also allow leaseholders to purchase a freehold at a lower cost. Some freeholders have taken advantage of the system in the past, so these changes will provide homebuyers with greater security. Predictably, homes with shorter leases will be more appealing for buyers, rather than being a hindrance to a successful sale.

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Call us on 020 7928 0276, phone calls are operating as usual and we will be taking calls from 9:30am to 6:00pm.

Email us on info@lisaslaw.co.uk.

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James Cook

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Can a small takeaway business obtain a sponsor licence ?

We receive many enquiries from owners of small takeaways and restaurants asking if they can obtain a sponsor licence to hire staff from abroad. Many face difficulties in hiring staff from within the UK and require experienced hires from abroad for the recruitment of positions such as chefs. For a number of years there has been a reluctance from owners to make an application for a sponsor licence if they have a relatively small turnover, or a small number of employees.

In this case study, we will delve in how to obtain a sponsor licence for a takeaway business.

Sponsor licence case study

We were recently successful in obtaining a sponsor licence for a small Chinese takeaway which currently has 3 full time staff and a modest turnover. The takeaway was in real need of hiring an experienced head chef. Despite advertising within the UK, they were unable to find a suitable candidate.

The takeaway approached us for assistance.

We advised the takeaway business that although the Home Office were previously reluctant to grant sponsor licences, this is no longer the case. The key was to understand our client’s business needs and put forward a key plan explaining why the appointment was necessary for the growth of the business.

We also explained the importance of the business being registered, them having an authorising officer, no adverse history, and a HR system. We are able to advise on how to set up an effective HR System.

Finally, we navigated through the large volume of documentation required, and we have been successful in obtaining a sponsor licence for our takeaway client. Our client can now look forward to their anticipate growth and serving their customers with delicious food!

To summarise, the answer is yes, a small takeaway can obtain a sponsor licence and hire talented staff from abroad.

Have questions? Get in touch today!

Call us on 020 7928 0276, phone calls are operating as usual and we will be taking calls from 9:30am to 6:00pm.

Email us on info@lisaslaw.co.uk.

Use the Ask Lisa function on our website. Simply enter your details and leave a message, we will get right back to you: https://lisaslaw.co.uk/ask-question/

For more updates, follow us on our social media platforms! You can find them all on our Linktree right here.

James Cook

See Full Bio

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