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Chancel repair

Chancel repair

Policies within house indemnity insurance

22/11/2016

The property owner should know about house indemnity insurance coverage for various cryptic risks that may befall his property. Such risks are different from the common ones in that they are not readily apparent. Common risks that people insure against include fire, vandalism or robbery. However, this type of risk relates to the breach of contracts relating to the construction of the property. These risks are never apparent until a claim is made by a party who is disadvantaged by the construction or modification of property.

What is house indemnity insurance?

Commonhold and Leasehold forms of property ownership restrict the owners’ ability to modify immobile properties. Ownership of property is subject to covenants that forbid an owner from making modifications to property. A leasehold owner who extends his unit will be liable to penalties demanded for by his tenant. This penalty can also be imposed to a buyer of the leasehold property rather than the previous owner who made the alteration. The holder of the insurance should not know of the covenant. Otherwise, the insurance will be invalidated. Most insurance firms need at least a twelve-month period from the breach of an agreement to the issuance of policy.

The “Breach of Covenant” policy protects the homeowner from loss of property value as a result of a breach of covenant. This is because the use of the new prohibited structures will be forbidden. The policy also protects the owner from costs of destroying the structure.

Policies taken against breach of the covenant are similar to those made in violation of building regulations. Violation of Building Regulations can affect freeholders as much as they affect leaseholders and commonholders. They arise when a structure goes against government building regulations or are constructed without due permission from the local government. The owner of the property can be barred from using the property or forced to destroy the property.

Protecting the owner

The policy protects the owner from loss of property value arising from inability to use the property. It also covers the cost of destroying the property. The owner might apply for permission to use the property rather than have it destroyed. If this is the case, then the policy will protect him from expenses incurred in obtaining permission for validation of the structure by the planning council.

A property owner may be unable to access a commodity that is necessary for maintaining a property. Such commodity includes water running in the neighbouring field but that the property owner is not allowed to use. The property owner can obtain permission to use the commodity by taking Absence of Easement policy. The policy covers for the expenses involved in obtaining legal permission to use the commodity. It also protects the owner from a reduction in property value arising from changes made in the property to compensate for the commodity.

Policy related to Churches

Churches used to exchange portions of their land with a promise that new land-owners will pay for the repair of the church. This agreement applied to anyone who occupied the property. Many new homeowners do not know of the existence of such agreements. Chancel Repair Liability policy will protect the owner should he be forced to repair the church.

What is Chancel repairs liability search?

21/10/2016

The chancel repair liability search is one of the recommended searches when you buy a new property. What does it mean? Basically, the chancel repair liability gives the parish in the area of your newly bought property the right to charge you, the landowner, for the conservation of the church chancel. As a landowner, you are required to pay for the repairs of the chancel of an Anglican parish church. If the property you acquire was part of the rectorial land, the Parochial Church Council (PCC) has the right to ask you for chancel repair liability.

Around 5 200 pre-Reformation churches in England and Wales are under the Land Registration Act 1925, classifying it as an “overriding interest in registered land” (until October 2013). Before buying a property, it is important for you or your solicitor to request a chancel-repair-liability search, so you know if there are any unpaid debts or to get an idea of how big are the costs for the property, including a chancel liability. The Records of Ascertainments can give you details on your property status, regarding any shares for church repairs you might have to pay.

A said parish land could have been divided into multiple parcels, and if your property is on one of them, you could end up paying the entire amount, due to the fact that the PCC is not obligated to divide the cost of the chancel-repair-liability between the parcels of the original rectorial land. It is part of the conveyancing process to do the chancel-repair-liability search and adjust your budget as requested, by taking into consideration that the maintenance debts towards the PCC could be higher than any other house search.

An interesting aspect is the fact that the property does not necessarily have to be in the immediate area of a medieval church for it to be liable for any church repairs charges. A search through the National Archives can give you more information, but it does not guarantee that if the property was not found in their records, it means that is chancel liability free.

Before October 2013, as a landlord, you were obligated to pay, even if you were not aware of the fact that your property is under an unregistered chancel liability. After October 2013, the PCC only enforce the liability if the property is protected by registration of a notice against the registered title. On the other hand, if the land is not registered with the Land Registry, the liability could be registered by way of caution against first registration.

We strongly advise you to have the chancel repair liability search conducted before investing a large amount of money in a purchase that might end up costing you more than you can afford.

Conveyancing costs: An overview

26/01/2015

Conveyancing is a lengthy process that involves quite a lot of money. If not careful, one can get snookered in the process specially when it comes to solicitor’s fees. Beware of the extra fees that solicitors charge upon their fees. Here is an overview of the costs involved in conveyancing-

Solicitor's fees: You have to pay the solicitor £350 - £500 for doing the job of conveyancing for you. Solicitors may ask for an additional £80-140 for making searches against the property.

Disbursements: The amounts your solicitor pays to others on your behalf.

Searches against the property:

  1. Drainage and mining search- The buyer’s solicitor will do a drainage search to find out if the house’s drainage system is in working order i.e. if the house is connected to public drains. It costs £45 to do the search. The solicitor will have to do a mining search too which does not cost more than £250.
  2. Environmental search- The solicitor has to search the areas surrounding the property to gather information such as whether there have been any incidents of environmental pollution or damage in the area caused by the local firms or industries. It costs £40 to do an environmental search.
  3. Local authority search- A local authority search reveals if there have been any complaints made against the property with Local Council. The fees in a local authority search can vary a great deal ranging from £40-300.
  4. Land registry search- A land registry search is made after the signing of the contract and registering the buyer as the new owner of the property. This is to make sure that the state of the registration has not been altered and that the buyer has priority for at least 30 days following the registration over all the attempts to change it. A land registry search costs as much as £3.
  5. Chancel repair liability search- This is to determine whether you are liable to contribute for the repairs of the local parish/church. It costs £20.

Mortgage fees:

  1. Purchase- Given that you are buying the property with mortgage, your solicitor will work as your lender’s as well as your representative and charge you £50-75 excluding the price of the mortgage. Also, your solicitor will check whether you are bankrupt which will cost £2.
  2. Sale- If you are the seller and your property has a mortgage on it, your solicitor will pay off your lender which will cost you £50-75 save the mortgage money.

Land registration fee: The land registration fee (£220) is paid to the Land Registry for registering your name as the owner of the property or/any mortgage charge. A land registry document stating your ownership costs £6-12.

Stamp duty land tax: This is paid to the government and is calculated on the value of the property. The rate is 0% up to £125,000, 1% of the price up to £250,000, 3% if the price is more than £250,000 and 4% if the price exceeds £500,000. An additional fee of £25 known as SDLT completion fee has to be paid to the HM Revenue and Customs if due.

Telegraphic Transfer fees: This is the fee banks charge when they transfer the buyers’ money to the seller’ solicitor. It costs about £40.

VAT: It is payable on the solicitor’s fees at a rate that changes with time. The rate is presently 17.5%.