New Stamp Duty Rates and their effect on the Residential Market AND Restrictive Covenants – how restricting should they be?
The new stamp duty rates for buy to let investors and the cancellation of mortgage relief on buy to let mortgages could put the property market in SW London back into winter? The possible effects of this raising of more tax from the property sector are:
- A glut of houses/flats at the lower end of market value coming onto the market for sale.This would be good for first time buyers and it could force a stability of values at the lower end of the market, where it is currently ‘overheated’ in our opinion.
- A rising of residential rental values, because there will be less available homes/flats for rent. This could lead to, possibly, social alarm as unscrupulous landlords take advantage of rising rental values. This might give rise to an overwhelming demand for further legislation, possibly, to protect those on lower incomes by the reintroduction of a new class of protected tenancies. This is not to be welcomed, in our opinion.
The rising awareness of the economic power to those, who hold the benefit of restrictive covenants on land and property is not to be underestimated. Restrictive covenants, which were often imposed prior to Town & Country Planning and Building Regulations legislation being imposed, are now often considered to be:
- Out of date and/or;
- Of no material benefit to the owner of the restrictive covenant; and/or
- An unreasonable restriction on a reasonable owner of land and property in modern times.
The ultimate authority is the Upper Tribunal (Lands Chamber) who can decide to lift or modify restrictive covenants under applications made to them under Section 84(1) of the Law of Property Act 1925. Such applications can be expensive for both sides but they can provide the basis for a negotiation for both sides to be reasonable and “come to terms”.
For further information on these issues and any other property valuation matter, contact Michael Tibbatts MRICS MEWI at Scrivener Tibbatts – email: firstname.lastname@example.org.