land law

What taxes are charged on rental profits of UK property business?

Income tax and corporation tax

Where does the taxable profits of the business derive from in UK property businesses?

Not from the land but from the estate, interest or right in or over the land

What items are considered land?

• Physical soil and clods of the earth that make up the surface layer as well as whatever lies under including minerals and treasure (crown own these)

• Natural produce of the soil (only those that grow without human labour)

• Airspace above the earth at such a height as is necessary for reasonable enjoyment of the land

• Buildings and other structures on the ground together with the fixtures

• Ground covered with water

• Estates, interest and intangible rights

Fixtures

chattels that are affixed to the building - two tests:

• the degree of annexation: has to be fastened in a substantial way (removing causes considerable damage)

• The purpose of annexation: Intention is to improve the building permanently and make its use more convenient

Who owns all land in England and wales?

The crown - people only own estates and interest in or over the land

Estates and types

Periods of time that persons own a land for. Two types:

• freehold

• Leasehold

Freehold estate

‘Fee simple’ is a period of time without an end.

Fee - can be inherited

Simple - estate can be inherited by any person

This is the greatest estate (lasts longest - usually forever) and practically makes them owner of the land

What is the only freehold estate recognised at common law? What does it mean?

Fee simple absolute in possession - owner of the estate has the present right to the immediate enjoyment of the estate without any conditions attached. If does not have these attributes then the estate exists only in equity

Leasehold estate and what rights do each have?

Also known as term of years absolute, it is a period of defined duration - owner of leasehold estate is regarded as owner of the land for the period of the lease. Freeholder has rights of ownership but gives the tenant rights of occupation

Reversionary leases

Leases that take effect within 21 years from the date they are granted

What does it mean if a person owns an interest in land?

They own rights over someone else’s land. Interest restrict the estate owner in their occupation and use of the land. An interest in land attaches to the land itself

Where do interests in land exist, in law or equity?

Can exist in either

Easement

Right of one person to use the land of another in a certain way.

Dominant tenement = enjoys the benefit of the easement

Servient tenement = carries the burden of it

Profits a prendre

The right of one person to enter and take property off another persons land

Covenant

An agreement by which one person promises the other that they will do or not do something in relation to their land positive = requires the Covenanter to perform some specified act in relation to land

Negative = restricts the covenantor

what conditions need to be met to validly create leasehold estate?

• the lease must give the lessee the right to exclusive possession

• A lease must have certainty of duration (a term)

• The premises subject to the lease must be accurately defined

Is payment of rent essential to create a leasehold estate?

No but if rent is provided for it must be of a defined and certain amount

When may a person not grant a long residential lease (excess 21 years)?

If it is not a permitted lease

What are the two aspects of a lease?

The lesser has an estate in the the land but also has rights against and owes duties to the landlord. This is why leasehold estate is not realty but it is personalty

What terms are usually implied in leasehold agreements?

for the landlord:

• quiet enjoyment

• Repair and fitness for habitation

For the tenant:

• To pay the rent

• To pay rates and taxes

• To allow the landlord to visit for repairs

• To return the property back

How may a leasehold come to an end?

• expiry: some leases contain break clauses that enable landlord or tenant to bring the lease to an end on certain dates.

• Either party giving notice to quit

• By merger: lessee acquires the landlords reversion on the lease or where a third party acquires both

• By surrender

• By forfeiture (material breaches of the leasehold covenants)

Security of tenure

Right to stay in occupation and take a new lease of the premises after their original lease has ended. Landlords may deprive their tenants of this right (landlord must usually pay a sum of money for disturbance)

Tenancy of will

Created where a tenant occupies premises at the will of the landlord who may determine the tenancy whenever they wish

Tenancy of sufferance

Created where, after the expiry of the term of their lease, the tenant remains in occupation of the premises. The tenant remains liable for rent and the landlord may claim possession at any time

Licence

A permission given by the occupier of the land to do something which would otherwise be unlawful in relation to the land of another person. It prevents what would otherwise be a tort (trespass). In most case they create no interest in the land in respect of which they are created, normally under a contract for payment

What does co ownership in land take effect as?

A trust

What are the two ways a person can prove their ownership of (title) an estate or interest in land?

• reference to the land register

• Reference to the title deeds

When is it compulsory to first register land?

• transferred by sale/gift

• Lease granted for more than 7 years

• There is a first legal mortgage of the land

What is the evidence of ownership for unregistered land?

Title deeds

what are the two stages of granting a lease of land?

• parties may enter into an agreement to create a lease

• The agreement is then completed by the actual grant of the lease

What are non-UK incorporated legal entities required to do in the context of sale of land?

They are required to register and provide information regarding their own beneficial owners (directly or indirectly own more than 25% of the companies shares of votes/significant control). If not on the register of overseas entities, cannot have name registered on land registry as owner so not able to sell or buy UK land