- DIY and Code of Compliance Issues
This may be relevant for our clients who have done extensions, particularly on the family home. Sometimes the work has been done by experts but often it is done by members of the family. We are finding that a disproportionate number of clients have code of compliance issues and therefore they are unable to sell the family home before this matter is resolved As a result, these issues are causing long delays in the final relationship property settlement.
Most of our clients have at least one Trust and often that Trust owns the family home. There have been a number of decisions in recent years which has changed the law in specific factual situations. Those clients who have at least one Trust will normally take longer to resolve matters than would otherwise be the case. Just because property is held in a Trust does not mean that the other party is not entitled to some compensation. This will need to be determined on a case by case basis.
- Not so Friendly Banks
With the new lending restrictions, it is becoming more difficult for our clients to find solutions to refinance or buy other properties. In particular, they are turning to mortgage brokers to provide them with more flexible options than the banks may help them with.
- Bright-Line Test
With our clients often buying and selling properties, some have to be aware of the bright-line test. This tax rule applies to residential property acquired from 1 October 2015 that is sold (or otherwise transferred) within two years of acquisition unless an exception applies. An exception is that residential property does not include dwelling that is the person’s primary residence.
If a residential property transaction falls into this category, the property sale is taxable at the marginal tax rate even if the seller did not acquire the property with an intention to resell.
The current period for the bright-line test is two years. Labour has indicated that if they win the election, this threshold will be extended to five years.
- Children of Relationship Property
Many clients may wish to have a portion of the relationship property pool to go towards benefiting their children. In general, this can only be done by agreement. In our view, the Property (Relationships) Act 1976 does not provide in a meaningful way for the interests of children to be taken into account. This is another area of relationship property law that may be up for reform together with the treatment of Trusts.