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Fundamental Differences to Housebuilding North and South of the Border

Fundamental Differences to Housebuilding North and South of the Border

There are many important and practical differences between the Scottish system and that operating south of the border when it comes to residential development and the sale of new build houses. We have highlighted the main differences below:

Land Tenure

Land tenure is different in England. English freehold titles are not quite the same as heritable titles in Scotland, and are registered with the English Land Registry rather than the Land Register of Scotland. 

It has also been common historically in England and Wales for both flats and new build houses to be disposed of on a leasehold basis, although the Government’s current leasehold reform proposals are expected to see a ban on sale of leasehold houses in the near future and far stricter controls on lease terms for new build flats going forward.

Deeds of Condition

There is no equivalent of deeds of condition in England and Wales. The process to set up and operate a successful scheme to allow for enforcement of common obligations and maintenance of common areas is much less straightforward than it is in Scotland and involves a variety of options, each with their own particular benefits and drawbacks. 

Problems arising with mutual enforcement of positive covenants is the main reason why flats in England tend to be sold on a leasehold basis, with “flying freeholds” an issue of real concern for practitioners, home owners and lenders alike. With the sale of new build leasehold houses expected to be prohibited shortly, this leaves options such as rentcharges, management companies and chains of covenants to be considered.

Planning

The English and Scottish planning systems are very different, relying on distinct statutory provisions and rules. There is no equivalent hierarchy of planning applications in England, and the rules with regard to appeals, judicial review and how applications are dealt with differ on each side of the border.

Contracts for sale

Contracts for the sale of houses are formed in a different way south of the border.  Instead of an exchange of a series of missive letters signed and issued on behalf of the parties by their solicitors, the parties’ solicitors in an English house purchase will agree the terms of a single contract, which will then be finalised and signed by the parties themselves.

Tax

Land and Building Transaction Tax applies only in Scotland, with Stamp Duty Land Tax remaining in existence in England and the new Land Transaction Tax applying in Wales.  Each of these taxes has different rates/thresholds, different rules applying, different forms to be completed and therefore different outcomes with regard to tax due for any given transaction.

Registration and Search Costs

Registration fees can also differ greatly between the two different land registries.  The standard searches required by buyers in connection with an English property is far more comprehensive – and therefore far more expensive – than the equivalent Scottish position.

With the largest dedicated English property team based in Scotland, we regularly provide advice to our clients on all aspects of site acquisition, planning, development, structuring and plot sales in connection with English sites. 

For further information on your English property requirements, please contact Nicky Clemence or Michael Wood.

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