The role of ACAS in an Employment Tribunal claim

Before an Employment Tribunal (“ET”) can accept a claim in respect of, for example, unfair dismissal, discrimination, harassment, or a combination of actions, the Prospective Claimant must have gone through the Early Conciliation (“EC”) process.

This has been a mandatory requirement since its introduction on 6 April 2014. This process is, in effect, a last chance for the parties to attempt to resolve their dispute before formal litigation can be commence, by the submission of a claim to the ET. The EC process is subject to time limitations, but these will be addressed in a separate article.

The EC process can be summarised in this way:

  • The Prospective Claimant submits an EC form, usually on-line, which includes basic information such as the claim(s) the Prospective Claimant is contemplating making and the identity and contact details of the parties, to ACAS (“The Advisory, Conciliation and Arbitration Service”), who oversee the EC process. The form is intentionally simple to complete and therefore does not necessarily require the input of a solicitor.
  • An assigned ACAS conciliator contacts the Prospective Claimant within a few days of the submission of the EC application in order to go through the contents of the EC form that was originally submitted. ACAS then contact the entity which the Prospective Claimant is making the claim against – known as the Prospective Respondent, and is usually the Prospective Claimant’s current or previous employer.
  • Following such contact, the Prospective Respondent is aware of the existence of the possibility of a claim(s), what it relates to, and the basic reasons why the Prospective Claimant considers that they have a valid claim.
  • The Prospective Respondent informs the conciliator either that it is prepared to try to settle the claim by negotiation, or that it does not (e.g. it considers that the claim is without merit, or that it wishes to defend any claim that is issued).
  • The conciliator communicates this to the Prospective Claimant. If the Prospective Respondent does not wish to try to settle the claim, the conciliator issues an EC Certificate to the Prospective Claimant. This issuance of the EC certificate proves that the parties have complied with the mandatory EC process but that it was unsuccessful. The Prospective Claimant is now free to submit a claim to the ET.
  • If the Prospective Respondent does wish to try to settle the claim by negotiation, it will communicate with the Prospective Claimant by way of the conciliator. It is this part of the process which is the subject of this piece.

Difference between a “Mediator” and a “Conciliator”

“Mediation” can be defined as an attempt to settle a legal dispute through the active (my italics) participation of a third party (the mediator) who works to find points of agreement and make those in conflict agree on a fair result.

“Conciliation” is an alternative dispute resolution (ADR) process whereby the parties in dispute use a conciliator, who meets with the parties both separately and together in an attempt to resolve their differences.

The distinction between these 2 definitions is more than semantic, and lies between the differing levels of proactivity of this impartial third party. The disputing parties’ expectation is that the mediator’s knowledge and experience allows it to understand the industry practices and legal issues which relate to the claim, and so advise the parties on the strengths and weaknesses of their positions. In such circumstances, the experience and conduct of the mediator will play a significant part in trying to resolve the dispute.

It is a common perception by Prospective Claimants that the ACAS conciliator will actively attempt to mediate during EC in such a manner. Our experience is that this is unusual, and that the conciliator confines themselves to passing on one party’s position to the other without advising either on the merits of the claim(s) or the prospects of success of that position. In effect, they are messengers who will neither offer legal advice on either party’s position or try to unlock a deadlocked negotiation other than by their existence in the process.  ACAS are entirely impartial in this respect.

This less-proactive stance often surprises parties unfamiliar with the process, who typically expect the conciliator to advise them on ways to settle the matter to avoid it going further. A frequent complaint from Prospective Claimants is that the conciliator does not dispense legal advice in the same way as a solicitor during the process. While correct, such a complaint misunderstands the role and remit of the conciliator. Their remit is to provide a mechanism to resolve a dispute but does not extend to advising the parties on the merits of their claim or their defence. Additionally, as the conciliators are generally not legally trained, they are not legally permitted to provide such advice.

The EC mechanism was introduced to reduce the number of claims progressing to the ET, and the statistics show that it has been largely successful in that respect. The number of ET claims that have been issued since the introduction of EC has fallen significantly. However, the constraints of the conciliators’ remit limits how successful they can be, and ironically, often leads to Prospective Claimants, who expected legal advice from conciliators during the EC process, instructing a solicitor instead to provide such advice.

 

Meaby & Co are lawyers experienced in all employment issues. Should you require advice on the EC process, or indeed any aspect of employment law, please contact Chris Marshall on 0207 703 5034 or cmarshall@meaby.co.uk.

 

Blogs

WHY DO WE HATE NON-DOMS?

“Capital will always go where it is welcome and stay where it’s well treated. Capital is not just money. It’s also talent and ideas.  They, too will go where they’re welcome and stay where they are well treated.”

Walter Wriston

 

It is a truth universally accepted that mention the term ‘non-dom’ and a great percentage of people will express disgust – whether this be in the form of a gentle ‘tut tut’ or in the use of a more forceful expletive.  Nor can we blame the popular media for its policy of ‘bashing’ the non-dom as this is only a reflection of the general consensus.

So why do we hate non-doms and is it not time to review not only the general opinion of this class of individual but the way it is taxed?  If not, we are in danger of losing a powerful class of person whose contribution to the UK economy is not only useful but essential in promoting growth and economic stability.

What is a non-dom?

A ‘non-dom’, abbreviation of ‘non-domiciled’, as the name suggests is a person who is resident but not domiciled in the UK.  The difference between residence and domicile in brief being the former is where one resides the latter is the country with which one has the greatest connection.  One is born with a domicile of origin normally that of one’s parents.  The rules as to the various forms of residence and domicile are too long for this article but are ably set out in Her Majesty’s Revenue and Customs Handbook.

Taxation of non-doms

Interestingly ask the average person on the street, or the man on the Clapham omnibus as the legal profession prefer, when the whole non-domicile regime began the majority will answer to the tune of back in the ‘80s, under Margaret Thatcher.  This is laughable, the non-domicile tax regime has been in place since 1799.

The non-domicile regime traditionally allowed those with ‘non-dom’ status to live and work in Britain without being subject to UK taxation on any income or gains earned outside of the UK.

Successive governments, most viciously under the Blair/Brown years, have overhauled the non-dom tax regime so that it is now merely a shadow of its former glory.

The introduction of the Annual Charge on non-doms opting to retain non-dom status and use the remittance basis for taxation, meaning that they would only pay UK tax on overseas income remitted to the UK already proved the growing hostility towards non-doms.

As it stands currently, for non-doms who have been resident for seven out of the previous nine years the Annual Charge is £30,000, for those that have been resident for at least 12 out of the previous fourteen years the charge increases to £60,000.

The final blow however which came in the changes made in April 2017, saw the removal of the right of non-doms that have been resident in the UK for more than fifteen out of the previous twenty years to be considered non-dom, instead they will become ‘deemed domiciled’ in the UK.

‘So-what?’

Despite changes in government the policy of bash the ‘non-dom’ shows no sign of relenting, to which your average chap on the Clapham omnibus might easily reply ‘so what’.  This however is a serious mistake.  The non-dom regime helped make the UK into a place where foreigners wanted to do business which in turn played a key role in shaping the success of the UK not least the rise of the City.

One only has to examine the list of primary donors to many of the UK’s institutions, galleries, museums and even universities to see the enormous value of non-doms.

Another mis-conception that must be corrected is that non-doms pay no tax.  This is simply not true, in 2015/16, non-doms contributed just under £6.6billion to the UK Treasury.  Not a figure to be sneezed at.  This figure only includes income tax, it does not consider for example the VAT raised from money they and their employees spent in shops, restaurants and on other services in the UK.

Brexit and Beyond

Far be it for a mere mortal to criticise the government but Theresa May has been given the perfect opportunity to build a solid post Brexit economy however to date her government has shown no signs in abating the vitriolic tax treatment of the non-dom.  This is foolhardy and short sighted.  Bashing the non-doms may get a likeable headline the day after the Budget but long term it will cause serious harm to the UK’s competitivity and ability to attract inward investment.  It appears that the government still has not learnt what Walter Wriston made clear, if you create a hostile environment capital will go elsewhere.  Hong Kong and Singapore are nipping at the UK’s heels, not forgetting New York.  If they can’t invest without penalty in the UK investors will move and this is a huge loss to everyone not just the wealthy.

If you would like any further information on Private Wealth  then contact Olivia Cooper at Meaby & Co LLP on 0207 703 5034 or ocooper@meaby.co.uk.

 

 

 

An interesting authority on single establishments and the duty to collectively consult in the event of redundancies.

The recent authority in Seahorse Maritime Limited -v- Nautilus International 2018, the Court of Appeal considered the definition of a single establishment and also the territorial scope on the duty of collective consultation.   This is a mandatory requirement under Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C )A)

Under these Regulations employers are required to inform and consult where they propose to make 20 or more employees redundant at one establishment within a period of 90 days.

This is an interesting case because it dealt with the issue of UK jurisdiction and also whether Seahorse was one establishment or whether the individual ships were.  These points were appealed successfully.

The Facts of the case

The Appellant – Seahorse employed a crew to work on a fleet of oil rig support ships that were operated by another entity called Sealion.   Most of these ships operated outside UK territorial waters.

Unfortunately, there was a downturn in the oil industry back in 2015 resulting in insufficient charters for many of these ships.  Consequently, various  redundancies were made from the workforce, but no collective consultation was implemented or took place.

The Trade Union Nautilus International representing the redundant employees issued employment tribunal proceedings seeking protective awards for a failure to collectively consult under TULR(C )A which would have resulted in awards of up to 13 weeks’ pay per employee.

Seahorse defended the claims by asserting that there were no jurisdictional ground to bring these claims as the employees were not UK based.  They also argued that each ship was a separate establishment and that therefore the threshold of 20 redundancies at any one establishment was had not been met, notwithstanding that there were more than 20 employees that were made redundant across the workforce.

The outcome

Both the Employment Tribunal and the Employment Appeal Tribunal both upheld the employees claims and held that the ships were not separate establishments and that their employees had a sufficiently strong connection to the UK and consequently Section 188 of TULR(C )A applied.

Interestingly it was also held that each ship was not a distinct unit of Seahorse’s undertaking and that the employees were ‘international commuters.  This was on the basis that the employment contracts were stated to be governed by English law combined with the fact that the employer used a British registered company to manage its employees and it was held that their duties started as soon as they left home and included travelling to the ships.

The Court of Appeal reversed the decision and held that the employees were assigned to particular individual ships which were self-contained operating units which in turn were each an individual establishment.  It was also held that there was not a significant connection with the Great Britain.

In its findings the Court of Appeal noted that the obligation to consult collectively under Section 188 sat at collective level and that it was necessary to focus on the one common feature which defined the Group – which was the establishment.  In this case it was the individual ships.

Accordingly, it was held that each ship was a separate establishment and that there was insufficient connection to Great Britain to trigger any obligation under Section 188 TULR(C)A.

The important points to gauge from the case are that ships can constitute separate establishments for the purpose of Section 188 similarly to a chain of retail shops, as long as the employees are assigned to a specific ship.    It is also clear from the authority that it is the connection that the establishment has with Great Britain as opposed to the connection any individual may have.

Seahorse Maritime Limited -v- Nautilus International 2018 EWCA Civ 2789

If you have any questions relating to individual or collective redundancies affecting your business then contact Steven Eckett, Partner and Head of Employment at Meaby & Co LLP   seckett@meaby.co.uk or 020 7703 5034

 

How will a no-deal Brexit affect the property market?

The last few weeks has seen the UK seemingly veer from one crisis to another while the Prime Minister has forlornly tried to negotiate a Brexit deal acceptable to both the EU and the Houses of Parliament. The latest vote, just yesterday, saw the House of Commons vote against a no-deal Brexit by an alarmingly small majority of just 4 votes. Leaving the EU on WTO terms is however still a possibility, if the EU refuse to extend the 29th of March deadline.

Understandably, anyone considering buying or selling at present has one eye firmly on the ongoing Brexit negotiations. But should Brexit affect your decision?

While the continuing and unshakeable concern is that a no-deal Brexit will cause a financial crisis akin to that of 2008, this is not necessarily a bad thing for buyers and property investors. If property prices crash, perhaps it is the time to buy – the old adage tells us to buy low and sell high.

Likewise, if you are selling and buying in the same area, and particularly if you are upsizing, a possible property market crash may not be the worst time to move – as long as you are not in negative equity, it may be possible to find a bigger home much cheaper than it would otherwise have been, while smaller properties will generally not lose as much value in a market slump as the larger properties.

Traditionally, the new homes market is the first to suffer in times of financial crisis, but this Government has, to their credit, invested in new homes. Initiatives such as the Help To Buy scheme have made buying a brand new property far more viable than it might have been in previous times of crisis.

While I certainly can’t predict the future, and while my personal opinion is that we would have been far better off remaining in the EU, I do feel that there are always going to be opportunities for the smart investor, and for those brave enough to step into the market when all others hesitate. If I can’t stop Brexit, then I might as well try and embrace the possibilities that arise from it. Who’s with me?

If you are looking to move house or buy another property, please contact Andy Roscoe at Meaby & Co for advice: andy@meaby.co.uk or call 020 7703 5034.

A reminder that increases in statutory payments for 2019 are imminent

Notwithstanding the amount of Parliamentary time that Brexit has taken up, it is good that the increase in statutory rates was published in good time at the end of last year to enable employers to plan ahead. These increases are in line with the Consumer Prices Index.

It is important that employers of all sizes are aware of the statutory increases that come into effect on 7 April 2019 (the first Sunday in April) to ensure that their affected employees receive the correct payments.

Here is a snapshot of the main increases that are scheduled to come into effect: –

Statutory Maternity Pay
This is scheduled to increase from £145.18 to £148.68. The first six weeks’ payments are payable at 90% of the employees weekly pay. Do remember that if the employee’s weekly earnings are less than the statutory rate then payments should be at 90% of their average weekly earnings. Statutory Maternity Pay is payable for a maximum of 39 weeks.

Statutory Paternity Pay and Statutory Shared Parental Pay
These payments are also scheduled to increase from £145.18 to £148.68 or 90% 0f the employee’s average weekly earnings if this figure is less than the statutory rate. Payments of Statutory Paternity Pay are for up to two weeks immediately following the birth (even if premature) or at any time within the following eight weeks. If you qualify for Paternity leave you can choose whether to take one week of two weeks’ leave. The two weeks’ paternity leave must be taken in one block and cannot be split. Shared Parental pay is payable for 39 weeks in total and as with statutory maternity pay the first six weeks is payable at 90% of salary.

Statutory Adoption Pay
The rate of Statutory Adoption Pay is also scheduled to increase from £145.18 to £148.68 or 90% of average weekly earnings is less than this sum. The first six weeks pay once again is payable at 90% of the employee’s average weekly pay.

Statutory Sick Pay
The rate of Statutory Sick Pay is scheduled to increase from £92.05 to £94.25 from 6 April 2019 and the maximum entitlement is 28 weeks in any linked period.

National Minimum/Living Wage
It is also important to remember that the National Living Wage payable to those aged 25 and over will increase by 4.9% from 1 April 2019 from £7.83 per hour to £8.21 per hour. This is in line with the Low Pay Commissions recommendations and will benefit around 2.4 million workers across the UK.
The following National Minimum Wage increases will also come into effect on 1 April 2017 for those aged below the age of 25.

Those aged 21 -24 – the hourly rate will increase from £7.38 to £7.70

Those aged 18 – 20 – the hourly rate will increase from £5.90 to £6.15

Those aged 16 – 17 – the hourly rate will increase from £4.20 to £4.35

Apprentices will also benefit and will see an increase in the hourly rate from £3.70 to £3.90.

Statutory Redundancy Pay
The statutory redundancy payment caps will increase from £508 to £525 from 6 April 2019 in accordance with the Employment Rights (Increase of Limits) Order 2019.

For the sake of completeness, the lower earnings limit will increase from £116 to £118 in April 2019.
It is also worth pointing out that some employees might have greater contractual entitlements to these payments and so it is worth reviewing any internal policies to ensure that they are up to date. Usually the first slice of any enhanced contractual payments tend to be the statutory proportion but the detail as ever is in the wording and meaning of any written policies.

Our recommendation for employers of all sizes is to ensure that they are aware of these increases. Otherwise there is a risk that they could inadvertently expose themselves to the risk of employment tribunal claims for unlawful deduction of wages/breach of contract or are fined and/or named and shamed by HMRC as a consequence of failing to pay the correct National Living/Minimum wage rates.

If you have any concerns about these statutory increases or any written policies then contact Steven Eckett, Partner and Head of Employment at Meaby & Co LLP seckett@meaby.co.uk or 020 7703 5034.

Who and When to Instruct your New Build Solicitor…

So you have decided to buy and have reserved your dream new build home at your chosen Development. Congratulations!!

Now it is time to think about the legal part and to decide quickly on instructing a solicitor. Whilst the Developer can make some recommendations of expert lawyers the decision is ultimately yours. We may be one of the preferred solicitors for several Developers, however it is important to note that we do not work for them and that every Developer has their own lawyers acting on their behalf on the sale to you. We will always act in your best interest which is paramount to ensure you are receiving the best legal advice, guidance and customer service to see you through the process.

We are preferred New Build Lawyers as we can ensure that not only will you receive an excellent service to ensure a more efficient transaction, you will be using a solicitor that has extensive knowledge of new build transactions and ensure that you meet the exchange deadline set by the Developer. This is a very important stage of the buying transaction and part of the deal agreed between you and the Developer when you reserve.

So when is the right time to instruct your solicitor? As the Developer sets a tight deadline for exchange of contracts, it is important to instruct us as early as possible following reservation of your property as there are a number of legal documents and procedures that must be completed when buying a property. The faster the paperwork can be handled the more quickly you’ll exchange and be one step closer to your dream home.

Meaby and Co have a specialist New Build Department headed by two very experienced and qualified Solicitors – Prabjoth Bassan and Senay Talat. Prabjoth and Senay have bought their passion of new build to their department and have National contacts which has seen their careers flourish over the years. Their dedication and excitement for helping buyers purchase their new home is evident in their work ethic and commitment to each client – they will be there for you along each step of the way and guide you through the whole process using their experiences and expertise – you will definitely be in trusted secure hands!

If you are looking to buy a new home or just want a chat about the process of buying a new build home contact Prabjoth or Senay at Meaby & Co for timely advice at pbassan@meaby.co.uk / stalat@meaby.co.uk or call 0207 703 5034.

What to do when someone dies

You should consider the following:-

  1. Register the death
  2. Appoint undertakers
  3. The type of funeral service you require
  4. If you would like a remembrance book/record of attendance to be made and ask a friend or family to assist with this (NB. it is easier to do this at the beginning of the service rather than the end)
  5. What type of flowers you would like (if any) and contact a florist. The church can usually recommend someone they use.
  6. Where to invite guests for the refreshments
  7. Placing an announcement in the local and/or national paper, if so, which one(s). Make sure that there is sufficient time for the announcement to appear prior to the day of the service.  Usually the notice to the public will have basic information i.e. name, age, date of death, and you may consider a short message and an indication as to whether flowers, if any, are to go to the undertakers or whether donations to a particular charity should be made via the undertaker etc.
  8. Making arrangements for friends and/or relatives not in frequent contact with the deceased to be informed by phone, word of mouth or advertisements in the local press of the news of the date and location of the funeral.
  9. Transport to and from the church/crematorium/

It is prudent to check 48 hours prior to the burial/cremation that all the arrangements have been put into place so that everything goes smoothly at this difficult time.

 

 

 

 

 

What are my duties as a Trustee when it comes to investing the trust assets?

It is often the case that an individual is named as a trustee in a will, and find that they now have a substantial sum of money or assets to deal with.  The role of a trustee is to manage the trust assets on behalf of the beneficiaries and at the end of the trust period, distribute those assets correctly and in accordance with the terms of the trust instrument.

Investment of the trust fund is one of the most important aspects of trust administration.  It is not often advised simply to hold the fund in cash form, but to invest it in appropriate investments.  Section 3(1) of the Trustee Act 2000 (the ‘Act’) gives trustees wide statutory powers of investment: “a trustee may make any kind of investment that he could make if he were absolutely entitled to the assets of the trust”, and Section 8 in particular enables trustees to invest in land in the UK.  It is noted that such powers are limited by section 4(2) of the Act, which states that the investment must still be a prudent one.  It would obviously not be prudent for a trustee to invest in assets where the risk of loss is considerable.

Trustees must take into consideration, when making an investment, the standard investment criteria set out in Section 4(3) of the Act. The criteria dictates the requirements as to suitability and diversification of investments.  The trustee must therefore consider whether the investment is suitable for the type of trust (a small family trust may require a conservative approach whereas a large discretionary trust may not) and they must ensure that the assets are diversified, perhaps across different portfolios if the size of the trust allows it.

Such requirements must also be read in conjunction with the trust document, which may specify how in particular the trustees are to deal with the trust assets.  They must also balance the needs of the beneficiaries – if for example the trust sets up a life interest for a surviving partner, with the capital to pass to children on the partners death, the trustees must ensure that the assets produce a steady income from the life tenant whilst preserving the capital value of the fund for the children later on.

Trustees should always consider taking advice from an investment manager or someone appropriately qualified to advise on investments (Section 5 of the Act), and they must always keep in mind the most important duty under the Act; the duty of care to the beneficiaries when making investments (Section 1 of the Act).

Should you have any questions on trustees’ duties, please do get in touch with our Private Client department by emailing Laura Sentkovsky at laura@meaby.co.uk.

Blogs

BNY Mellon: Can they unilaterally withdraw existing flexible working arrangements?

It has been widely reported that the behemoth US bank, BNY Mellon, has revoked the flexible working arrangements which have enabled staff to work from home for a proportion of the working week. The bank has justified their contrarian approach to the issue by stating that the move was designed to increase efficiency by improving staff “interaction”. Unsurprisingly, the move has been met with an outcry from employees who had got used the to the current arrangements, or, in some cases, had joined the bank precisely because of the availability of these arrangements which allowed them to juggle the various demands on their time, such as child care.

So what is the legal position?

In the UK, all employees have the legal right to request flexible working arrangements, although they must have worked for the same employer for at least 26 weeks to be eligible.  Flexible working can include reducing hours of work, taking time off during school holidays, job sharing, changing shift patterns and/ or working from home.

Employers must deal with requests in a ‘reasonable manner’ and give them reasonable consideration, and cannot lawfully reject such applications without considering them fully and rationally. Examples of handling requests in a reasonable manner include:

  • assessing the advantages and disadvantages of the application, the latter of which can include the burden of additional costs, the impact on quality of work and customer demand, and the inability to reorganise work amongst the team.
  • holding a meeting as soon as possible to discuss the request with the employee.
  • Giving the employee the opportunity to explain the changes they are seeking and when they want them to take effect. In addition, giving them an opportunity to explain what effect the changes would have on the employer and its business and how these could be dealt with.
  • offering an appeal process (the whole process needs to be concluded within three months of the original flexible working request)

If an employer does not handle a request in a reasonable manner, the employee can make a claim against them in the  Employment Tribunal, although it is highly recommended that any dispute is managed via an internal grievance procedure.

In the event of a claim being made to the Employment Tribunal there is the potential exposure of being ordered to pay compensation of up to eight weeks pay (currently capped at £508 per week) and possible associated discrimination claims if, for example, the decision affects more women or disabled employees.

An employer can refuse an application for flexible working, as we have alluded to, if they have a good business reason for doing so, and it seems that this is the provision upon which the bank is relying to withdraw the opportunity for flexible working. By applying a blanket ban on the practice, the bank has clearly not considered each application on a case-by-case, rational manner, and it is here that it is likely to be vulnerable and exposed to legal challenges, even if the defence of “a good business reason” is valid.

It has been reported that staff have had the flexible working arrangements added to their employment contracts when they became policy in 2017. If that is the position, then any unilateral withdrawal of that right will be a breach of contract, and the bank is susceptible to such claims by its employees.

Although it has been reported that the decision to withdraw the flexible arrangements has already been taken, the bank has informed some news providers that no final decision had yet been made. In our view, the bank would be wise to resile from the threat to withdraw the arrangement, as by its blanket ban, it is clearly in breach of Parliament’s intention to encourage such working practices, rather than eradicate them.

 

Meaby & Co are lawyers experienced in the financial services field in respect of employment issues. Should you require advice on any aspect of employment law, including the above, please contact Chris Marshall or Steven Eckett on 0207 703 5034.

 

I’m buying a property – when should I serve notice on my rental?

Sometimes, a first time buyer will ask when to serve notice on their rental accommodation.  It is very difficult at the beginning of the transaction to know when a purchase will complete.  The length of the transaction depends upon a number of factors, including the speed of all parties in the chain, i.e. buyers, sellers, solicitors, lenders and managing agents (if the property is leasehold).

 

It can also depend upon how complicated a transaction is and whether there are any complicated issues to resolve and if there is a chain (and if there is a chain how long is the chain).  If there is a chain, then the transaction can only move as quickly as the slowest link in the chain.  Instructing a conveyancer who is responsive, pragmatic and efficient will certainly speed up matters in the transaction, but there may be issues outside of your conveyancer’s control, particularly if they relate to a third party or another part of the chain.

 

If you were to serve notice on your rental at the beginning of the transaction, there is no guarantee that you will be able to complete before the end of the rental period.  Serving notice on a rental before exchange of contracts will mean a risk of you having to find alternative accommodation and storage if there is a delay in the transaction, such as waiting a long time for documents, resolving a title issue or waiting on one part of the chain to catch up with the rest of the chain.  It is possible that the seller or another party in the chain may have to put the process on hold for a while due to personal circumstances, or certain circumstances may require them to ask for a long time between exchange and completion.

 

If there is a chain, then one transaction in the chain could fall through which could mean that the chain could collapse or the chain could be delayed while that part of the chain is reinstated and that transaction has to catch up with the rest of the chain.

 

In conveyancing transactions, there is no legally binding contract until contracts are formally exchanged.  At any point before exchange of contracts, either the buyer or the seller can pull out of the transaction without penalty.  If a buyer were to serve notice on their rental only for the seller to pull out of the transaction, then the buyer would have to find another property to buy and start the process from the beginning.  This would likely mean an extended time in alternative accommodation or having to find another rental for a period of time.

 

Serving notice on your rental before exchange of contracts also puts a buyer in a weaker bargaining position.  If the papers to the property reveal any issues or adverse matters or if a survey reveals there are a number of problems with the property which require expensive repairs, then the buyer, being aware that their rental will end in the near future, may feel under pressure to proceed with the purchase notwithstanding the issues, whereas they may have pulled out if they did not have the pressure of their rental ending.  If the buyer wished to negotiate a price reduction due to issues on their survey, then they may be in a weaker bargaining position if they felt under pressure due to their rental ending soon.

 

Our usual advice is to wait until contracts are exchanged before serving notice on a rental.  Once contracts are exchanged, the contract is legally binding and a fixed completion date is set.  This may mean a period of paying both mortgage instalments and rent at the same time, but many buyers will feel safer doing this than risking having to find alternative accommodation or storage if the transaction does not run to the timescales they had hoped for.

 

If you are buying or selling a property, please contact Brian Craig at bc@meaby.co.uk or telephone 0207 703 5034 for timely advice.