November 24th, 2010
Anyone with an interest in the house market in Scotland must find some of the recent published articles confusing. One headline claimed “Scotland bucks the trend as house prices hit new highs”. Yet this article had been preceded only a week before by a property “expert” claiming prices and the housing market would be depressed for up to five years! Both cannot be right – so what is the layman to make of all this?
Well the first thing to note is that there is no single Scottish house market. The market for a city centre flat in Aberdeen will have few characteristics in common with the market for a property in rural Skye for example. This means aggregation of prices obtained and other data can be a bit meaningless. Consequently, recently when reading of house price rises readers on close examination of the data may well find one or a few areas with brisk markets responsible for the overall rise.
At Caesar and Howie, we tend to feel there is much too much emphasis by journalists on prices alone when describing market trends. The underlying assumption seems to be that rising prices are good and static prices are bad. We do not share that view – fast rising prices tend not to benefit anyone, purchases are more difficult and if prices rise too fast there usually follows a painful correction. Many householders are experiencing that now. On balance we feel that static or very modestly rising prices over longer terms makes the market more stable for everyone. Hopefully, the recent house price correction will be the start of a more predictable next decade than the last one has been.
Again the emphasis on prices seems almost to make secondary the real issue for buyers – which is – “can I find and buy accommodation suitable for me and my family.” By that yardstick it might be said that the market was good now in that there are lots of properties of all types on the market. Sadly, supply is only half of the story and ready buyers are just not out there in the same numbers. The reason for that is quite clearly the lack of available mortgage funds. When bank officials say banks are “ready and willing to lend” people should take that with a pinch of salt. The truth is all lenders have tightened their criteria so much that potentially sound borrowers are simply frozen out of the market. This is particularly true for first time buyers. Without first time buyers this market will not function properly because the age old pattern of buying say a small flat to start with, then steadily trading up through the years cannot work properly. If a first time buyer cannot sell the whole process is brought to a halt or slowed significantly. That is where we are now and until that changes talk about a market revival is simply not sensible.
Having said that, there still is a market out there of sorts and for those who can get the funds there are bargains to be had. Despite all the current gloom, recessions never last forever, and the long term trend in house prices is still likely to be upwards as demographic changes and population increases put pressure on housing stock. Scotland simply does not have the oversupply in property that for example is noticeable in Ireland. Consequently a buyer with funds and taking the long view of prices might be able to make a very wise purchase now.
Posted in Uncategorized | No Comments »
November 9th, 2010
The Daily Mail recently reported that an estimated 20,000 homes a year in the UK are sold to pay for the care costs of the owner, when that owner needs residential care. That is a pretty dramatic figure and the Mail points out that effectively about 60 houses a day are sold to pay for care costs. Each one of these sales represents a tragedy for the elderly owners and of course it also means their family also loses an inheritance, probably built up by the elderly owner over many years of prudent and thrifty behaviour.
One of the problem issues for families with an elderly member needing care is the soaring cost of care itself. The Mail also reports a rise in care costs of 20% over the last five years. In Scotland nursing and personal care are free to all but accommodation care costs are not. With accommodation care costs now frequently around £30,000 per year it is easy to see how someone’s assets can be devastated very quickly indeed if they have to move into care and pay for it.
Some financial help is available but anybody with capital valued at more than £22,750 has to pay. With this limit being so low it means in practice that every householder in Scotland may be liable to pay for their own care costs – and many Scottish houses may be sold to pay for care.
Is there a way of avoiding this problem? Well at the moment th
ere are several possible ways of dealing with this issue says Caesar and Howie Partner, Sarah Patrick., one of the firm’s Senior Issues team. “What individuals must do is to organise their affairs so that a house is not owned by them individually at the time their assessment for help or otherwise for payment of care costs. Placing a house in a Discretionary Family Trust where it is owned by trustees – usually the individuals themselves with their family will have that effect”. However, any such trust must not be set up solely for the purpose of avoiding care costs. Sarah adds “you need to act well before any care costs are in contemplation and the trust deed must make it clear that it was set up for different reasons. But there are many legitimate reasons for setting up a trust for elderly people not least for the better management of their affairs if they become infirm. If you like, the avoidance of care costs is a sort of beneficial side effect of the trust model”.
Such trusts are becoming quite popular with families who really want to preserve assets but there are other routes to address the issue at least in part. Lesley Cunningham, another partner in the Caesar and Howie Senior Issues team, comments “Some families enter into less sophisticated arrangements such as gifting property to children but reserving the right to live in the house. There are “pluses and minuses” with each route anyone chooses and advice must be sought at every stage. Each family is different and what suits one may not suit another. But, if you are worried about care costs – waiting till someone is about to go into care is much too late. The legal steps which may help avoiding care costs have to be completed long before the point when care is needed – the longer the better”.
Posted in General, Our News | No Comments »
November 9th, 2010
With a £900 million cut in the Scottish Budget next year it is clear various services must be hit. A whole series of bodies including Age Scotland and the Scottish Association for Mental Health have flagged up worries facing various sectors in society – particularly disadvantaged groups.
Now the Law Society of Scotland has joined the debate and warned that cuts in the legal aid budget would threaten the public’s access to justice.
One little known feature of the Scottish Legal Aid system is that it is relatively generous to pensioners. Through the “Advice and Assistance” element of the legal aid system, about 80 to 90% of Scottish pensioners can have basic legal work done absolutely free or at a significantly subsidised cost.
David Borrowman, of Caesar and Howie is worried that this aspect of the system may change. “I really hope that whatever changes come to the system this relative generosity to older folk stays in place” says David…“A key document every older person should prepare is a Power of Attorney, appointing a trusted friend or relative to look after their affairs should they become unable to themselves. We prepare lots of these free to the client because of legal aid and I would hate to see that benefit removed. Apart from anything else the cost of dealing with incapacity would go up because the less Powers of Attorney that are written the more court applications for guardianship there will be.”
David’s advice to pensioners and to those involved in pensioners groups is simple.
“Pensioners should act now – the three key family care documents, a Will, a Power of Attorney and a Living Will can all be done on legal aid. Do them now – don’t’ wait. If this benefit is cut you will be too late.”
Posted in General, Legal Aid, Our News | No Comments »
August 17th, 2010
(Senior Partner Ivor Klayman of Caesar and Howie sounds a note of caution)
We live in austere times these days. Money is tight in most households and we are all looking for ways to get things done cheaply if we can. DIY stores are apparently bucking the retail trend for that very reason. We are also seeing from time to time some legal work being done by individuals themselves. This seems to be limited to probably two areas of work, letting residential property and writing wills. On the letting side some people are reluctant landlords rather than landlords of choice – with letting being a last resort when the housing market is poor. These landlords may be trying to let “on the cheap” On the wills side there has always been a small number of people who go “DIY”.
Sometimes a DIY legal job is done properly but over my career, for every well done DIY job I have seen, I have probably seen 10 times as many failures. That’s a pretty horrible ratio and the consequences for the individuals and their families can be damaging and expensive to fix – if they can be fixed.
Not setting up a Short Assured Tenancy properly can make it very difficult to recover the property from the tenant. Not serving Notices to Quit properly can have the same effect and cause significant wasted court costs. On top of that there is now a mass of legislation placing obligations on landlords, where if any obligations are not met, the consequences are potentially extremely serious. So letting a house in Scotland without understanding the legal framework surrounding residential letting in Scotland is risky to say the least.
On the wills side I have seen “self made “wills which vary from being completely invalid to ones which were wholly confused and contradictory. I have even seen a DIY will which did not actually leave the person’s property to anyone!
If legal documents are to have legal effect, experience of drafting such documents and of the meaning of legal terminology is really necessary to get things right.
I would never dream of rewiring my own house because I don’t have the skill and knowledge of an electrician (and anyway, it would now be illegal!). I think DIY in critical areas is simply dangerous and usually a false economy. In our field we generally earn higher fees sorting out an estate for example with a shambolic DIY will than we ever would from doing a correct will in the first place.
And one last point – all Scottish solicitors carry compulsory insurance against defective work. If a solicitor does make a mistake clients can be and are compensated for losses occurring. This is a massive protection for the Scottish public and really should make people think twice before perhaps dabbling in drafting legal documents which if wrongly completed could cost them or their family dear.
Ivor Klayman
Senior Partner
Caesar and Howie
Posted in General, Our News, Uncategorized | No Comments »
July 26th, 2010
David Borrowman from Caesar and Howie discusses some of the issues brought up by clients considering granting Powers of Attorney.
Some clients worry about granting a Power of Attorney. Sometimes a client will say “I wouldn’t trust X to look after my affairs properly.“ It is easy to deal with that – in such a case under no circumstances should X be appointed as an attorney. There is no entitlement to be appointed someone’s attorney just because of a blood relationship. So if clients have unreliable relatives they just should not appoint the relatives as attorneys. The whole idea of appointing an attorney is to give powers to someone to act for your benefit and your benefit alone – consequently if a client has any doubts as to the integrity of the person to be appointed – the appointment should not be made.
Assuming a satisfactory person is found, clients can be reassured that person cannot simply do what he or she likes with the affairs of the incapacitated person. Attorneys are bound by a strict code of law laid down in the Adults with Incapacity Scotland Act. Of course they should only act, at all, if the person who made them their attorney is for some reason (usually but not always illness) not capable of dealing with things himself or herself. And when an attorney does act he or she must adhere to five principles laid down in the Act. Simply put these are: 1. There must be no intervention unless for the benefit of the adult – “adult” being the name used for the incapacitated person in the Act. 2. Any intervention must be the least restrictive option in relation to the freedom of the adult. 3. Account must be taken of the present and past wishes of the adult. 4. Account must be taken of the views of others, eg the nearest relative or primary carer. 5. The attorney must encourage the adult to exercise whatever skills he or she has with respect to property etc.
In common sense terms being bound by these principles the attorney I suppose has to exercise his powers effectively acting in the way the adult would have acted had the adult not lost capacity.
Should an attorney breach the principles in the Act or act improperly then the Act does allow for robust sanctions. The Public Guardian, the Mental Welfare Commission and Local Authorities and indeed any person claiming an interest in the affairs of that adult can apply to the court to safeguard the property, financial affairs or personal welfare of the adult. The sheriff then has significant powers to resolve matters including placing that attorney under supervision of the Public Guardian, requiring accounts and reports to be submitted to court, even as far as revoking the appointment of the attorney. On top of all that of course criminal law could come into play if an attorney used his powers to affect a criminal act.
In short there is in place a significant body of law designed to protect a vulnerable adult against an attorney acting improperly – clients can be reassured on that point.
However, the main consideration in choosing an attorney is the honesty and integrity of that person. Powers granted to such a person can make families’ lives so much easier should incapacity strike.
Posted in General, Wills and Executries | No Comments »
June 16th, 2010
House selling in Scotland has just become a little bit less painful for sellers using the Central Solicitors Property Centre. The CSPC has just launched a new “no sale no fee product” which will allow sellers to market their house with normal marketing costs being taken on credit up front, not out of the sellers pocket, and not being paid by the seller at all if the property does not sell within a nine month period.
The product is actually a clever combination of a credit facility and an insurance – which pays out the normal up front costs of marketing if the property does not sell within the nine months. On the other hand, if the property does sell within that period these costs would be paid out of the sale proceeds. The seller would only be left paying for the service which costs £70 for up to £1000 of credit and £110 for up to £1250 worth of credit. The policy would also pay the up front costs if a property had to be taken off the market for issues like serious illness or redundancy.
David Borrowman, Managing Partner of Caesar and Howie, welcomes this development. “Many, would be sellers, are put off by the high costs of marketing a property now – particularly the cost of the Home Report. We think the government should abandon Home Reports and the market will then improve. But until that happens this new product at least will make it easier for people to test the market for sale of their house.”
Property Consultant John Renton, also welcomes the no sale no fee development. “This will definitely be attractive to some house sellers in Scotland. But it is important to be aware that conditions apply to the deal. The seller must market at a price not in excess of the Home Report valuation, and must actively market the property throughout the nine month period. In addition the house seller must accept reasonable marketing advice and reasonable offers. But I think these conditions are relatively fair and if people wishing to sell their house in Scotland are realistic in the prices they seek this product will definitely help.”
Posted in Estate Agency | No Comments »
June 10th, 2010
Scotland has a very generous legal aid system for pensioners. A pensioner can be on a state pension, have a modest private income, £26,664 of savings and still get legal aid for vital issues. For a pensioner couple the limit is £26,999. Issues of most interest to pensioners are writing a Will, appointing an Attorney to look after the pensioner‘s affairs should that person fall ill and become incapable of dealing with things. There is also an increasing demand amongst pensioners to prepare Advance Healthcare Directives (otherwise known as Living Wills) which state the person’s wishes regarding medical treatment in extreme situations. But legal advice is also available for many other matters covered by the Legal Advice and Assistance Scheme.
However, this year the Scottish Legal Aid Board have already intimated an increase in civil applications of 24%. This and the certainty of government cuts to come could mean that this generous benefit to pensioners could be under threat in the future.
David Borrowman, Managing Partner of Caesar and Howie, states “We believe probably over 80% of Scottish pensioners could have their affairs put in order either free or at a significantly subsidised cost using legal aid. Having these documents in place is massively helpful to families. Powers of Attorney in particular, can save families the stress of court actions should a family member become unable to look after themselves.”
It is possible however that legal aid will be less easy to get in the future. David continues “I understand the Scottish budget is protected for this year but will not be after that. I hope legal aid is ring fenced since it helps the more vulnerable in our society – but who knows what may be cut in the future. My advice to senior citizens is to act now – get these family care documents done whilst legal aid is available.”
Posted in Legal Aid, Our News | No Comments »
June 10th, 2010
One of the most important documents anyone will sign in their life is their Will. The purpose of a Will is legally to transfer a person’s property to other parties on death. That means the Will itself is a document of fundamental legal effect. It should be written in such a way as to comply with the mass of law surrounding the transfer of property and the validity of legal documents. Despite that, in Scotland Will writing is not regulated at all – anyone can call themselves a Will Writer and many people do operate as Will Writers who have no legal training. The Scottish Government has now announced that it intends to close this loophole and put in place a regulatory framework under which Will Writers will have to operate.
Caesar and Howie welcome this move. Senior Partner Ivor Klayman comments:
“This proposal is important and in my view cannot come quickly enough. I’m sure there are capable non – solicitor Will Writers out there but that is not the point. How can clients be sure that a Will Writer has the necessary legal expertise to write a Will validly and safely? Only regulation can give some comfort here and I am all for that.”
Sarah Patrick, Executry Partner at Caesar and Howie agrees. “I’m afraid I have seen some not great work done and high fees charged by non – professional Will Writers – even if this is not the story across the board. But, I have had a long and arduous legal training – as do all lawyers – and I think that it is necessary to have this background to prepare Wills safely.”
Posted in Wills and Executries | No Comments »
May 21st, 2010
“An Englishman’s home is his castle” – or so it is said. Sadly, these castles have been a little more difficult and expensive to sell these last few years because of the late Labour Government’s imposition of the compulsory Home Information Pack into the house sales process.
Fortunately, commonsense has broken out in England and one of the first acts of the new Tory Liberal coalition is to dump the hated packs.- to the great relief of property professionals, buyers and sellers alike. Of course this decision applies only in England in Wales and we Scots have to suffer on with our Home Reports.
In Scotland Home Reports were inflicted upon the unsuspecting public with a zeal which overtook logic, reason and evidence. Politicians chose to ignore sensible advice from about 95% of all property professionals who argued firmly against Home Reports. Excepted from this group of course were surveyors who realised they stood to make a killing from these reports and that is what they have been doing these last 18 months or so.
However, most of the rest of us, particularly house buyers and house sellers in Scotland have been suffering because of this ill thought out legislation. The cost of selling has gone up, Home Reports are hated by most sellers because of their cost, distrusted by most buyers because the sellers produce them, and are frequently also not accepted by many lenders. The legislation has caused multiple surveys to return when that problem had long been solved by the unanimous adoption of the practice of offering “subject to survey”. Worst of all in this difficult sales market some houses simply do not sell quickly and sellers decide to stay put. The Home Reports in these cases have simply been a total waste of money and may even have never been read by anybody. Concluding contracts has become slow and uncertain and the valuations in the reports themselves are often wildly out of date by the time a contract is concluded.
In short our house selling system is more expensive and less certain than it ever was in the old system. Then the buyer instructed one survey from a surveyor approved by his or her lender at the time a deal was about to be done. The old Scottish system was quick easy and relatively cheap – and well understood by all – in fact simply better all round for buyers, sellers and lenders. But this system has been wrecked by Home Reports.
Is it too much too hope for that commonsense will break out in Scotland too? Are any politicians or consumer groups honest enough to admit they got this one wrong? Might some brave politicians unite in the spirit of the “new politics” and consign this damaging legislation to the bin?
David Borrowman
Managing Parter, Caesar and Howie
Posted in Estate Agency | No Comments »
April 27th, 2010
Equity Release Solicitors’ Alliance member, Caesar and Howie report large growth in numbers of Scottish equity release clients
April 2010: As Scottish houses prices have plummeted by almost 7%* during 2009, figures show a marked rise in equity release in the same period, according to Caesar and Howie, the first Scottish member of the Equity Release Solicitors’ Alliance, (ERSA).
Comparing the first three months of 2010 with the same period in 2009, Caesar and Howie has seen a 55% increase in the number of equity release cases they advised on, supporting leading market figures which show that the value of equity release plans across Scotland increased by 102% from £4.5m (Q1 2009) to £9.1m (Q1 2010).**
This growth represents a sea-change for the Scottish equity release market. Until recently, equity release has not seen the kind of growth in Scotland that has been evident elsewhere in the UK. Older homeowners with adult children have traditionally chosen to downsize from a larger house to a smaller one. However, an increased awareness of the benefits of equity release, coupled with a drop in house prices that make downsizing a less viable option, has led it to become an increasingly popular alternative.
Another possible reason for the growth of equity release is increased regulation and protection in the sector, offering peace of mind to potential customers. Caesar and Howie’s membership of ERSA shows a commitment to specialist, impartial legal advice on equity release for all older homeowners considering an equity release plan.
Releasing equity allows homeowners to remain in their home alongside generating money which can be used to improve their standard of living in the absence of a large pension, or to spend on home improvements and life’s luxuries.
David Borrowman, Managing Partner of Caesar and Howie said;
“Over the last year, we have seen a marked growth in the Scottish equity release market which comes from an increased awareness of the benefits of equity release, an increased confidence in the sector and a housing market that makes downsizing a less viable option.”
“Roughly 95% of our cases over the past year have been down to enhancing “lifestyle choice”- in other words, to improve income during retirement by releasing capital from their homes.”
Posted in Equity Release | No Comments »
