Replacing garden boundaries, tax on property sale and buying out ground rent
Q Our backyard is currently surrounded by overgrown hedges. We tend to spend many hours during the summer trimming the hedges back. We wanted to install fencing in our yard to tidy the area up and hopefully make the yard space a bit bigger and useable. We also plan on demolishing an old shed and replacing this with a new one.
There are also two trees that we would have to remove in order to get the fencing in. Both of these trees are on our property. I am obviously planning on telling my neighbours our plan to cut down the hedges and replace these with fences. However, do I need to have my neighbours consent to do this work? Our neighbours on one side only have a hedge surrounding the yard.
Also we will be paying for all the work ourselves and are not expecting the neighbours to contribute. Is it common for this work to be paid solely by one neighbour?
A There are two principal considerations to take into account. Firstly, you should confirm how much of the hedges are on your property and to what extent your neighbours may be dependent on them for security. You are entitled to remove hedges that are your property without permission. Replacing them immediately with a fence, if necessary, deals with security/protection issues.
The second consideration you should take into account is the general effect removing the hedges will have on your neighbours. They may feel that the hedges give them privacy and would be upset by their removal despite your right to do so.
Establishing the precise extent of your property can be difficult when hedges or trees have become overgrown if there are no permanent marker posts or walls. Boundary positions that were never an issue suddenly become one. If you cannot determine the legal boundary from your title deed map, you may need the assistance of a chartered geomatics surveyor.
When you have established the legal boundary, you should then approach your neighbours and discuss your proposals and explain your reasons. Reaching an understanding with them on the desired outcome is important, as firstly, you will need their permission if it involves any work on their side of the boundary, and secondly, if they are not happy with the removal of the hedges they may replace them with hedges on their side of the legal boundary.
Your control over these would be limited to overhanging branches. You may end up again with trimming requirements on your side in the future. You should ensure the replacement fence is positioned as close to the legal boundary as possible so as not to create a potentially problematic strip.
In relation to costs, if they are your hedges and you want the work done, payment is your responsibility. You may be lucky if it transpires that your neighbours want them removed and offer to contribute in order to encourage you to remove them.
Patrick Shine is a member of the Society of Chartered Surveyors Ireland , scsi.ie
Q My brother and I jointly own a home in Cork since the mid-1990s. There is no mortgage. He lives there full-time and I usually spend about three to four months a year there, the rest of the time travelling and teaching English abroad. I am planning to spend most of my time in Ireland when I have my own home purchased. We share the costs equally. The utility bills are in individual names, some in his with the rest in my name. Neither of us has another home.
We are now planning to sell and purchase individual homes with the proceeds as he is planning to marry. Do either/both of us have a capital gains tax liability on the sale proceeds? What can we legally do to minimise/avoid same if applicable. How is it calculated? Would we get any allowance for immediately reinvesting in individual homes?
A You should always obtain specialist tax advice but, in brief, the house is your brother’s principal private residence (PPR) and he should benefit from the relevant capital gains tax (CGT) exemption.
We assume that there is no development value in the sale price; this would require computation of the residential versus development portions of the sale price.
Your position is slightly more complicated. There are rules governing how long you can live away from the PPR, for example, a period of up to 12 months immediately before the end of the period of ownership is treated as a period of occupation even though you may not have been actually living in it during that period.
There are other permitted circumstances for living away from the house that do not invalidate its status as your PPR, such as time when you worked outside the State which appears to apply to your case.
Beware of the stricter conditions that exist for foreign employment than for an Irish employment, however. If you work abroad, to qualify as a deemed period of occupation it must be a period “throughout which the individual worked in an employment or office”.
Your case involves working and travelling which is problematic. Most advisers assume that the individual has preserved their PPR relief for the time spent working but lose it for the time spent travelling. An alternative view is that the individual would not preserve any of their PPR relief as they were not working throughout the entire period abroad.
You will need to show clearly that you were working for most of the time you were overseas and will need evidence of this. Details of how CGT is calculated are available on revenue.ie
Reinvesting in another home is not a relevant issue. You can buy another house (your next PPR), sell it in the future and avail of CGT exemption once you comply with the requirements. Talk to your accountant or tax adviser about how best to handle a CGT exemption claim with reference to your time overseas.
Simon Stokes is chair of the residential property professional group of the Society of Chartered Surveyors Ireland
Q I really hope you can help me with the query below as we have been going around in circles for the last year with this and I’m getting pretty desperate. I am in the process of buying a piece of land in Dublin city centre from a family member. It has become apparent that we need to buy out the freehold for this property as the lease is running out in 61 years’ time and, as such, it is impossible to get a mortgage on this. It is commercial land which has planning permission for a house.
According to the lease which dates back to 1871, the annual rent is £20. As it is commercial it is not covered by the Ground Rents Purchase Scheme. We have hit so many brick walls with this process, not helped by our family solicitor being taken over by the Law Society. Ground rent has never been paid for the lease and the lease holder is a religious society which disbanded many years ago. So it would appear no one has a claim to it. However, we must put an ad in the newspaper to establish this.
Our new solicitor says he must apply to the courts to resolve this and has estimated his costs at €5,000 but doesn’t seem able to tell us how long it will take and how much it will cost to buy out the lease. Can you shed any light on this?
A The conditions for buying out the freehold interest (that is a right given to a person to enlarge his existing, “leasehold” interest into a freehold interest) are set out in the Landlord & Tenant (Ground Rents) No. 2 Act 1978.
The first condition to be satisfied is that there are permanent buildings on the land and the portion of land not covered by those buildings is “subsidiary and ancillary” to them. Whether or not the unbuilt-on land is subsidiary and ancillary is a question of fact and there is much case law on this point.
Your solicitor will examine the following matters to see if the conditions imposed by the Act are met: (1) an existing lease on the property, (2) permanent buildings built on the land, (3) whether the premises is residential or business premises. The restrictions on the right to buy the freehold set out in section 16 of the Act will also be considered.
If your solicitor is satisfied that you do have the right to buy out the freehold interest but the holder of the freehold interest in the property named on your title deeds no longer exists or cannot be located, then searches against the title will be made to ascertain whether or not the freehold interest was acquired by any other party and you will be required, as indicated in your query above, to advertise a notice seeking information on the holder of the freehold interest before making an application to the county registrar.
The above process of investigation, notification and application to the county registrar may take several months and the cost to buy out the lease is determined by statutory formulae. If you are not satisfied with the decision of the county registrar, you may appeal to the circuit court.
Mandu Nkomo is a South African attorney who worked with Whitney Moore solicitors, under an Irish Rule of Law International project
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