Update on impact of COVID-19 on SIPP and SSAS transactions - Q&A

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02 November, 2020

  • Give the changing rules and regulations both nationally and locally, can a rent holiday still be agreed with a connected tenant company?

As early as March 2020, HMRC announced that they would relax their usual requirements in respect of rent holidays (for an independent valuation to be obtained from a qualified surveyor confirming that the agreed rent holiday is on commercial terms), confirming that "any arm's length commercial decisions… including rent holidays, will not give rise to an unauthorised payment charge and can be agreed without independent valuations taking place." This was initially to be reviewed every three months, although HMRC have now confirmed that given the ongoing situation the relaxation of the rules on agreeing rent holidays will continue until at least 31 March 2021.

  • If a rent holiday is agreed with a Tenant, does this need to be formally documented?

Our view is that it is best practice for Scheme administrators to document any change to the lease terms in writing, signed by the parties to the lease, in particular to minimise the potential for a dispute in future. If the parties have agreed a change in rent payment (whether that is to change the payment dates, or for the rent to be deferred or to be abated entirely), this can be documented by way of a side letter which tends to be quicker and easier than a formal variation of the lease. A rent holiday can have an knock-on impact on other provisions in a lease such as clauses dealing with assignments or break rights, and once a change in the lease terms have been agreed, we can assist in preparing a suitable side letter to ensure all relevant issues have been covered.

  • Have there been any further changes to electronic signature of property documents?

Legally, it is possible for an electronic signature being used to execute a document although depending on the nature of the documents itself there are still rules and formalities that may need to be complied with. With the context of property law, although many documents can be signed electronically, those documents which need to be lodged with the Land Registry will also need to comply with the Land Registry's requirements.

Traditionally, as a general rule the Land Registry required confirmation that any documents lodged with them had "wet-ink" signatures. Due to the impact of COVID-19, as with many other organisations the Land Registry have allowed more flexibility in their policies and in July 2020 they announced that they would accept electronic signatures. However, there remain strict conditions including the requirement for an electronic signature platform to be used and all signatories must be subject to two-factor authentication (ie. they will also need to enter a password to access and sign the document) so there are additional process to follow. Nonetheless, the indications are that the Land Registry will be embracing the use of electronic signatures going forward and as the technology develops further hopefully the processes will also become more user-friendly and steamlined.

For more information contact Adam Bromley in our SIPP & SSAS department via email or phone on 0333 207 1158. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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