UK Law and Practice Contributed by: Colin Rodrigues and Harminder Sandhu, Hawkins Hatton Corporate Lawyers Ltd
3.9 Effects of a Borrower Becoming Insolvent The secured interests of a lender are not affected by the insolvency of a borrower. However, dur - ing an administration, a lender may not start or continue legal proceedings against the com - pany and/or enforce security without leave of the court. 3.10 Taxes on Loans From April 2020, new legislation has meant that a landlord will only be allowed a 20% tax credit for mortgage interest paid. This has two main implications for landlords: • if the landlord is a higher-rate taxpayer, only a 20% tax refund will be given (not the higher rate of tax paid); and • it may force landlords into a higher tax bracket, as they will have to declare the mon - ies paid on the tax return. 4. Planning and Zoning 4.1 Legislative and Governmental Controls Applicable to Strategic Planning and Zoning Government plans and development aspirations are contained in policy statements, including the National Planning Policy Framework (NPPF), which applies only to England. This provides the programme for generating local plans for housing and other developments. It is against the background of these local plans that appli - cations for planning permission are determined. The local planning authorities (LPAs) are also motivated to prepare a local plan which sets planning policies in a local authority area. If there is no local plan, LPAs will be deemed to adopt a “presumption in favour of sustainable devel -
above that of other creditors. Priority of security is a matter to be addressed by a deed of priority when making the loan. 3.7 Subordinating Existing Debt to Newly Created Debt The rules governing the priority between two dif - ferent security interests over the same asset vary for different types of assets. In order for a particular security interest to take priority over an earlier security interest, one or a combination of the following circumstances must usually apply: • the later security is a “better” type of security (legal rather than equitable, fixed rather than floating); • the holder of the later security was not aware or is deemed to have been unaware of the earlier security; and/or • the later security has been better perfected or was perfected first. Secured creditors will usually agree on the pri - ority of their respective secured interests con - tractually by virtue of a deed of priority, which will rank the priority of the secured interests on enforcement. 3.8 Lenders’ Liability Under Environmental Laws A lender cannot generally be liable for envi - ronmental damage unless it is responsible for the cause or knowingly permits the damage. A lender does, however, need to be mindful that, if it takes possession of the property at enforce - ment of its security, it may then have a liability relating to any environmental issues as an owner of contaminated land or as a knowing permitter.
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