Blockchain Native Trusts: Possible or even useful?

Rory Carter, Trusts and Estates Disputes Senior Associate writes for EPrivateClient’s most recent digital assets newsletter on the possibility of Blockchain Native Trusts. Here is a summary of the key concepts that Rory explores:

  1. Evolution of Crypto assets: The article discusses the rapid evolution of the crypto asset landscape since the publication of the Bitcoin Whitepaper in 2008. This has led to the creation of a trillion-dollar industry and a variety of blockchains, applications, and smart contracts that reduce the need for trusted third parties.
  2. Concept of Blockchain Native Trusts (BNT): The potential for Blockchain Native Trusts (BNTs), which is hypothetically a trust settled by a settlor settling crypto assets and interacting with the blockchain impressing the terms of the trust on chain or a bespoke smart contract.
  3. Technical Feasibility and Market Demand: While it may be technically possible to create BNTs, the demand for such trusts remains uncertain. A BNT may be appropriate for a niche category of persons who have accumulated wealth in crypto assets might prefer using blockchain technologies for succession planning over traditional trust structures.
  4. Challenges and Risks: There are challenges and risks associated with BNTs, such as the need for bespoke coding, limited functionality, and the requirement for trustees to have a high level of technical understanding. The lack of wider adoption of BNTs suggests that the traditional trust model may still be more practical and less risky. 

You can read the full article here.

That is not to say that there is no place for traditional trusts holding cryptoassets, these remain essential; but rather to consider whether a niche genre of trust is technically possible and, if so, would there be any demand for it.

https://www.paminsight.com/epc/article/blockchain-native-trusts-possible-or-even-useful?message=6702

Has BNG taken root? – Matt Evans speaks to The Planner

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

A year on from the Biodiversity Net Gain (BNG) policy coming into effect for both major and minor developments, the lower-than-expected delivery is being evaluated against the required minimum 10% BNG for these sites.

How actionable the policy is in real terms is being highlighted, and Matt Evans, Partner in our Planning Team, has spoken to The Planner on how developers are pushing for their results.

“Expertise provided by the developer is driving the process, with quite a few councils relying on what is provided”, he says – a common solution to where local authority constraints, such as resourcing and capacity, impact their ability to meet developer needs and ecologically assess applications.

With the minimum terms for management plans of these BNG sites being for 30 years, it may be too hasty to discredit the work being done. However, with shortfalls in the hectares of off-site land set aside for BNG, there is evidence more support is needed to properly implement the policy.

Once local authorities are able to provide that, BNG has the potential to be a hugely impactful policy for habitat creation.

Read the full article in The Planner here.

The global migration shake-up: Tracy Evlogidis quoted in City Wealth on Americans relocating to the UK

In today’s climate of geopolitical shifts and economic uncertainty, high-net-worth individuals and professionals are reconsidering their long-term residency plans. Immigration trends are rapidly changing, with Dubai, Italy, Monaco, and the UK emerging as key destinations. The UK is particularly attractive to Americans seeking stability, opportunity, and cultural familiarity. City Wealth explores these trends in a recent article in which our Head of Immigration, Tracy Evlogodis shares her insights on the influx of Americans looking to relocate to the UK.

Tracy notes a significant rise in this trend compared to eight years ago. ‘Clients are serious and quite vocal about their reasons for wanting to leave the US. Over recent months, the increase in actual instructions, not just exploratory conversations, has been significant. These instructions range from married couples, where one partner is a US national and the other is British, to business people who fear the conditions that may be imposed upon their operations.’

She added that several of her recent instructions have come from ‘high-profile individuals, particularly in the legal sphere, that have clashed with the current administration in the past and now fear the repercussions. These individuals have built their professional careers in the US and now feel they can no longer stay.’

Tracy has also seen an ‘increase in US nationals who have held permanent residence in the UK for many years and now feel the impetus to secure British nationality and, more importantly, a British passport. It is clear that many US nationals now feel uncomfortable remaining in their home country, making the UK an increasingly appealing alternative.’

Clients are serious and quite vocal about their reasons for wanting to leave the US. Over recent months, the increase in actual instructions, not just exploratory conversations, has been significant.

https://www.citywealthmag.com/news/the-global-migration-shake-up-why-the-wealthy-are-moving-where-theyre-heading-next/?utm_term=0_-e9cdd474f6-236989540&mc_cid=ae797e88f9

The FCA delays DE&I reporting requirements: Why doing the right thing still matters

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

In an article this week for Professional Adviser, Jo Keddie discusses the Financial Conduct Authority’s (FCA) decision to delay the long-awaited Non-Financial Misconduct (NFM) regulations and no longer proceed with its proposed mandatory Diversity, Equity, and Inclusion (DE&I) disclosures. 

Jo believes this retreat from proactive DE&I encouragement and the delay in addressing the rising number of NFM incidents in the finance sector is concerning. Firms should not be complacent and should continue prioritising DE&I initiatives, not least to avoid legal, reputational, and financial risks.

Why this development is disappointing

The FCA’s decision to delay the NFM regulations until June 2025, falls against the backdrop of increasing workplace misconduct, which served to highlight the need for accountability by firms and for action and sanctions by the FCA. The FCA’s own 2023 survey recorded over 2,300 allegations of misconduct, highlighting the urgent need for intervention. The return to the office post-pandemic has seen a rise in bullying and discriminatory behaviour. Stronger regulatory oversight is essential to ensure firms take misconduct seriously.

Upholding good DE&I policies and initiatives

Strong DE&I policies help foster an ethical and sustainable workplace. Rolling back on these initiatives is a retrograde decision, and firms that do so may well fall behind their competitors in terms of investor and stakeholder expectations, talent retention, and regulatory profile.

The FCA’s announcements may represent a disappointing shift in regulatory momentum, but workplace culture remains a critical risk area for financial institutions. Firms must continue to uphold robust DE&I practices and take proactive steps to address misconduct to avoid litigation and reputational damage.

Read the full article here (behind a paywall). 

Ahead of the new regulations, firms cannot be complacent. They should be clearly defining what constitutes NFM, implementing procedures for addressing it, ensuring senior leaders understand their responsibilities, and, in my view reviewing internal governance and HR processes to align with the FCA's expectations.

https://www.professionaladviser.com/opinion/4411700/fcas-volte-doing-matters

Polly Montoneri advises on West Oxfordshire’s first BNG Habitat Bank

Rolling green hills are adorned with scattered trees and stone walls, creating a peaceful rural landscape. In the distance, soft hills rise under a clear, bright sky.

West Oxfordshire has established its first habitat bank in the district, enhancing the local biodiversity of Pudlicote Farm near Chipping Norton, and facilitating part of the government’s offsite Biodiversity Net Gain (BNG) policy. Polly Montoneri, Partner in Rural Land and Business, has been advising on the s106 Agreement with West Oxfordshire to secure the scheme.

The benefits of the BNG policy offer opportunities for landowners to re-focus land use to benefit from income generation through the eventual sale of BNG credits to developers, enabling offsite offsetting of BNG obligations. 

The designated area of land on Pudlicote Farm is prone to flooding, so leaning into this unique quality will produce and sustain wetlands and a watermeadow. The landowner Brad Wickens is “passionate about restoring the landscape to a pre-arable state, including a full transition of natural and native habitats from the river, across the floodplain and up valley sides”, says Ben Heaven Taylor from the Trust for Oxfordshire’s Environment.

This demonstrates the significant progress that the private sector is making in the delivery of BNG and the scaling up of nature recovery projects. As the regulatory landscape of nature recovery comes into sharper focus, schemes like these emphasise the value of the private sector for innovation and rural growth and should constitute a strong call to government to enable private nature finance markets to continue to flourish. 

Read the full press release by West Oxfordshire District Council here.

Ground (f) Breaking News

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

The recent case of Spirit Pub Company (Managed) Limited v Pridewell Properties (London) Ltd involved a landlord seeking to remove a tenant from a long-established pub with residential upper parts under Ground (f) to facilitate a mixed-use redevelopment. The Defendant’s failure to show a real prospect of obtaining the necessary funding was sufficient to defeat the landlord’s opposition under Ground (f). 

Key Issues and Arguments

The court had to determine whether the Defendant had established Ground (f) by demonstrating:

  1. That the proposed works could not reasonably be carried out without obtaining possession of the premises.
  2. That the Defendant had a firm and settled intention to carry out the redevelopment. 
  3. That the Defendant had a real prospect of overcoming the relevant hurdles (planning permission, restrictive covenant, and funding) and commencing the redevelopment within a reasonably short time of the termination of the current tenancy. 

Court’s Analysis and Decision

1. Works Requiring Possession

  • The court found that the Defendant could not carry out the proposed works without obtaining possession of the premises. 
  • The Defendant’s redevelopment works involved substantial structural work that would permanently exclude the Claimant from significant parts of the premises, resulting in a breach of the covenant of quiet enjoyment and a derogation from the grant of the tenancy. 

2. Firm and Settled Intention

  • The court was satisfied that the Defendant had a firm and settled intention to carry out the redevelopment. 
  • The Defendant had sought pre-application advice twice before it decided to proceed with the development in July 2024. The court accepted the Defendant’s evidence that the premises were purchased as a development property and that the decision to proceed with the redevelopment was not conditional on the outcome of the litigation. 

Real Prospect of Overcoming Hurdles

The court considered the four main hurdles: planning permission, the restrictive covenant, funding, and timing. 

(a) Planning Permission

  • The court found that the Defendant had a real prospect of obtaining planning permission. 
  • The court acknowledged the tension between the local authority’s policies on protecting public houses and the proposed planning application. 
  • However, the court found the Defendant had a real prospect of obtaining planning permission, and focused on the fact that the Defendant had instructed acoustic consultants and that acoustic design measures could mitigate the risks associated with noise complaints from new residential units. 
     

(b) Restrictive Covenant

  • The court found the Defendant could overcome the restrictive covenant, either through an application to the Upper Tribunal or by obtaining restrictive covenant insurance. Any compensation payable would likely be modest and would not derail the development.

(c) Funding

  • The court found that the Defendant had not demonstrated a real prospect of obtaining the necessary funding for the redevelopment. 
  • The Defendant’s reliance on an indicative term sheet from Punjab National Bank (International) Limited was insufficient, as it was not legally binding, and the Defendant had not provided evidence of the directors/shareholders’ ability to provide personal guarantees. 

(d) Timing

  • Ground (f) requires that the works relied on to make out the ground must be undertaken “on the determination of the current tenancy”. Case law allows for a grace period after lease expiry, although there is limited guidance on how long that grace period can be. 
  • In this case, the landlord’s work was not expected to begin until 10–14 months after the tenant’s lease ended. Here, the court found that the Defendant had a reasonable explanation for the delay, as the Claimant had refused the Defendant access to the premises to carry out an acoustic survey and intrusive investigations.

Key Takeaways 

This case highlights the importance of financial viability in establishing Ground (f) claims. Future landlords should ensure that funding arrangements are well-documented and credible before opposing a lease renewal on redevelopment grounds. 

The case is also important in highlighting several critical aspects of Ground (f) lease disputes:

  1. Timing: A landlord may be permitted to delay the development works for an extended period (e.g. 14 months) if they have a reasonable explanation and have taken all necessary steps to advance the project.
  2. Tenant co-operation: Courts may be more lenient in assessing a landlord’s delay if the tenant does not reasonably co-operate. In this case, the tenant refused to grant additional access rights beyond their contractual obligations. 
  3. Likely future events: Courts may consider the likelihood of future events occurring (e.g. planning permission being granted) when assessing a landlord’s redevelopment prospects. 

Clarification Schedules – beware the Sisks: clarification schedule torpedoes site condition clause

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

Last month’s decision of His Honour Judge Stephen Davies in John Sisk and Son Limited v Capital & Centric (Rose) Limited [2025] EWHC 594 (TCC) is a stark illustration of the mischief that can be done by an unscrutinised clarifications schedule in a building contract. 

Capital & Centric (“the Employer”) contracted with John Sisk (“Sisk”) for construction works during the course of which difficulties occurred with the existing structures on the site. A dispute arose over who had responsibility for the risk in relation to the existing structures, including the site’s ability to support and/or facilitate the proposed works.

The JCT D&B Contract 2016 had extensive bespoke amendments, including very comprehensive clauses 2.42.1, 2.42.2 and 2.42.3 which “made clear that Sisk was contractually responsible for all risks in relation to the existing site, including the risk in relation to the condition of the existing structures and the risk of any of the information provided by C&C being wrong”.

Nevertheless, contrary to what the Employer had no doubt firmly expected, those clauses did not put a stop to the dispute.  Clause 2.42.4 provided that “This clause 2.42 shall be subject to item 2 of the Clarifications”. Thus, the employer’s nemesis, the clarifications schedule, came into play.  The judge found that the following section of a document called “Clarifications” was, therefore, relevant:

  Sisk Clarification Comments / Risk Owner
2 Existing Structures Risk including ability to support / facilitate proposed works The Employer is to insure the Existing buildings/ works. Employer also to obtain warranty from Arup with regard to the suitability of the proposed works. Employer Risk

 

The judge rejected that this wording was to be understood as meaning that the Employer had the contractual risk of a failure to provide the required insurance and/or the required Arup warranty.  Rather, his view was that the Employer was the owner of the risk of the suitability of the existing structures, including their suitability to support and facilitate the contract works.  He did not consider that item 2 would “deprive those clauses [2.42.1 to 2.42.3] of all effect” but that it provided a “limited” (though significant) carve out from those clauses, namely the existing structure risk.  He went on to review the other Contract Documents and found that they were consistent with that conclusion. 

As such, the Employer learned a hard lesson on behalf of all employers and developers… No matter how carefully and comprehensively a risk allocation clause might be drafted, it can be torpedoed by the introduction of a clarifications schedule.   Granted, the clarifications schedule was expressly referenced in clause 2.42.4, but it is very much doubted that the effect of that reference was what the Employer had intended, and it is conceivable that the judge would have reached the same conclusion even absent such explicit reference to it.  As such, real thought should be given to whether a clarification schedule is included and referenced, and if it is, the wording of such documents should be given close review. 

The judge also made the noteworthy observation that the bespoke provisions’ references to clarifications schedules in this case “well illustrate how the negotiation and agreement of such issues can lead to a final contractual position of some complexity” which presents quite a challenge in ascertaining how risks are allocated when they come to fruition. 

Focus Apartments: a ‘gentle’ remediation order case?

The First-tier Tribunal has handed down another remediation order (“RO”) case involving Grey GR (the railway pension fund), in an application brought by the Secretary of State.  Although the decision itself was handed down in July 2024, it has only just been published.  

Grey, as an investor in ground rent portfolios, has found itself lumbered with several Higher Risk Buildings in need of significant fire safety remediation works.  It has therefore had the misfortune to appear in several FtT decisions already, including the Chocolate Box, Vista Tower, and Bracken House/Timberbeck.  The FtT in this case (Focus Apartments in Ipswich) referred to the previous decisions and noted that, in the majority of them, Grey had shown it was willing and starting to complete the remediation works.  Grey’s past ‘good behaviour’ appears to have held some weight in this case with the FtT, who noted that Grey had effectively consented to an RO being made, had made significant progress in applying for funding from the Building Safety Fund, and had submitted an application to Building Safety Regulator to sign off for the works.

The only real issue between the parties was whether Grey should be allowed a grace period in which to complete the works.  This would be a provision in the RO specifying that Grey would not need to apply for an extension to the deadline provided it finished within the set grace period.  A grace period had been awarded in previous cases, but the government had since got cold feet as to whether the FtT had the required jurisdiction to award them, instead preferring to phrase potential delays as ‘contingency’.  

The FtT was sympathetic to the complexities of the remediation project, and the fact that much of the timing was driven by factors outside Grey’s control, such as Regulator sign off and third party consents.  It was not persuaded that specifying a deadline for completion of the remediation works which was very close to the estimated completion of the works programme was appropriate.

The FtT pointed out that this was not a case where short deadlines were needed to force a recalcitrant landlord to engage, and that short deadlines would be more likely to increase distraction and dispute between the parties, ultimately delaying completion of the works.

It therefore chose to set a deadline of 6 months after the projected completion date in the works programme, thus avoiding the need to award a grace period or expressly factor in contingencies. However, it did also require Grey to update leaseholders and the government if they did not think they would be able to meet their projected works programme completion date, in the interests of transparency.

The message to landlords is surely this: if the FtT has lost faith in your willingness and ability to progress matters swiftly, you will find yourself on a very short leash. Better, then, to be proactive and demonstrate engagement, in order to earn yourself the relative freedom to progress the works as you see fit.

As with Vista Tower, we are not satisfied that this is a case where an order providing for short deadlines or active intervention is needed to put pressure on a landlord who is failing to engage. Our approach is intended to avoid doing more harm (by risking interference with the contractual mechanisms which should soon be in place, or otherwise causing distraction and delay) than good.

https://assets.publishing.service.gov.uk/media/67e515f67903e752b7fd88c4/Decision_-_Focus_Apartments__Ipswich_-_RO.pdf

The Timing and Form of Payment Notices and Payless Notices

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

In the recent case of Placefirst Construction Ltd v CAR Construction the Judge found a valid payment notice had been given, despite not being explicitly named a “payment notice” and despite being provided alongside a payless notice. It also decided that a valid payless notice had been given, despite arguments that the timing of service deemed it invalid. 

On 24 July 2024, the contractor, CAR, emailed an interim payment application to the employer, Placefirst. On 31 July 2024, Placefirst emailed back with a payless notice and a valuation. CAR argued that Placefirst had failed to serve either a payment notice, or an effective payless notice, and so the amount stated in CAR’s interim payment application was therefore due.

There were two issues discussed in this case. The first was whether Placefirst’s payless notice was valid. The second was whether Placefirst had given a payment notice. The Judge made clear that Placefirst needed only one of these points to succeed, as it was only necessary for it to have served either a valid payment notice or a valid payless notice.

The Judge noted some points of law from previous case law. These were that: 

  • It is essential to identify first the notice that contains the “notified sum”. It is then possible to pay less than the notified sum, subject to compliance with requirements set out in the Housing, Grants, Construction and Regeneration Act 1996 (“the Construction Act”).;
  • The test for whether a notice is valid is not about how the recipient understood the notice, but instead how a reasonable recipient would have understood the notice;
  • Provided that that notice makes tolerably clear what is being held and why, the court will not strive to intervene or endeavour to find reasons that would render such a notice invalid or ineffective; and 
  • The notice does not need to say in its title what type of notice it is. 

 

Was Placefirst’s payless notice valid?

The first issue considered was whether Placefirst’s notice amounted to a valid payless notice. 

Under the amended form of subcontract:

  • CAR was required to submit an interim payment application, which was to include a statement of the sum that CAR considered was due to it “at the date when the relevant interim payment shall be calculated”. 
  • Placefirst was then to give a payment notice not later than 5 days after the payment due date. The amount specified in that payment notice would be the “notified sum”.
  • If Placefirst did not serve a payment notice within the required time, the interim payment application would be regarded as a payment notice. The amount in the interim payment application would then be the “notified sum”.
  • Placefirst were to pay the notified sum.

The Construction Act requires that a payless notice is not given before the notice by reference to which the notified sum is determined. 

Placefirst’s Counsel submitted that the interim payment application given by CAR amounted to a valid payment notice under the Construction Act, and would take effect on the date that it was sent. 

It was CAR’s case, however, that Placefirst’s payless notice was invalid because it was served before the date when the interim payment application came to be regarded as a payment notice.

The Judge found favour with Placefirst, stating that it was true that the interim application payment would only become a valid payment notice after the time for the payer to give a payment notice had elapsed, but that there was no compelling reason why it should have been intended that the payer should not be able to give a payless notice before that date. 

Had a valid payment notice been given?

Regarding issue two, whether a valid payment notice was given on 31 July 2024: Placefirst’s Counsel submitted that the payment notice was the worksheet behind the payment certificate. CAR’s Counsel submitted that, objectively, this could not have been intended and understood as a payment notice as, amongst other reasons, it did not describe itself as a payment notice and instead called itself a certificate. They also submitted that it did not state the sum that Placefirst considered due at the payment due date, and that the covering email said it was in “support” of the certificate. 

Placefirst argued that it intended to, and did, submit two separate documents. One was a payless notice, and one was a valuation, but either of these documents could have been the payment notice. There was no express provision in the contract that this document needed to be titled a payment notice. 

The Judge found in favour of Placefirst, stating that Placefirst had sent two separate documents, and that the valuation document was intended to be a payment notice, separate and distinct from the payless notice with which it was sent. 

Why is this case important? 

This case will be important to those in the construction industry when the timing of a payless notice is being considered. It also serves as a reminder of what will and will not constitute a payment notice, and the importance of looking beyond the title of such a document to ascertain this. 

 

TCC provides welcome guidance in relation to information orders under the Building Safety Act 2022

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

In BDW Trading Limited v Ardmore Construction Limited and ors [2025] EWHC 434 (TCC) (here), the Technology and Construction Court provided instructive guidance as to the correct interpretation of section 132 of the Building Safety Act 2022 (“BSA 2022”) relating to information orders (“Information Orders”). 

Building Liability Orders 

Section 130 of the BSA 2022 provides that the High Court may make an order (where it is just and equitable to do so) providing that a relevant liability of an original body corporate relating to a specified building is also the liability of another specified body corporate, or the joint and several liability of two or more specified bodies corporate. These types of order are known as “Building Liability Orders”. 

A relevant liability (within the meaning of section 130) (“Relevant Liability”) is liability which has been incurred either (1) under the Defective Premises Act 1972 or section 38 of the Building Act 1984, or (2) as a result of a building safety risk. 

A body corporate may only be “specified” in circumstances where it is, or has at any time in the relevant period been, associated with the original body. A body corporate will generally be considered to be associated with another if (a) one of them controls the other, or (b) a third body corporate controls both of them. 

Information Orders 

The BSA 2022 provides a mechanism for applicants to obtain information about entities against which they may wish to make an application for a Building Liability Order.

A person of a prescribed description may apply for an Information Order: an order requiring a specified body corporate to give, by a specified time, specified information and/or documents relating to persons who are, or have at any time in a specified period been, associated with a body corporate. 

By way of limitation of this power, an Information Order shall only be made if it appears to the Court that: 

(a) the body corporate is subject to a Relevant Liability, and

(b) it is appropriate to require the information or documents to be provided for the purpose of enabling the applicant (or the applicant and others) to make, or consider whether to make, an application for a Building Liability Order.

Key takeaways

The decision in BDW v Ardmore established the following in relation to Information Orders:

  • Information Orders will only be made against an associated entity(/ies) of a body corporate where the associated entity(/ies) has a Relevant Liability. 
  • The Court, when assessing an application for an Information Order, will do so based on the merit of the information put before it, and should not become embroiled in an assessment of liability. Applications for Information Orders should therefore be short and uncomplicated. 
  • Information Orders should not be used as a fishing exercise – the information sought by the applicant must actually be required for the purposes of applying for, or considering whether to apply for, a Building Liability Order.

Background 

BDW engaged Ardmore Construction Limited (“ACL”) between 1995 and 2005 to design and build five separate buildings. Following the Grenfell tragedy, fire safety and structural defects were discovered in all five of the buildings and BDW brought a number of claims against ACL, claiming that the relevant defects in the buildings had been caused by ACL’s breach of its duties under the Defective Premises Act 1972, and/or pursuant to the Civil Liability Contribution Act 1978, ACL was liable to make a contribution and/or to indemnify BDW in respect of the remedial works required. 

ACL’s alleged liabilities in respect of all five buildings totalled approximately £85 million. Having reviewed ACL’s latest publicly available accounts, BDW decided that, as it appeared to BDW that ACL alone would not be in a position to discharge the value of the alleged liabilities in full, it would apply for a Building Liability Order against a number of entities associated with ACL. 

BDW made two applications for Information Orders: (1) against ACL (the “First Application”); and (2) against the second, third and fourth respondents (“R2”, “R3” and “R4”, respectively)(the “Second Application”). ACL was a wholly owned subsidiary of R2, R2 was a wholly owned subsidiary of R3, R3 was a wholly owned subsidiary of R4 and R4 was the ultimate parent company. 

In its applications, BDW sought a wide range of information and documents from ACL and R2, R3 and R4 including, among other things, details of the corporate and security structure of the group as a whole, details of all existing banking and lending arrangements within the group, up-to-date management accounts, reports and medium term forecasts (including projected profit and loss and cashflow and balance sheets). 

Decision of the TCC 

In refusing both applications, Judge Keyser KC provided some very helpful guidance as to the correct interpretation of section 132. 

The Second Application 

One of the conditions that must be met before an Information Order can be made is that it must appear to the Court that the body corporate against whom the Information Order has a Relevant Liability. In the first instance, the Court considered the Second Application and held that no Information Order could be made against R2, R3 or R4 as they had no Relevant Liability. ACL alone had been party to the underlying building contracts for each of the five buildings and therefore, ACL alone could have a Relevant Liability. R2, R3 and R4 were, at most, simply associates of a company with a Relevant Liability. The Second Application was therefore dismissed. 

Significantly, the Court’s conclusion on this point is contrary to the scenario outlined in the explanatory notes to the BSA 2022 (in which it was suggested that an Information Order could be made, not against the original body, but against a company believed to be an associate of the original body, regardless of the existence of a Relevant Liability). The Court noted that, while the explanatory notes may guide the reader as to the purpose of a particular provision, they will never override the meaning of the underlying statute itself. The reader should not assume that the explanatory notes correctly state the effect of the statute.   

The First Application 

In the First Application, BDW argued that, in accordance with the explanatory notes, the Court could be satisfied that ACL had a Relevant Liability (and that the condition had thus been satisfied) in circumstances where (1) BDW had sought and received expert advice that serious fire safety and/or structural defects existed which gave rise to serious safety risks and required remedial works, (2) BDW had received legal advice that, in respect of all five buildings, a claim could be made against ACL under the Defective Premises Act 1972, and (3) BDW intended to seek damages from ACL in respect of these claims. 

Alternatively, BDW argued that the Court could nevertheless still be satisfied that ACL had a Relevant Liability for either of the following reasons: (a) the Court should consider it implausible that ACL would be able to defeat the case against it in respect of all five developments, or (b) if section 132(3)(a) required a Relevant Liability must already have been established before an Information Order could be made, this had already been satisfied in respect the Crown Heights development, given that the adjudicator had awarded BDW its entire claim against ACL, and BDW would incur costs in respect of a future appeal in connection with this decision. 

ACL argued that BDW had failed to establish ACL’s alleged Relevant Liability in respect of each of the developments as the phrasing in section 132(3)(a) is in the present tense: “is subject to a relevant liability”. Two of the five developments were the subject of early litigation, two more were the subject of ongoing (confidential) arbitration, and ACL argued that its liability in respect of the Crown Heights development had been discharged, owing to the fact that an adjudicator had awarded BDW the value of its claim in full, an amount that has subsequently been paid in full by ACL. 

In refusing the First Application, the Court made the following observations: 

  • BDW’s argument that the condition in section 132(3)(a) would be satisfied if the Court considered that the Respondent’s Relevant Liability had been asserted on reasonable, or plausible, or credible grounds (i.e. that the corporate body against whom the Information Order was sought was potentially “in the frame” for a Relevant Liability) was incorrect. The phasing “it appears to the Court” could not be construed as meaning anything other than a view arrived at by the Court – it was not a requirement that the Court must only be satisfied as to the “possibility of the existence of a state of affairs” rather than the actual existence of the state of affairs.
    • ACL’s liability in respect of Crown Heights had been discharged by payment of the adjudicator’s award in full. Any potential future liability for costs relating to the adjudication could not be said to be a Relevant Liability. 
    • In relation to the other four developments, although the definition of Relevant Liability was not specifically constrained to a “specified building”, given that the very purpose of an Information Order is to facilitate an applicant’s consideration as to whether to make an application for a Building Liability Order (which requires the demonstration of Relevant Liability relating to a specified building to succeed), any application for an Information Order must therefore demonstrate that a body corporate’s Relevant Liability relates to a specified building. The fact that an indeterminate claim against one or more of the developments might ultimately succeed was not sufficient to satisfy this condition.  
  • While it is not strictly necessary for the existence of a Relevant Liability to have been conclusively established prior to making an application for an Information Order, at the hearing of an application for an Information Order, the Court is not required to make any determination of liability where this has not already been established. 
  • Section 132 is not a vehicle for resolving underlying disputes and therefore, at the hearing of an application for an Information Order, there is no question of engaging anything like trial procedures, e.g. examination of lay or expert witnesses. 
  • Applications for Information Orders do not impose any obligation on the court to “become embroiled in assessments of the merits of disputed matters”. The Court acknowledged that this may mean applications for Information Orders may be made sparingly in cases where liability is at issue. 
  • Applications for Information Orders should be short and uncomplicated. 

Additional non-binding comments 

The Court made a number of additional non-binding comments, as follows: 

  • In relation to Building Liability Orders, there was nothing in section 130 which suggested that it is a precondition to the making of a Building Liability Order that a Relevant Liability of an original body must already have been established. 
  • In the absence of any restriction on the types of documents and/or categories of information permissible in section 132, an Information Order could specify the provision of any information and/or documents which would enable an applicant to identify the associate(s) of a body corporate or which concerned the financial position of the associate(s) of a body corporate. 

Stamp Duty Changes Are Coming

Glass building walls curve gracefully, reflecting geometric patterns. The structure's sleek, modern design contrasts with a vibrant blue sky, while golden foliage accents the foreground.

From 1 April 2025, new stamp duty land tax (SDLT) thresholds will mean that many buyers —especially first-time buyers — could pay higher SDLT rates on property purchases.

First-time buyers purchasing a property from 1 April will pay SDLT at 5% on the purchase price above £300,000. Currently, the purchase price has to be above £425,000 for SDLT to kick in for first-time buyers, so the change is likely to result in many more property purchases becoming subject to SDLT. 

The maximum property value eligible for first-time buyer relief will also decrease from £625,000 to £500,000. This means that if the purchase price is over £500,000, the relief will not be available and the standard rates of SDLT will apply.

Another change from 1 April is that the 0% SDLT rate band on standard residential purchases will drop from £250,000 to £125,000, again bringing more property purchases into the SDLT regime. 

So, if you’re a first-time buyer purchasing a property for £600,000 after 1 April 2025, the SDLT would be calculated as follows:​

First £125,000: 0% SDLT = £0​

Next £125,000 (£125,001 to £250,000): 2% SDLT = £2,500​

Remaining £350,000 (£250,001 to £600,000): 5% SDLT = £17,500​

Total SDLT payable: £20,000

This calculation reflects the standard SDLT rates applicable to all buyers for properties over £500,000, as first-time buyer relief does not apply in this scenario.

These changes will mean a significant shift in the property market, especially for those trying to get onto the ladder. With reduced reliefs and lower thresholds, home ownership will feel further out of reach for many.

Building Safety Levy: Another hurdle for developers now planned for 2026

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

The Government has published its response to the technical consultation it ran on the Building Safety Levy which closed in February 2024. For those who have followed the developments of the levy, there will not be many surprises as generally the Government has confirmed it is proceeding with what it had proposed previously. Here are a few key points confirmed in this response:

Timing

  1. Delay in implementation to Autumn 2026 (and no exact date has been set).

Calculation of the levy

  1. The calculation of the levy will be on a ‘per square metre’ measurement rather than a ‘per unit’ of residential building and will be by reference to the gross internal area (GIA) of the development (based off RICS Code of Measuring Practice 6th Ed.). Communal spaces will be included within the GIA for the development. If the communal space is shared with an exempt part of a development (such as an entrance shared between affordable housing residents and private residents) then an apportionment will be applied to the communal space GIA based on the proportion of the development used for the exempt use. 
  2. The rates will be set per local authority and any further granularity was rejected by the Government.
  3. The rates will be reviewed every 3 years (the Government dismissed suggestions of the rates being subject to indexation), albeit the Government reserved the right to review the rate more frequently if warranted. 
  4. The 50% discount applied to developments on Previously Developed Land (PDL) will apply where 75% or more of the site is on such PDL. PDL will be defined by reference to a similar definition used in the National Planning Policy Framework (NPPF).

Procedure of the levy

  1. Some further insight was given on what information will be required and when in respect to confirming whether a development is chargeable:
    1. When applying for building control approval either to a local authority or the Building Safety Regulator (BSR), developers will need to submit information confirming:
      1. Information regarding the planning permission or application under which the development or bedspaces in the case of purpose built student accommodation.
      2. The number of dwellings which will be created as a result of the development or bedspaces. 
    2. When the first commencement notice stage is submitted:
      1. Information as to whether exemptions to the levy charge apply.
      2. If the works are chargeable, whether the development is on PDL.
      3. If the works are chargeable, the GIA for the chargeable floorspace of the development, including communal areas.
    3. Other supporting evidence will be required to be submitted when these confirmations set out above are provided to the relevant building control authority. 
  2. Where information is not provided in respect to whether a development is chargeable under the levy, that will be ground for rejecting a building control approval application or initial notice.
  3. As previously proposed by the Government, a building control completion certificate cannot be issued without confirmation that the relevant levy has been paid. When applying for the completion certificate, the developer will need to confirm in a statement that it has paid the levy. Local authorities should issue confirmation of receipt of payment within two weeks of payment being received.
  4. There will be an opportunity to dispute a decision on the levy within 28 days of the decision being confirmed to the local authority. 

We will need to wait to see whether any changes are made in implementing this policy when the secondary legislation is drafted and passed into law. Additionally, owing to the uncertainty on timing, developers will likely need to budget for paying the levy ahead of knowing when the exact date of introduction will be in the Autumn of 2026. The levy is a further hurdle for developers in achieving the returns they require in an already challenging market given current viability issues for residential developments. 

The Building Safety Levy (the levy) is part of the government’s plan to accelerate the pace of remediation. It is essential to protect leaseholders from remediation costs and helps deliver the Prime Minister’s promise that building safety is a top priority for this government

https://www.gov.uk/government/consultations/building-safety-levy-technical-consultation/outcome/building-safety-levy-technical-consultation-response

Why do investment banks hate staff working from home? Jo Keddie shares her views with The Banker

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

A recent article by The Banker explores the controversial return of full-time office-working in the banking sector. Despite the widespread adoption of hybrid work models in many industries, investment banks including JPMorgan, Goldman Sachs, and Barclays have mandated a full return to the office for their employees.

Jo Keddie, Head of our Employment and Partnerships team, shared her insights with The Banker on how the cost of offices; the weak employment market and the pressure on London investment banks to perform has impacted work from home practices. She says that ‘the pressure on London investment banks to perform is immense as other regions vie for new company flotations and London needs to retrieve its position.’ Jo added that due to the regular restructuring culture at banks, employees remain grateful for their jobs as the prospect of finding roles elsewhere is difficult. 

Office space has also become increasingly expensive, and banks have invested heavily in prime office locations. For example, Goldman Sachs spent £1bn on its London headquarters in 2019. Jo Keddie points out, ‘with rising office costs in the Square Mile, where premium and new five-star office premises are now edging into the region of £100 per square foot, and with lease commitments making it difficult to surrender office space, there is every reason to ensure occupancy is maximised.’

The article concludes that while remote work may offer flexibility, the investment banking sector remains committed to in-office work due to productivity, security, and financial considerations.

with rising office costs in the Square Mile, where premium and new five-star office premises are now edging into the region of £100 per square foot, and with lease commitments making it difficult to surrender office space, there is every reason to ensure occupancy is maximised.

https://www.thebanker.com/content/00f3c9b9-b701-456f-ac51-f21d290b7c32

New landmark Planning and Infrastructure Bill – Matthew Evans discusses in the press

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

The Government’s new Planning and Infrastructure Bill, officially introduced to Parliament on 11 March, is a landmark moment for the future of planning in the UK.

Designed to help facilitate the new homes and key infrastructure targets for a ‘building boom’, and giving confidence to builders and investors, the industry is welcoming this significant reform.

The Bill includes changes such as:

  • A new national scheme of delegation, to divide applications between officers and committees
  • Allowing builders to combine resources into Nature restoration funds, to facilitate larger environmental projects
  • Compulsory purchase reform for delivering public benefits
  • Reform of Development corporation to aid large-scale works such as new towns
  • Spatial development strategies, to identify sustainable areas to build
  • Streamlining nationally significant infrastructure project consultation requirements 
  • Prioritising grid connections for approved clean energy projects, for them to achieve clean power by 2030.

Whilst concerns have been raised on fully resourcing these measures, Matthew Evans, Counsel in our Planning team, has spoken to i News, EG, Building and New Civil Engineer on how positive these changes are for Planning. 

“It is encouraging to see that the Government is sticking to its timelines on bringing forward planning reform. For too long the planning system has functioned inefficiently to the real detriment of new homes delivery and economic growth.

“The government’s creative thinking about how to free up planning officer time to determine more applications by moving to a system where delegated decisions are made by default, is a move in the right direction and aligns with its emphasis on a plan led system. Other steps to speed up the decision-making process, including reducing the number and scope of statutory consultees are positive. These reforms should reduce uncertainty in the system and enable schemes to progress to delivery more quickly.

“Larger than local planning is much needed to remove the political heat at a local level and unlock land for employment and logistics, as well as new homes. Insular boundary led thinking has restricted the delivery of vital infrastructure and regional spatial strategies should remedy this. Resourcing, as always, is a significant challenge and local authorities will need hundreds of more planners to really turn up the dial on decision making.”

Read the full articles here in i News, EG, Building, New Civil EngineerGreen Street News, Property Week and Planning.

Dam good for biodiversity – Polly Montoneri speaks to The Times on beaver reintroduction

Rolling green hills are adorned with scattered trees and stone walls, creating a peaceful rural landscape. In the distance, soft hills rise under a clear, bright sky.

Two pairs of Eurasian beavers were reintroduced into the wild at the Purbeck Heaths National Nature Reserve in Dorset this month, more than 400 years after they were eradicated by hunting in the area. 

This is a significant move for the species in the UK, holding a protected status in England since 2022, and bodes well for biodiversity, water quality, and waterways. Some members of the agricultural community have raised concerns about the types of landscape changes beavers can bring, and what this means for farmers and landowners, but it is hoped that the positive outcomes can outweigh the bad.

Speaking to The Times, Polly Montoneri, Partner in our Rural Land and Business team, emphasises the importance of stakeholder engagement through these biodiversity efforts, but also looks forward to the potential for such projects to help accelerate the well needed drive to mobilise private investment into the rural economy and natural capital. In the light of the Governments recent and sudden closure of SFI applications, this mobilisation of private investment is ever more crucial to the rural economy.  

Whilst projects enabling the reintroduction of beavers will be localised and site specific, the possibility can pave the way for the creation and delivery of projects and, crucially, the development of knowledge, collection of data and the evolution of metrics to enable accurate measurement of nature improvements that are so crucial to the development of robust nature finance markets.  

Read the full article in The Times here.

Closure of SFI – further belt-tightening, or a concerted push for private finance?

Rolling green hills are adorned with scattered trees and stone walls, creating a peaceful rural landscape. In the distance, soft hills rise under a clear, bright sky.

The government’s decision, as of 11 March, to stop accepting applications to the Sustainable Farming Incentive (“SFI”) has been met with widespread dismay. Some commentators have seen it as yet another example of the government’s “anti-rural” bias. It follows the inheritance tax changes announced in the Autumn Budget, and comes hot on the heels of the Planning and Infrastructure Bill, which has sparked widespread concern about the possible use of compulsory purchase for development land.

The government’s justification for pausing SFI is that it has reached its £1.05 billion cap. It describes itself as “a responsible government committed to the careful management of a fixed budget.” On the face of it, pausing SFI demonstrates the government’s determination to keep its books balanced and stay solvent.

However, the simultaneous publishing of detail surrounding the Nature Restoration Fund may suggest an alternative, with the intention that further funding for environmental recovery be sourced via housing and infrastructure delivery. Whilst the nature of the Nature Restoration Fund as a solution to resolving Nutrient Neutrality (on the face of it) would be largely localised, it is perhaps indicative of a movement towards scaling up nature restoration projects, both financially and spatially. 

The withdrawal of SFI, and launch of initiatives like the Nature Restoration Fund, could be characterised as a new approach intended to force the mobilisation of private investment into nature-friendly land management, with the reduction of government finance through SFI to be balanced by increasing private funding via the planning system in the first instance and through new nature finance markets as they grow.

Is the pausing of SFI no more than the government further demonstrating its determination to live within its means? Or is it part of a more overt push towards seeking engagement from private finance in nature restoration?

 

Will Commonhold 2.0 be the answer…?!

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

The government published its much anticipated White Paper on commonhold on 3 March 2025, detailing its plans for commonhold to become the “default tenure” of ownership in England and Wales.

The White Paper is the precursor to a draft Commonhold Bill, which the government intends to introduce in the second half of this year. The White Paper introduces a new framework for commonhold which is based upon the Law Commission’s 2020 report – all of the Law Commission’s 121 recommendations for reform have been accepted, bar one. It is designed to generate a better understanding of how a new commonhold system might operate and importantly, it explains how the new system is likely to benefit consumers and property owners across a range of industries.

What is commonhold?

Commonhold is a form of freehold ownership. Individual property owners will own the freehold of their unit (i.e. a flat), and a share in the freehold of the communal areas of the whole property along with the other unit owners in the property. There are no landlords or leases. Instead, the collective ownership functions through a commonhold association, which is a company jointly owned and controlled by the commonhold unit owners. The unit owners’ rights and responsibilities are governed by the Commonhold Community Statement (which will be fixed by law) and ‘local rules’ (which can be set by each property’s commonhold association).  In this way, the government hopes that commonhold will create a “democratic framework for shared living” without the unfairness often associated with the landlord and tenant relationship. 

What reforms are being proposed?

Commonhold was first introduced in 2004 but to date, has been adopted by less than 20 developments in the country.  The White Paper is designed to reinvigorate commonhold by fixing the legal and practical issues which have limited its uptake. Those reforms can be split into the following categories:

Flexibility in commonholds

  • Commonhold developments will be capable of division into separate ‘sections’ to separate out the management of different areas or groups of units. This will enable more flexibility in larger developments where services and costs are allocated differently across separate buildings.
  • Commonhold will be opened up to key homeownership products, including shared ownership and home purchase plans. It is intended that this will expand commonhold to a wider range of consumers.
  • Developers will be permitted to reserve key development rights throughout the lifecycle of a development, adding greater flexibility to phased commonhold developments. 

Living in commonholds

  • The voting threshold required to change the local rules of a commonhold will be increased to 75% of unit owners, up from 50%. This increased voting threshold is intended to avoid dissatisfaction and disputes amongst commonhold owners.
  • Commonhold associations will have the right to create rules to restrict certain short-term uses of properties, such as Airbnb.
  • Commonhold budgets will be subject to a yearly vote, requiring a majority of unit owners to support a budget before it can be passed. In the event that it is not passed, the previous budget will roll over. 
  • Commonhold associations will be able to vote on the standard of repair expected from individual unit owners. 
  • All commonholds are required to have at least two directors, who will be elected annually. It will be possible for the commonhold association to appoint professional directors.  
  • Commonhold associations will be able to take out loans where extra funds are needed for the commonhold, such as for urgent repair works. Commonhold associations will also be able to sell parts of the building to raise those funds, if necessary. Both measures will require the unanimous support of the unit owners.

Resolving disputes and recovering debts in commonholds

  • The government will remove unnecessary barriers to resolving disputes between commonhold owners and will promote mediation and other out-of-court methods to resolve disputes. The government will also consider the possibility of introducing an ombudsman for commonhold. 
  • Commonhold associations will be given greater powers to enforce any unpaid debts owing from unit owners, including the ability to apply to the court for an order to sell a unit if the owner repeatedly fails to pay their bill. This ability will be subject to a minimum arrears threshold.

What further reforms are needed?

The government has acknowledged that further attention needs to be given to the following key areas before the draft Bill is published:

Converting existing leaseholds to commonhold

  • At present, full consent is required from all parties (freeholder, leaseholder(s), and lender(s)) for a leasehold to be converted to commonhold. This can be very difficult to achieve in practice and will likely act as a barrier to conversion to commonhold.
  • The government intends to reduce the consent threshold for commonhold conversion to 50%, mirroring the consent threshold required for enfranchisement. However, it acknowledges that this lower threshold may negatively impact non-consenting leaseholders. To alleviate that impact, the government is considering whether to introduce a mandatory leaseback arrangement for non-consenting leaseholders. 
  • The government intends to provide further detail of its proposals for converting from leasehold to commonhold in its draft Commonhold Bill later this year.

Making commonhold work for properties of all sizes

  • The government has suggested that less onerous requirements may be used for smaller commonholds comprising only 2 or 3 units. Equally, it has been indicated that extra requirements may be imposed for commonhold buildings which are taller than 11 metres. 

Banning the sale of new leasehold flats

  • One of the government’s flagship manifesto policies was a ban on the sale of new leasehold flats. The ban is closely linked to the implementation of commonhold, and the government plans to consult on the ban later this year. 

To achieve these additional reforms, the government plans to consult with industry and consumer groups to understand their concerns around commonhold. Whilst all interested parties should be encouraged to engage in this process, it remains to be seen whether the government will be able to produce a system that satisfies the concerns of consumers, developers and lenders. 

The government is determined to ensure that commonhold becomes the default tenure and the publication of this White Paper is a crucial step in realising that objective.

https://www.gov.uk/government/publications/commonhold-white-paper/commonhold-white-paper-the-proposed-new-commonhold-model-for-homeownership-in-england-and-wales

Jo Keddie quoted in the Financial Times on rising equal pay claims in the retail sector

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

The FT article outlines the persistent issue of equal pay and the efforts being made to address it, particularly in the retail industry. Despite numerous initiatives and legal frameworks over the decades, disparities still exist. Employees, predominantly women who are most commonly impacted by these inequalities, are increasingly willing to challenge employers on pay. 

Jo, Partner and Head of our Employment and Partnerships team, noted that in the last two years she has ‘done more equal pay claims than in the last decade.’ 

Recent court rulings have seen store workers from major retailers such as ASDA, win their claims of unequal pay. The financial stakes for retailers are high with estimates that the total bill for the sector could potentially exceed £8 billion.

One way for employers to pre-empt equal pay claims is to conduct an audit of their workforce, to spot any discrepancies and address them. However, Jo commented that companies that conduct equal pay audits ‘don’t always like their results.’ This causes problems with transparency and whether companies leave a paper trail when conducting equal pay audits.

You can read the full article here.

In the last two years I’ve done more equal pay claims than in the last decade.

Size Does Count

The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 (the “Regulations”) are the least thrilling 10 words you can start a blog post with.

However, many contractors caught within the IR35 Off Payroll Working rules will certainly be singing their praises thanks to the impact they have on off-payroll working.

Currently, where an organisation (the “Employer”) engages a contractor through their personal services company (“PSC”), it is the Employer who has the obligation to consider whether the off-payroll working rules apply to the engagement, and whether the contractor is a disguised employee. However, for “small” companies, the obligation to make this determination remains with the PSC, giving the contractor more control.

The Regulations change the thresholds for small companies. For accounting periods beginning on or after 1 April 2025, a small company is one which meets two of the following conditions:

a) annual turnover of no more than £15m (up from £10.2m)

b) balance sheet total of not more than £7.5m (up from £5.1m)

c) average of no more than 50 employees for the company’s financial year

To determine whether the exemption for small businesses applies to a tax year, the two consecutive financial years ending before the tax year in question are considered. Where two or more of the above requirements are met, then the business will be deemed to be small.

The Institute of Chartered Accountants in England and Wales estimates that around 14,000 currently “medium” sized businesses will be recategorised as small, meaning that the obligation to consider the off-payroll working rules will fall on the PSC rather than the business itself, giving more control and decision-making to contractors who will be able to apply the rules themselves rather than face having determinations imposed upon them.

And away we BLO…

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Following on from her finding in 381 Southwark Park Road RTM Company Ltd & Ors v Click St Andrews Ltd & Anor [2024] EWHC 3179 (TCC) that Click St Andrews had a relevant liability to the leaseholders under section 130 of the Building Safety Act 2022 (the BSA), on 19 December 2024, Mrs Justice Jefford handed down her decision allowing the claimants’ application for a building liability order (BLO) on the basis of that relevant liability. We have obtained the transcript of that decision and, as the first BLO made by the Technology and Construction Court (TCC), it provides vital guidance on when it will be “just and equitable” to make a BLO and on certain flexibility and limits with BLOs. 

Associated bodies corporate

The first step of deciding whether a company was an associated body corporate was straightforward. Jefford J considered that as Click St Andrews Limited (in liquidation) (the developer of the property) was a wholly owned subsidiary of Click Above Limited, in which Click Group Holdings Limited held all shares, Click Group Holdings controlled Click St Andrews indirectly, and was therefore an associated body corporate of Click St Andrews under section 131 of the BSA. 

Just and equitable

The “principal issue” for Jefford J to consider was, therefore, whether it would be “just and equitable” to make the BLO. 

The meaning of “just and equitable” in the context of the BSA was considered last year by a beefed up First Tier Tribunal (FTT) in Triathlon Homes LLP and Stratford Village Development Partnership [2024] UKFTT 26 (PC). That case concerned an application for a remediation contribution order under section 124 of the BSA which, as Jefford J noted, “provides a somewhat different jurisdiction from the jurisdiction of the High Court to make a Building Liability Order”.  Nevertheless, as the FTT had considered the same words in the BSA, Jefford J took the steer given by the FTT and held that the TCC should have regard to the purpose of the BSA and to all relevant factors when deciding if it would be just and equitable to make a BLO.   

Jefford J also took guidance from the FTT’s decision on what the purpose of the act was: namely, to ensure that where a development has been carried out by a thinly capitalized or insolvent development company, a wealthy associated body corporate (such as a holding company) cannot evade responsibility for meeting the cost of remedying relevant defects by hiding behind the separate legal personality of the development company.

In Jefford J’s view, when considering whether a BLO would be just and equitable, the “emphasis” should be on the financial position of the company with the relevant liability (i.e. the development company) rather than of the associated body corporate (i.e. the holding company).  Accordingly, if the development company were to be in poor financial health, that would suffice, even if the holding company were also in poor health (as in the instant case). 

The TCC held that it was just and equitable to make the order in this case because the development company, Click St Andrews, was: 

  • a special purpose vehicle;
  • set up for the sole purpose of purchasing, developing, and then divesting itself of the property; and
  • dependent upon inter-group and inter-company loans for survival. 

Flexibility and Limits 

As part of the decision, Jefford J also accorded some helpful flexibility to claimants who may wish to progress the BLO process, but who have not established the identity of the associated body corporate or the costs and losses caused by the relevant liability: 

  1. As in her main judgment, she confirmed that it is not necessary to join the associated body corporate to the main proceedings establishing a relevant liability against the original body, or to name it in pleadings (albeit she noted that it would be sensible to do so if the identity of the associated body corporate is known).  She reasoned that, at the time of the main proceedings, it may not be clear who should be named, or it may be dependent on changeable financial arrangements, or the associated body corporate may not exist at the time of the main proceedings.  Such obstacles will not preclude a claimant from establishing a relevant liability in relation to which a BLO can subsequently be sought.  
  2. In a similar vein, Jefford J also decided that in the absence of anything in the BSA requiring the Court to do so, it would not be necessary to quantify the relevant liabilities in the BLO. 

In formulating the terms of the BLO, Jefford J adhered to the wording of the BSA and in so doing limited the liability of the holding company to the relevant liability of the development company only.  Jefford J rejected the argument that relevant liability was a gateway to making the holding company liable for all of the development company’s liability to the leaseholders in excess of just the relevant liabilities. A claimant cannot, therefore, establish a relevant liability and then obtain a BLO for losses caused other than by a breach of the Defective Premises Act 1972 or a risk arising from spread of fire or structural failure. 

Jo Keddie shares her insights with The Banker on the cultural realties of seemingly generous parental leave policies

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

A recent article by The Banker examines the evolving landscape of parental leave policies and their impact on employees, highlighting which UK banks offer the most generous benefits. Companies are increasingly recognising the importance of these policies in promoting work-life balance and supporting families.

However, Jo Keddie, Partner and Head of our Employment and Partnerships team, warns that despite seemingly generous policies, discrimination against women in the banking sector remains widespread. Jo and the Forsters’ employment team have been involved in an increasing number of discrimination claims by women against banks in recent years, including maternity leave claims, suggesting that the reality does not always align with these seemingly generous parental leave policies.

Jo also notes that the tough economic climate, marked by widespread redundancies and pressure on banks to perform, complicates the situation. For example, Lloyds recently announced 500 job losses and office closures, while HSBC is scaling back its equity capital markets and M&A activities. This environment makes employees hesitant to fully utilise parental leave policies due to job security concerns.

Additionally, Jo points out that banks often have a negative attitude towards shared parental leave compared to other sectors like public relations, real estate, and law, where there has been an encouraging increase in parents taking shared parental leave. Despite policies advocating for it, culturally there is a long way to go before the banking sector truly embraces the use of shared parental leave. 

Read the full article here (behind a paywall). 

Which UK banks have the most generous parental leave? Lenders boost policies but employment lawyers sceptical of culture change

https://www.thebanker.com/content/77f58a8b-9295-4771-9232-ce602bed0336

Approved Document B: 2025 amendments now in force, but a review on the horizon

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

As of 2 March 2025, the latest amendments to Approved Document B, the statutory guidance on fire safety supplementing the Building Regulations 2010, are in force. These amendments focus on three areas: fire safety information; changes to the fire testing standards used in the guidance, and sprinklers in care homes.

The amendments were initially published in September 2024. On 2 March 2025, the Ministry of Housing, Communities and Local Government issued a circular making a few minor adjustments to the text.

The amendments come in the context of a broader review of building regulation guidance on the horizon. In an announcement made in December 2024, Angela Rayner, the Secretary of State for Housing, Communities and Local Government, stated that the Building Safety Regulator would conduct a fundamental review of all building regulations guidance, including Approved Document B. Both Dame Judith Hackitt’s Independent Review of Building Regulations and Fire Safety final report published in May 2018 and the Grenfell Tower Inquiry Phase 2 report published in September 2024 recommended changes to the building regulations guidance.

                                                             

Andrew Parker on the feasibility of Government’s Grenfell Debarment Plans in Construction News

Construction workers in high-visibility vests and helmets stand and communicate amidst metal scaffolding at a construction site, with sunlight streaming through an open structure.

Last week, Angela Rayner announced plans for the Government to utilise the Procurement Act to debar seven firms associated with the Grenfell fire from public work. However, with the Act only having just come into force last week, questions are being raised as to how this can be done without reforming such new legislation.

Schedule six of the Act is the point in question, detailing a cut-off for disregarding events occurring “before the five-year period ending with the date on which the determination is made” when considering supplier exclusions. With the Grenfell fire having occurred in June 2017, it would (according to the Act), be outside the five year period and so would be disregarded as an event to be taken into account.

Speaking to Construction News, Andrew Parker, Head of Construction Disputes and Building Safety, agrees that it is “unclear” how the Act would be implemented but offered the following thought:

“One answer might lie in the interpretation of ‘events’ in the legislation,” and the five-year time limit could be applied such that “the clock only starts to run from the date of a decision or conviction against a company, or perhaps even the publication of the Grenfell Reports themselves”.

Read the full article in Construction News here.

Matthew Evans quoted in Property Week on the potential net loss of biodiversity net gain

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

As we reach the end of the first year of the biodiversity net gain (BNG) regulations, the industry is reflecting on how the regime is coming along.  Matthew Evans, Counsel on our Planning team, speaks to Property Week on the response of developers and landed estate owners, and shared their concerns around BNG.

“I think developers are seeing it as an additional cost and they are definitely taking it into account. I think it’s the 30-year monitoring period [that is of most concern], certainly if BNG is being delivered on site. It’s not just a case of doing some landscaping; it’s doing landscaping to a certain level and for a long time. And when you’re looking at complex sites that are perhaps going to be broken up, how do you assign responsibility for that?”

“I was speaking to a lot of our landed estate clients the other week and their feeling is that a new private market has sprung up to both deliver and secure BNG land. There is a concern now that to let it fall by the wayside would be quite soul-destroying. I do wonder whether the government is saying: ‘We’ve got a lot of developers already complaining about pre-commencement conditions generally and why has this been added on?”

Read the full article in Property Week here.

Office Occupancy Rates – latest trends

So what do you think the average office occupancy was in the UK, during the last week of January 2025?

I recently asked my LinkedIn connections and the results might surprise you.

25% occupancy 8% of votes
37% occupancy 30% of votes
49% occupancy 22% of votes
53% occupancy 41% of votes

The correct answer – if you were wondering – is 37.1% occupancy.

The data comes from research carried out by Remit Consulting, who have been monitoring office occupancy rates since the first lockdown. 

Happy Mondays

This research has been done on a national level and includes some interesting findings:

  • 37.1% is the highest weekly occupancy rates they have ever recorded – the previous best being during March 2024 
  • This week included the second consecutive Monday where occupancy has ever topped 33%

What is full?

This seems a silly question, but isn’t. 

Not all businesses have the same desk-to-person ratio. Where a business has dedicated desks, then it’s easy to understand. But where a business runs a leaner operation, for example with hot desking, it can be more opaque. 

If a business runs a desk space ratio of 7:10 (7 desks for every 10 people) then even when all desks are used, then only 70% of employees are in the office. So is the office full if not everyone is there?

But what is a desk? Yep, that great existential question of our time. 

Some businesses will include touch down desks, collaboration space and even seats in the canteen within their total count. So you tell me, what is full?

The idea that before Covid everyone was in the office every day is a myth. Holidays, illnesses, parental leave, client meetings, part-time work, site visits – all meant offices were never ‘full’. A good rule of thumb is that pre-Covid, offices were never more than 70% utilised. 

Perceptions matter

Why do most of the guesses over-estimate occupancy rates?

I would suggest there are a number of factors:

  1. most people come into the office themselves on the most popular days – that’s why they are popular. By not experiencing the quieter days they underestimate the weekly average;
  2. it’s hard to assess occupancy when hot decking; and
  3. offices have never been fully utilised, so our baseline understanding of fullness is skewed.

I will look forward to seeing if this upwards trend of increased occupancy continues. Until then – I hope to see you in the office soon.

Andrew Parker speaks to Property Week on new safety gateway delays

Construction workers in high-visibility vests and helmets stand and communicate amidst metal scaffolding at a construction site, with sunlight streaming through an open structure.

Since 2022, the new Building Safety Gateways have brought a greater element of safety to high-risk developments. The series of three milestones are a rigorous process, with sign-off before planning, construction, and occupation, and each submission requiring a large amount of information. However, there are significant delays in response times, with the expected 12-week period inflating to 6 months in some cases, partially attributed to under-resourcing of the regulator.

This bottleneck may threaten supply chains and potentially disrupt long-standing procurement methods, affecting viability. As Andrew states, “Developers, for example, may have to allow contractors to add ‘float’ to their programmes to account for the risk of delays, for student accommodation in particular. Even then, the danger is that additional programme [duration] will make some schemes unviable.”

While the gateways ensure safety at key milestones, continual delays will slow the momentum of high-rise developments. A more streamlined approach will be necessary to avoid stalling critical projects and help developers to meet the 1.5 million new homes target set by the Government.

Read the full article in Property Week here.

Lucy Barber speaks to Spear’s on super-prime buyer anonymity

In the realm of super-prime property, where millions are at stake, information is at a premium. Whether it’s on the buyer, seller, or property, those involved want to know the facts but also want to protect their privacy and their interests. Speaking to Spear’s, Lucy Barber comments on the benefits, and caveats, to super-prime property anonymity in the UK.

NDA’s are often asked to be signed before details on the property can be released, or a visit made, maintaining the element of privacy that off-market selling brings. ‘Buyers may also feel better protected from gazumping if the number of people with knowledge about the sale is more limited than usual’

However, a buyer trying too hard to remain anonymous can cause disputes both before the purchase and further down the line if the seller feels information was purposefully withheld, and thus changes the terms of sale. What with strict anti-money-laundering laws requiring both the buyer and seller to disclose their identity and the transaction purchase price being published when registered at the Land Registry, buyers have much less scope for privacy.

For all the details, read the full article in Spear’s here.

LAFRA 2024 – Key RTM reforms commence on 3rd March

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

Matthew Pennycook, the Minister of State for Housing Communities and Local Government, yesterday passed The Leasehold and Freehold Reform Act 2024 (Commencement No. 3) Regulations 2025.

This secondary legislation brings into force parts of LAFRA 2024 which fundamentally change the Right to Manage regime. The reforms are in force from 3 March 2025 and, in summary, are:

  Provision Position under existing legislation Position from 3 March
s.49 % non-residential limit on RTM claims A premises will not qualify for RTM where the internal floor area of any non-residential area exceeds 25%  A premises will not qualify for RTM where the internal floor area of any non-residential area exceeds 50% 
s.50 Costs of RTM The RTM Co is liable for the ‘reasonable costs’ of the landlord (including the cost of any proceedings if the RTM Co’s application is unsuccessful) 

The RTM Co is not liable for the landlord’s costs. 

 

The only exception is where the Tribunal awards costs (only available if the claim is withdrawn or ceases to qualify, and other conditions are satisfied).  

s.64 Restriction on recovery of non-litigation costs A landlord can charge costs incurred in relation to the RTM claim to the service charge if the lease permits it (subject to s19 of the Landlord and Tenant Act 1985). The landlord cannot charge leaseholders who are not members of the RTM Co the non-litigation costs incurred in relation the RTM claim via the service charge. 
s.51 Enforcement procedure A landlord or the RTM Co can apply to the County Court for an order to require any person to make good a default under the Commonhold and Leasehold Reform Act 2002 after 14 days has passed from the service of a default notice. 

The Tribunal is now the correct forum to bring a default action.

 

If an order other than an order to pay a sum of money is made, the action can be transferred to the County Court for enforcement. 

s.52 First instance applications to the High Court N/A Where the FTT has jurisdiction, it is not possible to apply to the High Court for a determination in the first instance.
  RTM Model Articles  The RTM Model Articles are contained in the Schedule to The RTM Companies (Model Articles) (England) Regulations 2009

The RTM Model Articles have been amended by The RTM Companies (Model Articles) (England) (Amendment) Regulations 2025.

The main amendment is to place a cap on the total number of votes that can be exercised by member landlords. 

 

The timing of these reforms is interesting. The proposed timetable for the implementation of LAFRA (issued by Matthew Pennycook in November 2024) suggested that the RTM amendments would come into force in the Spring of 2025. They have, then, arrived at least a month early,  and just 10 days after the High Court gave permission for several high-profile judicial review challenges to LAFRA to proceed to a full hearing. One wonders if the Government are seeking to bring through as many of the less controversial aspects of LAFRA before the hearing in July. 

See the links to our previous posts about the judicial review permission hearing and the timetable for LAFRA, together with The Leasehold and Freehold Reform Act (Commencement No. 3) Regulations and The RTM Companies (Model Articles) (England) (Amendment) Regulations 2025. 

 

Building Safety Act: Takeaways from a new remediation contribution order decision

The First-tier Tribunal has made a remediation contribution order (“RCO“) of over £13m against a developer and 75 other entities. The RCO, granted in Grey GR Limited Partnership v Edgewater (Stevenage) Limited and others CAM/26UH/HYI/2023/0003, covers costs incurred by the landlord in carrying out remedial fire safety-related works on Vista Tower, a 16-storey block of residential flats in Stevenage, Hertfordshire.

There are a number of key takeaways from this latest RCO determination:

  1. The Tribunal found that it was just and equitable to include in the RCO costs which had not been incurred to remedy a defect that caused a building safety risk but had instead been incurred for “types of consequential or other works involved in a package of works to remedy relevant defects“. In reaching this conclusion, the Tribunal commented that the “just and equitable” test does not necessarily limit RCOs to covering only works/costs that were unavoidable or even works/costs that were reasonable. The Tribunal did note, however, that it might be helpful to consider whether the relevant works/costs were within a “reasonable range of responses/costs” when considering whether it would be just and equitable to include them within an RCO. 
  2. The Tribunal found that it was just and equitable to make an RCO against 75 other entities in addition to the developer, having undertaken a forensic analysis of the complex web of companies under the ultimate control of the two key developers. This was because, in addition to association with the developer through common directorship, almost all of these 75 entities were linked in other relevant ways which indicated a wider corporate structure or connection. The Tribunal also considered it relevant that the purpose of RCOs was “so that remedial work can be carried out and/or public money from grant funding can be recovered promptly” and that they were not fault-based.
  3. The Tribunal made a joint and several RCO, rather than making orders of specific amounts against specific respondents. It felt this would be more practical for the applicant to pursue and was consistent with the purpose of the jurisdiction, which is to recover money quickly.
  4. The Tribunal considered that the meaning of “defect” in the definition of “relevant defect” in s120(2) BSA was not limited to building work that did not comply with applicable building regulations. This was one type of “defect” for which an RCO could be made, but not the only type. 
  5. The Tribunal considered that the phrase “building safety risk” in s120(5) BSA could mean, in the context of the risk of spread of fire, “any risk above “low” risk (understood as the ordinary unavoidable fire risks in residential buildings and/or in relation to PAS9980 as an assessment that fire spread would be within normal expectations)“. There would only need to be “a risk to the safety of people arising from the spread of fire in a tall residential building” for an RCO to be made. 
  6. As it did with the previous RCO decision in Triathlon Homes LLP v Stratford Village Development Partnership [2024] UKFTT 26 (PC), the Tribunal referred to a hierarchy (or waterfall) of liability and reiterated the purpose of the BSA as being to protect all leaseholders, including those who do not qualify for the costs protections contained in Schedule 8 of the BSA (“Non-Qualifying Leaseholders”).  Whilst it held that the applicant was entitled to costs that could have been recovered from Non-Qualifying Leaseholders through the service charge, it reminded those falling into this category that they have the right to make their own applications for an RCO against the developer and/or other entities that are liable to pay for remediation costs. 

Section 133 of the Act provides that landlords must take reasonable steps to obtain monies for remediation works from funding and/or third parties before seeking to pass on costs to leaseholders and there is authority which suggests that failing to do so would deem such demands as being unreasonable. Whilst it remains to be seen how the landlord in this case will deal with any monies already charged to Non-Qualifying Leaseholders, this case indicates that the Tribunal will expect that leaseholders, even those who do not benefit from qualified status, should not be charged for building safety related remediation costs where there are others higher up the “hierarchy of liability”. 

 

Landlords may have to find further cash down the sofa

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

For those dealing with assets with domestic EPCs take note – we have a further consultation on proposed reform to MEES, five years after the initial 2020 proposals. Is it EPC C or equivalent by 2030, as hinted by Labour back in September?

This follows the December consultation on EPC reform, with specific proposals for domestic EPCs that include: (1) a transition to a multi-metric approach (instead of the existing headline metric that is based on modeled energy costs per square metre); (2) a proposed 2026 transition; and (3) a small increase in the proposed maximum penalty to £400. 

The proposals are inter-linked, but the general gist is that landlords will require that “EPC C” equivalence by 2030 for existing tenancies (2028 for new tenancies).  The EPC methodology may change per the December consultation (hence the reference to “equivalence”), but as the government says, they expect “similar improvement measures” as a requirement for compliance. Notably, the government supports an increased fine to £30,000 for the same breach and same property (from £5,000). 

In addition, MEES in domestic property (unlike non-domestic) requires the landlord to put its “hand in its own pocket” to fund improvement works in sub-substandard property, regardless of affordability. The current cap is £3,500 inclusive of VAT. The preferred proposal is £15,000 inclusive of VAT (as opposed to the £10,000 figure proposed in 2020). Even without any inflation-ratchet and proposed exemptions (e.g. based on affordability), it is still a significant outlay. Unsurprisingly, the political arguments have started…

In this article from Alexander Peace in Green Street News (Alternative angle: what is the next £10bn sector?), he identifies the exit of many buy-to-let landlords from the sector, but also the opportunity for institutional investment. Increasingly stringent energy efficiency requirements, a complicated and ever-changing EPC regulatory landscape (plus renters reform)…will these changes only accelerate that trend? 

My overriding thought here – EPC reform, MEES reform – this is all complicated! In a politically sensitive environment (with a plethora of legislative priorities), a typically slow legislative process, and taking the lack of progress already from 2020 – there is the potential risk of lots of talk but no practical action, with the risk of further delays. Let’s hope not. And let’s hope the equivalent commercial MEES consultation, expected any day now, keeps it simple.  

Nb. For those in the social housing sector, we have a parallel consultation on more stringent application of EPC requirements. For more, see this from colleague, and expert, Charlotte Youngs. 

 

“We believe this more granular approach can achieve greater scale in time, as there is so much more to buy around the country. And it’s a far bigger sector than the new build or apartment sectors”

https://greenstreetnews.com/article/alternative-angle-what-is-the-next-10bn-sector/

The dark side of bonus season: navigating redundancy

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

Unfortunately, it is no coincidence that the impetus for organisations to reorganise and make cuts often happens just before bonus payments for the previous financial year are due to be paid. 

As a result, bonus season can be a particularly tumultuous and fraught period, with many employees finding themselves without a role or an anticipated bonus only weeks into 2025.

In a recent article for the FT Adviser, Jo Keddie and Daniel Parker shared their insights on bonus season in the financial services sector and the emerging pattern of reducing headcount in the run up. We have summarised the article by sharing eight steps that employees can take if faced with the possibility of redundancy before bonus payments are made. 

  1. Review your employment contract: check for information about your financial entitlements related to your notice period, bonus award, and deferred incentives in case of termination.
  2. Check award documents and policies: look at any freestanding award documents, bonus policies, or incentive plans for ‘good leaver’ terms that might offer more favourable treatment in redundancy situations.
  3. Scrutinise the redundancy process: check that your employer is carrying out a fair process involving proper consultation, fair selection criteria, and taking reasonable steps to avoid redundancy-related dismissals.
  4. Consider unfair dismissal claims: if your employer has not complied with the required procedures, you may have grounds to challenge the redundancy and claim unfair dismissal, provided you have sufficient length of service (around two years).
  5. Understand the rationale: ask for the rationale behind the redundancy. If there is no genuine business need or if the explanation differs from reality, the dismissal may not be fair and lawful.
  6. Check for unlawful factors: scrutinise whether the selection process is motivated by unlawful factors such as discrimination or whistleblowing. 
  7. Engage in the process: engage in the redundancy process early. Understand if any enhanced redundancy terms are on offer and whether the employer is allowing volunteers for redundancy.
  8. Document performance and contributions: ensure that your performance and contributions are fairly documented in your appraisals. Challenge any unjustified criticism or grading to avoid being unfairly selected for redundancy.

Taking these steps can help you navigate the redundancy process more effectively and protect your rights.

You can read the full article here.

 

We have seen a clear pattern emerging of reductions to workforces being made in the first quarter of each new year and 2025 is proving to be no different. Once again, we are finding that the timing of the reduction processes is often closely linked to rules around bonuses and other incentives.

https://www.ftadviser.com/advice-businesses/2025/2/4/bonus-season-can-come-at-a-cost-and-not-in-the-way-you-might-think/

Reflections on the NHF’s Housing Associations in 2025 Strategic Review

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Last month the National Housing Federation (NHF) published their Housing Associations in 2025 Strategic Review, which has been published in advance of their new five-year business strategy starting in April 2025 as well as reflecting the change in government in 2024. The review includes interesting feedback from their members on where they consider the Housing Association sector is now, as well as listing three priorities for the sector. 

Within those priorities, the following caught my eye in respect to potential legal developments this year: 

  1. Delivering good homes and energy efficient homes – practically, there is still a lot for Housing Associations to do in respect to upgrading their existing stock. As part of that, the NHF has identified retrofitting as a key focus area for the sector and having a clear plan by 2030 for the path to net zero by 2050. This also reflects the decision by the government to consult (currently ongoing until 26 February 2025) on social housing being subject to more stringent EPC requirements:
    1. requiring a valid EPC throughout the duration of a tenancy (so if the EPC expires then a new one is required to be undertaken even if the same tenant remains in the premises); 
    2. also closing the loophole in respect of renewal lettings not requiring a new EPC; and
    3. (generally for EPCs) EPCs measuring a wider set of matters:
      1. fabric performance;
      2. heating system;
      3. smart readiness; and 
      4. energy cost.
    4. Additionally, the government has announced it intends to consult on increases to the minimum energy efficiency standards (MEEs) for domestic properties (including social rented which have not previously been caught by MEEs) from the current rating E requirement to rating C by 2030. The NHF acknowledges that Housing Associations generally already have plans in place to achieve rating C by 2030, but if the requirement is confirmed in the MEEs regulations this will add further pressure to the sector.
    5. Having provisions in leases or tenancy agreements to enable the landlord to obtain access to the premises to survey premises for the purposes of updating EPCs or undertaking works to retrofit the premises will become more important for Housing Association landlords. “Green lease” provisions as they are sometimes called have become reasonably common in commercial property leases, but these are less prevalent in residential leases and tenancy agreements. 
  2. Collection of data for demonstrating the delivery of good homes and services – data collection will enable Housing Associations to better evidence the impact their services are having on residents and improvements made to the performance of their housing stock (such as collating energy efficiency metrics). Some of the data may be obtainable from building management systems or “landlord side” equipment. However, there is some data which may require the tenant’s consent such as on individual premises’ energy usage. Including terms in leases and tenancy documents to permit the landlord to recover that data will assist in collating the evidence. Additionally, Housing Associations will need to be careful to comply with UK General Data Protection Regulation (UK GDPR) and the Data Protection Act 2018 requirements (which they are already used to complying with) in collecting such data. 
  3. Trusted partners for residents – NHF highlighted that the consumer regulatory requirements being brought in under the Digital Markets, Competition and Consumers Act 2024 will make mandatory standards, which under the NHF’s Charter were already required. However, it is a useful reminder of further regulatory updates which Housing Associations will need to take account of in interacting with their residents and prospective residents.
  4. Enhancing existing relationships with local and regional authorities – working with devolved authorities may be familiar to some Housing Associations in England (such as in London, where the Greater London Authority plays a key role in providing grant). The new devolution policy set out in a white paper published on 16 December 2024 will empower Strategic Authorities across England and crucially give them control of grant funding for housing (as is already the case in London). NHF has highlighted that Housing Associations will need to build upon their existing relationship with local decision makers and obtain a better understanding of how best to navigate devolved structures and funding. 

“Our sector is determined to do more and to meet the multiple challenges it faces head on”

https://www.housing.org.uk/globalassets/files/business-strategy-2022--25/nhf_strategy_report_final_2.pdf

An update on the human rights challenges made against LAFRA…

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Following the passing of the Leasehold and Freehold Reform Act (“LAFRA”) in May 2024, a number of judicial review claims were made, arguing that many of its provisions were contrary to Article 1 of Protocol 1 (“A1P1”) to the European Convention on Human Rights.

A hearing took place at the Royal Courts of Justice on 30 October 2024 to decide whether these judicial review claims should be stayed until the Government made secondary legislation bringing the majority of LAFRA’s provisions into force. The Court decided that all the claims should proceed.

The next stage of the judicial review was the permission hearing. This was a preliminary hearing for the Court to decide whether the case was arguable and should be allowed to proceed to a full hearing. We understand that the arguments, once again, focused on whether it was possible to bring a judicial review claim challenging legislation in circumstances where not all of the provisions have been brought into force. 

The permission hearing took place on 29 and 30 January 2025 and Mr Justice Chamberlain granted permission for the claims to proceed to a full hearing. The key provisions being challenged are:

  1. The ‘abolition’ of marriage value
  2. The cap on ground rents at 0.1% of freehold vacant possession value
  3. The abolition of the landlord’s right to recover costs

It is important to note that permission to proceed is no guarantee of success and the permission hearing is not a full hearing of arguments. A substantive hearing will be held in July 2025, at which the High Court will decide whether these provisions should be declared incompatible with A1P1. 

That said, it will be interesting to see how this will impact the Government’s timetable for reforms. Will they slow it down to see the outcome of the judicial review, or will they push ahead in the hope of success?

By way of a reminder, the proposed timetable of events issued by Matthew Pennycook in November 2024 is set out below:

Event Date

LAFRA – ENFRANCHISEMENT / RIGHT TO MANAGE

Removal of the two year qualification rule for freehold acquisitions and lease extensions January 2025
Right to Manage reforms in LAFRA (expanding access, reforming its costs and voting rights) Spring 2025
Consultation on capitalisation rate and deferment rate Summer 2025
Primary legislation (amending errors in LAFRA) and secondary legislation to commence LAFRA (including rates) After summer 2025 consultation (but no commitment to a date)

LAFRA – RESIDENTIAL PROPERTY

Consultation on detail of LAFRA’s ban on buildings insurance commissions  “Very shortly”
Consultation on estate charges Summer 2025
LAFRA’s provisions on service charges and landlord’s costs of service charge proceedings 2025
Consultation on reforms to section 20 ‘major works’ process No date
Consultation on regulation of managing agents 2025
Consultation on private estate management arrangements  2025

COMMONHOLD

White paper on commonhold Early 2025
Consultation on banning leasehold flats 2025
Draft Leasehold and Commonhold Reform Bill published (including banning ground rent and forfeiture) Second half of 2025

 

The permission hearing took place on 29 and 30 January 2025 and Mr Justice Chamberlain granted permission for the claims to proceed to a full hearing.

Sustainability in 2025 – top five issues to watch

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Sustainability…what will shape real estate decision-making in the coming months? In an uncertain political climate, is there a risk of the sector heading off course? 

With thanks to Peter Massie, Head of UK at Carb0n, for the share, check out the “ULI Global Sustainability Outlook for 2025: Top Five Issues to Watch”. Leading global industry figures in sustainability have identified the top five issues, and for me, this is spot on, aligning with client activity on the ground (as well as our own experiences as a firm at Forsters in relocating to Lazari’s excellent 22 Baker Street). 

  • Simplifying goals and prioritising decarbonisation
  • Emphasising the impact of building materials
  • Focusing on occupiers—demand, health, and well-being (including KPIs around social impact)
  • Sourcing and storing green power
  • Investing in resilience

As the outlook identifies, the World Meteorological Organization reported that 2024 was poised to be the hottest year on record. There is no time to decelerate. Pleasingly, the real estate horizon looks good. Ultimately, money no doubt talks, and notably the CEO of Norway’s $1.8 trillion sovereign wealth fund, Nicolai Tangen, was resolute at Davos: “We do not agree that one should roll back climate efforts”, whilst acknowledging an “ESG” backlash in the US. This is just as it acquired a 25% stake in a Grosvenor portfolio valued at £1.2bn…

 

Robert Barham on the legal perks and quirks of home improvement

A modern building with sleek black columns supports a white structure overlooking a vast, calm ocean under a clear, blue sky.

As social media is flooded with inspirational homes and ambitious renovations, focussing on paint colours rather than paperwork, it’s important to consider the legislation surrounding your home and improvements to avoid any costly delays.

Robert Barham, Partner in Residential Property, spoke to i-Build on the perks and quirks when it comes to the legalities of home improvements, and the different considerations you must take into account.

While it is a case-by-case basis on which homes are suitable for extensions, as this depends on your grand designs and the space available, the Labour government are encouraging upwards home extensions through proposals which make it harder for the local councils to reject. Home expansions are a great way of improving the value of your property, but also for accommodating growing space requirements without having to move elsewhere. If you live in a terraced or semi-detached property, extensions upwards or outwards if incorporating a shared wall or encroaching on boundaries may be subject to the Party Wall Act 1996. Detached properties have more flexibility with space, however any home extension more than 50% of the original size of the house or more than 4m in height, requires planning permission. With the additional quirks of historical properties, or areas of outstanding natural beauty, you’ll be better protected against unexpected costs or unsuccessful outcomes if you look into any extenuating factors before beginning work.

This is even more of a factor if your home is on ‘The List’. Listed buildings bring charm to a home through period features, however these are the reasons why they are also protected by the Planning (Listed Buildings and Conservation Areas) Act 1990. It’s important to receive planning permission before any work begins, to avoid facing a hefty fine, having to reverse the work, or even a visit to prison. Specialist legal advice should also be sought before purchasing a listed building, to confirm if all previously carried out works on the property have been completed with consent.

Extensions are an excellent way of adding some value to your property, typically resulting in a 5% increase in value with some cases up to 20%! Although with this comes potentially increased property taxes and changes to your tax liabilities, as well as greater insurance premiums.

Another caveat to the excitement of home renovations are the increasing environmental regulations by local authorities. This scrutiny of construction sites applies to both developers and individual homeowners, so your waste management and use of materials is something to keep in mind.

Read the full article in I-Build here, to learn more about the complexities of legally extending your home.

Building Safety Act: TCC ruling on “relevant liability” precedes the first Building Liability Order

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

In December, Mrs Justice Jefford handed down judgment in 381 Southwark Park Road RTM Company Ltd & Ors v Click St Andrews Ltd & Anor [2024] EWHC 3179 (TCC) which included some notable pointers on the use of section 130 of the Building Safety Act 2022. 

To recap, section 130 provides that where it is just and equitable to do so, the High Court may make an order that a relevant liability of a body corporate shall also be a liability of an associated body corporate (a building liability order, or BLO).  A relevant liability means liability incurred under the Defective Premises Act 1972, under section 38 of the Building Act 1984 (if it is ever enacted(!)), or as a result of a risk to the safety of people in or about the building arising from the spread of fire or structural failure. 

The case is understood to be the Technology and Construction Court’s first decision on whether alleged wrong doing is a relevant liability, and the decision was as would be expected: in light of expert evidence, Jefford J was satisfied that in carrying out the works, the first defendant was in breach of the relevant terms of the relevant agreement in respect of fire safety and structure, which gave rise to a relevant liability under section 130.

However, this case’s particular interest comes from Jefford J’s pronouncements on procedure and on the scope of “relevant liability”. 

Procedure

At paragraph 31, Jefford J confirmed that, while it seemed “sensible and efficient” for the claimant to make a claim under section 130 within existing main proceedings, it is not necessary for the claimant to do so.  Rather, a claimant is free to make a claim for a BLO against an associated company after the proceedings in which the relevant liability is established. Jefford J noted in explanation that it would be “surprising” if a BLO had to be claimed within existing proceedings, since (a) the circumstances in which it might be just and equitable to make the BLO may not arise until after proceedings to establish the relevant liability are concluded and (b) a BLO can be sought against a corporate body that did not even exist at the time of such proceedings. 

Scope of “relevant liability”  

At paragraph 219, Jefford J set out her view that it was correct to characterise a failure to comply with design standards concerned with structural safety as a relevant liability, notwithstanding that the risk caused by that failure had not yet manifested itself, may not ever manifest itself, and was capable of being addressed.  She noted that, indeed, such is the “nature of risk” and was of the view that such risk “is what the ‘relevant liability’ is concerned with”.  It is presumed that this would also be the case with fire safety risks. 

First Building Liability Order

We understand that a Building Liability Order has now been made in this case: the first one to be made under the Building Safety Act 2022. We will report further once we have obtained a copy of the transcript.

Renters’ Rights Bill: Parliament’s Amendments and Its Path to the House of Lords

The main focus of the Renters’ Rights Bill so far has been the abolition of fixed-term tenancies (making all tenancies periodic) and, with this, the removal of Section 21 “no fault evictions.” As a result, tenants will have the right to remain in their home until they choose to end the tenancy, as long as they provide their landlord with two months’ notice. For more information on this and the bill’s other key features, please see here.

On 14 January 2025, the bill was presented again in the House of Commons for its report and third reading, where the government introduced further amendments, some of which are detailed below. The bill has since moved to the House of Lords for its first reading, which entails additional review and scrutiny. The legislation is expected to come into effect around the summer of this year.

Restrictions on upfront rent payments 

The government has brought in new provisions to restrict landlords or agents from asking tenants for more than one month’s worth of rent in advance: this will apply to both tenancies and licences. At present, there is no limit on the amount that a landlord can ask for upfront. 

This means that a landlord would not be permitted to accept rent in advance even if the tenant offers this voluntarily, as doing so would constitute a breach of the Tenancy Fees Act 2019.

Matthew Pennycook, the Minister of State for Housing and Planning, explained the reason behind this amendment as follows: 

“the Government have long recognised that demands for extortionate amounts of rent in advance put undue financial strain on tenants and can exclude certain groups from renting altogether.” 

In addition, some unscrupulous landlords have been using upfront rent payments to foster competition between prospective tenants and selecting the highest offer for added security.

Whilst this reform appears to be a positive step towards protecting tenants from bidding wars and the burden of shelling out large sums up front, there are concerns about its practical impact. Critics argue that this amendment could negatively affect financially vulnerable tenants, such as those with poor or no credit histories or who may not meet the necessary affordability checks, for example, international students, overseas workers, and those who have varied earnings. Paying rent in advance can often be a legitimate solution to provide peace of mind to landlords that these individuals will not default on payments. The proposed ban on rent in advance could take away this option for less financially secure tenants, leaving them with limited housing options. 

Student accommodation 

The Government debated the issue of students feeling pressured to sign rental contracts for the next academic year well in advance (and often much earlier than is necessary), without having had the chance to finalise their friendship groups or consider other options available to them, before committing to the tenancy. This also poses a problem for landlords, as student tenants may vacate the accommodation early, having been rushed into the rental contract too soon.

“This arms race, in which students are pressured ever earlier in the year to enter into contracts for the subsequent academic year, clearly is not benefiting them, and it is arguable whether it benefits the student landlords engaged in it.” (Matthew Pennycook)

A measure has been included to prohibit the above under new possession ground 4A. The landlord will be unable to regain possession when students in houses of multiple occupation (HMOs) have entered into a tenancy agreement more than six months in advance of the date of occupation.

Private Rented Sector Database

The bill envisages the setting up of a mandatory national database where landlords will be required to register themselves and their properties. This aims to provide tenants with greater transparency and information, including their landlord and managing agent’s name, address, and contact information. It will list details of any local authority enforcement action taken against landlords and any prior eviction notices issued to tenants. There will also be penalties issued for failure to register. 

For landlords, the database should act as a “one-stop shop” with all the relevant guidance through a single “front door”. It will also serve to communicate updates to landlords regarding their legal requirements and provide them with access to current statutory guidance.

Registration fees for the database will be used to fund a private rented sector Ombudsman, giving renters and landlords alike a dispute resolution service.

Protections for guarantors

In cases where the guarantor is related to a tenant, they will no longer be liable for rent payments following the tenant’s death, which the government has described as “safeguarding bereaved families”.

There were several more amendments implemented and you can read the latest version of the bill here

The bill is set to have its second reading in the Lords on 4 February 2025, giving its members the chance to review and debate the key principles of the legislation and voice any general concerns that they may have. We wait to discover which further amendments will be raised in due course.

Victoria Du Croz writes for Property Week on making affordable housing viable

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

In the current push by Labour to build more new homes, developers and registered providers (RPs) alike are struggling to deliver targets.

Writing for Property Week, Victoria Du Croz (Partner and Head of Planning) discusses the challenges faced in making affordable housing viable, and how funding is the key to unlocking this.

The key takeaways are: 

There is a substantial need for flexible grant funding for RPs. With budgets already constrained by ageing stock and remediation challenges, having flexible grant funding to contribute towards bringing these up to standard alongside acquiring new homes would be beneficial.

On a related note, another significant issue is the increasing number of residential developments that have stalled, primarily due to RPs not taking s106 affordable housing units required as part of these schemes. These bottlenecks are causing delays and financial strain on developers, with a report finding almost 17,500 of these unsold units across 31 developments.

Whilst there have been some governmental efforts to aid this, such as developing a database of these unsold homes to find RPs, these do not address the underlying funding issues. Action is needed if the government wants to achieve their targeted 1.5 million new homes by 2029.

Read the full article in Property Week here.

Let it B, Let it B (by 2030)?

Vertical garden flourishing on a building facade, with lush green plants covering multiple levels, set against a backdrop of tall glass skyscrapers.

For commercial property owners in early 2025, one question looms large – EPC B by 2030 (and EPC C by 2027), or not to be. Yes, no, maybe? In short, we don’t know yet, but watch this space! Here is a quickfire EPC/ MEES update on what those in the commercial property industry, working with non-domestic EPCs, need to know as of January 2025:

MEES: As for EPC B by 2030, this is not a legal requirement, but will it be? The industry craves clarity, spearheaded by the tireless work of Rob Wall and his team at the BPF – see for example their pre election 2024 “Carbon Manifesto”. The thinking is that the dates will push out, but when will the industry find out?  Well, we may hear more of the government’s intentions any day now. As stated in its response to the CCC Progress Report, “We are planning to publish the response to the Non-Domestic Private Rented Sector MEES consultation early in 2025”. As a reminder, that consultation closed in 2021! 

EPCs: We have a live consultation on EPC reform, including non-domestic EPCs (it closes at the end of February). Perhaps the key proposals of note for readers: reducing the validity period of new EPCs to less than the current 10 years; automatic requirement for EPCs on expiry where occupied; all heritage buildings must have an EPC; and potential doubling of penalties (i.e. max £5k to £10k). These are just proposals, but an indication of government thinking.

 

 

 

TCC decision underlines the breadth of adjudication clauses

Construction workers in high-visibility vests and helmets stand and communicate amidst metal scaffolding at a construction site, with sunlight streaming through an open structure.

The Technology and Construction Court (“TCC”) in BDW Trading Ltd (“BDW”) v Ardmore Construction Ltd (“Ardmore”) recently decided on the enforcement of an adjudicator’s decision in a historic fire safety dispute. The headline point is that a party to a construction contract can use the extended limitation periods under the Building Safety Act 2022 (“BSA”) to refer a claim under the Defective Premises Act 1972 (“DPA”) to adjudication. It also serves as a reminder of the importance of proper record-keeping and document retention.

Background

The case involved a dispute over fire safety cladding defects at a residential building constructed in 2003. The current owner, BDW, sought to hold the original contractor, Ardmore, responsible for the defects.

BDW referred the dispute to adjudication on two alternative grounds:

  1. BDW argued that Ardmore breached the building contract by failing to install cavity barriers and that this omission was deliberately concealed, meaning that BDW could rely on an extended limitation period; and
  2. BDW claimed that Ardmore breached the Defective Premises Act 1972 (“DPA”) by constructing a building that was not fit for habitation.

The adjudicator ruled in favour of BDW on points (1) and (2) above, and the TCC case relates to the enforcement of the adjudicator’s decision.

Jurisdictional Challenge 

Ardmore disputed the jurisdiction of the adjudicator over a DPA claim on the basis that the adjudication clause was limited to disputes which arose under the contract, whereas the DPA claim arose under statute. In addition, Ardmore contended that different wording in the arbitration clause (which referred to disputes arising under the contract or “in connection therewith”) was further evidence that the adjudication clause was not intended to extend to the DPA.

Both arguments were rejected by the TCC on the basis that the adjudication clause was intended to cover any dispute arising out of the parties’ contractual relationship. In addition, the contract stipulated that Ardmore would bear the same responsibility as the relevant design professional, including responsibilities under the DPA. This reinforced the understanding that an alleged breach of the DPA could be addressed through adjudication as a dispute which arises under the contract.

Natural Justice Challenge

Ardmore also argued that using adjudication to pursue a £15 million claim on a 20-year-old project was unjust and violated the principles of natural justice. Ardmore contended that adjudication was principally intended to address current or recent disputes. As is so often the case with disputes of this nature, Ardmore lacked documentation from the project and heavily relied on BDW’s disclosure, which was also limited.

With regard to the value of the project, the TCC held that even complex cases can be dealt with by adjudication. With regard to the age of the project, the TCC held that the passage of time is not a sufficient defence and found that Ardmore’s situation arose largely due to its own poor record keeping, rather than from any scheduled disposal of documents following the expiration of the initial limitation period. The fact that BDW had complied with disclosure requests was considered relevant.

Key Takeaways 

  1. Adjudication can extend to statutory claims related to the contract.
  2. Adjudication is a suitable forum for complex and historical disputes.
  3. Construction professionals should maintain comprehensive records and review document retention policies and processes.

A link to the judgment can be found here. The impact of this case will likely depend on the awaited Supreme Court’s judgment in the URS Corporation Limited v BDW Trading Limited which relates to similar issues.

 

Can a landlord charge for the cost of electricity to the building where there are solar panels on the roof?

This question was considered by the Upper Tribunal in the recent case of Avon Ground Rents Limited v Pilgrim

The Upper Tribunal decided that the answer was “no”. This was despite the fact that there was no mention of the solar panels in the leases and that the Upper Tribunal agreed that where the freeholder of a building with solar panels has chosen to grant long leases of flats in the building, it is under no contractual obligation to use those panels for the benefit to its leaseholders unless it has covenanted in the leases to do so.

Why then did the Upper Tribunal decide that it was not reasonable for the landlord to re-charge the costs of electricity to the leaseholders in this case?

Facts 

The case concerned Highview Court, a block of flats in Luton. Highview Court was constructed with solar panels on its roof, which were required under the planning permission. The solar panels were connected to 12 of the 52 flats in the building to provide for their electricity supply and the remaining panels were set up to generate electricity for the common parts. 

The landlord of the building, Avon Ground Rents Limited, together with the management company, are responsible for the provision of the heating and lighting of the common parts and the cost of doing so can be recharged through the service charge. 

During the first three years of the leases, the leaseholders were not charged communal electricity. They inferred this was because the electricity was being generated by the solar panels. When the landlord started to demand payment for electricity, they inferred it had diverted the supply from the solar panels for its own use. 

The landlord said this was incorrect. The solar panels were never able to provide energy for the communal areas and the reason the leaseholders were not invoiced for the first three years was due to an issue with metering.  The tribunal was not satisfied that this was true. 

Decision 

Section 27A of the Landlord and Tenant Act 1985 gives the First-tier Tribunal the jurisdiction to decide whether and to what extent service charges are payable. Section 19 of the 1985 Act provides:

(1) relevant costs shall be taken into account in determining the amount of service charge payable for a period:

(a) only to the extent they are reasonably incurred, and 

(b) where they are incurred in the provision of services or carrying out of works, only if the works are of a reasonable standard. 

(2) Where a service charge is payable before the relevant costs are incurred, no greater amount than is reasonable shall be so payable, and after the relevant costs have been incurred any necessary adjustment shall be made by repayment, reduction or subsequent charges or otherwise.

The effect of s.27A of the 1985 Act is that, when invoked by the leaseholders, they must raise a prima facie case that a cost was not reasonably incurred. Once they have done so, the evidential burden shifts to the landlord or management company to show that the expenditure or charge was reasonable. 

The Upper Tribunal found that the leaseholders in this case had raised a prima facie case that the costs were unreasonable, as required. The planning permission required the property to benefit from solar power up to at least 10% of its needs.  The First-tier Tribunal had decided that the solar panels were connected to be able to provide power for the common parts and for three years they appeared to have done so, meaning that the leaseholders were not required to pay anything. 

The leaseholders therefore wanted to know why the landlord was paying for electricity from an outside supplier, rather than using the solar panels. The Upper Tribunal took the view that, in the circumstances, it was not surprising that the leaseholders took the view that the landlord must be diverting the electricity from the solar panels for its own ends. 

The landlord had failed to discharge its evidential burden to prove that the costs were in fact reasonable. It had failed to refute the evidence that the solar panels had been used for the first three years and was not able to provide an explanation for them not being used since. The tribunal was left with the leaseholders’ prima facie case that the power for the common parts could be and had been provided by solar panels. 

Conclusions 

This decision is very fact-specific. Had the landlord been able to demonstrate that it was not able to use the solar panels for electricity for the common parts, the decision may have been different. 

However, it does seem to suggest that a charge levied by a landlord has the potential to be unreasonable if it has access to a different, more cost-effective (or in this case, free) means of providing the service to the leaseholders, even if the landlord is under no contractual obligation to provide the service in that way.

How can I negotiate a new bonus structure? Daniel Parker answers FT reader’s question

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

Daniel Parker, Senior Associate in our Employment and Partnerships team, shares his advice on how to negotiate a bonus structure and job title when offered a new role in banking.

Firstly, he highlights the importance of determining whether the bonus is contractual or discretionary. A contractual bonus is guaranteed if specified conditions are met, whereas a discretionary bonus allows an employer to decide if and how much to pay. A contractual bonus is usually preferable, as it provides more security.

For senior risk-takers, banks often have fixed and variable pay to create reasonable performance incentives. If a bonus is target-based, clarity should be sought on what those targets are. Are they based solely on performance, or do they also depend on the bank’s overall performance? Understanding this can help gauge the likelihood of receiving a bonus.

It can also be wise to negotiate a slightly lower performance target for your first year to account for the time spent settling into a new role or, ideally, a guaranteed first-year bonus. 

Be aware of any “clawback” provisions that allow an employer to reclaim bonuses in cases of gross misconduct or accounting misstatements. These are common in the banking sector and can significantly impact annual remuneration.

Regarding a job title, it’s common to negotiate this before starting a new role. It is worth understanding the team’s structure and progression pathway before making the request. Smaller teams may have limited titles, while larger businesses may offer more flexibility. If there’s a mismatch between your experience and title, this is ultimately worth addressing. 

Our Employment team often help Senior Executives considering a new role, with reviewing their proposed employment contracts and help to negotiate positive terms. Do get in touch to find out how we can assist. 

In the case of the latter, it may be prudent to obtain some assurance from your employer as to the likelihood of your bonus being paid bearing in mind recent business performance and forecasts for the future. However, if the bonus is based either wholly or partly on your own performance, it is important to ensure that those targets are realistic and achievable.

https://on.ft.com/402kqMX

New Year’s Resolution: to file company accounts on time

Last year, Companies House issued a record amount of fines for the late filing of company accounts. In the year 2023/24, Companies House issued fines totaling £34.4m to private companies filing seriously late for two consecutive years; an increase of over £20m from 2019/20. The number of companies fined for repeatedly filing more than six months late also significantly increased, from 3,418 in 2019/20 to 11,463 in 2023/24.

According to the FT article quoted below, this increase is, in part, due to numerous companies facing financial difficulties, which stem from the COVID pandemic, slow economic growth and higher costs. As a result, such companies have been unable to satisfy their auditors that they have the “financial strength to stay afloat as a “going concern””. 

Another reason mooted for the increase is the number of “ghost companies” set up during the pandemic to take advantage of the government’s bounce back loans; companies which presumably had no intention of ever filing accounts whether on time or not. Even the wildest optimist is unlikely to expect any fines issued to those “ghost companies” to be repaid.

Filing your company accounts may not be the most exciting commercial venture that you embark on this year, but with fines for private companies ranging from £150 (for accounts filed less than one month late) to £3,000 (for accounts filed more than six months late in two consecutive financial years), it’s not something that should be moved down your to do list. It should also be remembered that the coming into force of the Economic Crime and Corporate Transparency Act 2023 (ECCTA) has given Companies House far greater powers than it had wielded previously. To enable Companies House to fully utilise such powers, the coming years are likely to see an increase to its resources and, I expect, an increase in its clamping down of non-compliant companies. 

If you have any questions about any of your filing obligations or about the changes being brought in by ECCTA, please get in touch with your usual Forsters’ contact or any member of our Corporate team. 

 

Figures produced by Companies House show that a record £34.4mn of fines were issued in 2023-24 to private companies filing seriously late two years in a row, up from £10.2mn in 2019-20

https://www.ft.com/content/1d6a7d0b-1761-49c8-8c90-ef6bd4d3ef4d

Don’t believe the h(AI)pe?

In the legal industry (and no doubt other service industries) the received wisdom is that you can achieve two out of three things when doing a job for the client: do it quickly, do it well, do it cheaply. I was reminded of this the other day when discussing recent surveys by Deloitte (The future of legal work?) and Thomson Reuters (Future of professionals), both focusing on legal technology and in particular generative AI. The Deloitte survey canvassed ‘senior legal leadership’ at 43 of its ‘closest and largest clients’ and provides interesting insights into what those organisations are thinking and doing. The Thomson Reuters survey canvassed professionals in legal, tax, and accounting, receiving more than 2,200 responses.

Something I am always curious about is, while there is a belief generative AI will change things and that it should make things quicker, better, cheaper, it is not always clear how and why people believe this. For example:

  • In the Deloitte report, 79% of respondents said they expected generative AI to have ‘moderate to significant long-term impact on how legal work is carried out’. That was despite the fact that 76% of its respondents reported ‘no current adoption of the technology’, although with the caveat that they were expecting some level of adoption in the next 2-3 years.
  • Deloitte’s respondents also expect external law firms to adopt generative AI, and that it will produce benefits for clients (the prevailing expectations being that it will reduce costs or speed up turnaround time). However only 3 – 6% were seeing these benefits.
  • A huge number of Thomson Reuters’ respondents (77%) believed AI would have a ‘high or transformational impact on their careers’. However, many professionals cannot articulate how to convey the benefits of use of AI to clients, with 46% saying they were ‘not very confident or not confident at all about articulating this’
  • Amongst those of Thomson Reuters’ respondents who use the technology, a fair number (28%) felt the output was ‘a strong starting point’ they would ‘just need to edit’, although most (50%) felt it to be a basic starting point where the user would still need to do ‘the majority of the work’, and 7% found the output to be poor. 
  • Interestingly, while pricing is one of the key areas where clients hope to see improvements, respondents to Thomson Reuters survey thought efficiencies would prompt a move away from pricing by reference to time taken and towards pricing the value of the work.

My guess is that a lot of people are searching for the Holy Grail: a tool that can respond quickly, accurately, and briefly to the question “Can we do this?”, which may get sent to in-house (or external) counsel late in a transaction, and all for less than the current legal spend. Despite all the hype and hope around generative AI this is not something that exists. If it did, most companies would be champing at the bit to replace their external lawyers with it. 

Coincidentally, the same day these two surveys were discussed I also came across a study on the use of AI by police departments for report writing carried out by Ian T. Adams, Matt Barter, Kyle McLean, Hunter Boehme, and Irick A. Geary (No Man’s Hand: Artificial Intelligence Does Not Improve Police Report Writing Speed). This trial looked at whether AI tools reduced the time police officers spent writing reports. The findings were straightforward: use of AI did not result in any statistically significant reduction in time taken to create the reports. There were a few things that jumped out at me from this study: 

  • One reason put forward as a possible explanation for the lack of impact was that the reports were already largely based on templates. The aspects that were bespoke to a particular incident required substantial input from the officers involved, based on their experience of the particular incident. Use of templates may have already created substantial time savings and therefore only incremental savings were being made by using the new technology. 
  • The officers were reminded that the reports were for them to review, correct and issue under oath, and that the AI’s work could not be relied upon. 
  • Notwithstanding its findings, it did acknowledge that there might be other benefits to use of AI which remain untested, such as consistency of reporting or improved quality. 

It is easy to see similarities between this study on the policing context and use of this technology in the legal context. Use of templates and precedents is the norm for law firms, as is a requirement that a firm stands behind its work. There is also the bigger picture point of marginal gains. For example, law firms also have the benefit of reference materials that succinctly and accurately summarise the law for them – why would they pay for something that is new, untested, and less reliable? Similarly, clients have been pushing for lower fees for longer than I have been a lawyer, and the side effect of that has been that firms embrace software solutions where they can, for example document automation for first drafts and cross-checking, or software to assist in disclosure exercises, and even for checking cross-references – the key question being do they work overall? When it comes to judgement calls and decision making, which is really what clients want from their advisors, the prevailing view seems to be that this is not within the capability of the technology, nor will it be any time soon.

I suspect it will take some time before we really know whether there are generative AI tools that will be able to deliver the Holy Grail of fast, cheap, and good. In the meantime, I wonder if most law firms might more wisely be asked (and consider) whether they are fully utilising existing software tools that may be less flashy but are more mature and more reliable. 

Almost 70% of all professionals said that a higher or the same portion of work matters will be brought in-house within the next five years, compared to today.

https://www.thomsonreuters.com/content/dam/ewp-m/documents/thomsonreuters/en/pdf/reports/future-of-professionals-report-2024.pdf

Matthew Evans on Government planning committee changes

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

In recent articles for BE News and Property Wire, I joined with industry experts looking at the announced “sweeping overhaul” of the planning system. These plans, outlined by Angela Rayner (the secretary of state for housing, communities and local government), are aimed at accelerating the planning process whilst supporting better decision making, and some in part without permission from council committees.

Whilst these changes bring improvements, this may not be the fast track to building 1.5 million homes a year.

The key planning takeaways being that:

  1. The aim is to improve the process to help meet the hugely ambitious housing targets set by the Government. Although to make a genuine difference, greater reform is needed.
  2. With emphasis on this being a plan-led system, applications should, in theory, be approved faster if compliant. Giving greater control to the local planning authorities should accelerate approvals if they comply with the Local Plans, reducing wasted time.
  3. With the introduction of a new national scheme of delegation, only involving committees when truly necessary, and the opportunities for standardising elements of local plans, the speed and consistency of output looks set to improve.

This is a step in the right direction but, as I’ve mentioned, greater reform overall is needed to make a real change.

Read the full articles in BE News and Property Wire.

 

It may not deliver 1.5 million homes, but it would save time, money and get Britain building a bit faster.

https://www.propertywire.com/news/government-pledges-to-bypass-planning-committees-to-speed-up-housebuilding/

Andrew Parker on the new Remediation Acceleration Plan

Construction workers in high-visibility vests and helmets stand and communicate amidst metal scaffolding at a construction site, with sunlight streaming through an open structure.

Andrew Parker, Head of Construction Disputes, spoke with PBC Today and The Construction Index, on the challenge of resourcing the Government’s new Remediation Acceleration Plan. 

This plan has outlined three key objectives: (1) fix buildings faster, (2) identify all buildings with unsafe cladding, (3) support residents with the ultimate aim that by the end of 2029, all 11m+ buildings with unsafe cladding have either been remediated or have a date for completion.  

Read the full articles in PBC Today and The Construction Index.

The Government’s Remediation Acceleration Plan is seeking to increase the pace of remediation across 18m and 11m residential buildings, putting in place legislation and new regulatory powers to ensure buildings have a clear remediation plan and timeline. Ensuring leaseholders have clarity and certainty about the safety of their buildings and the timings of remediation work is welcome but the key challenge, which the Government does acknowledge, is the availability of suitably skilled professionals and contractors qualified to design and implement the required remediation works. Regulation will sharpen people’s minds, but the pace can only improve when all parts of the construction industry and regulatory bodies are effectively resourced, and this will take time.

https://www.pbctoday.co.uk/news/building-control-news/new-remediation-acceleration-plan-pledges-to-remove-all-dangerous-cladding-on-high-rise-buildings-by-2030/146579/

Penalty Saved or Penalty Paid? Gary Lineker’s match with HMRC on IR 35 comes to an end.

Gary Lineker’s 90 minutes with HMRC and the courts are up, after the Match of the Day star and the tax man entered into a confidential settlement. HMRC had appealed a finding in the First Tier Tribunal in favour of Mr Lineker.

With a confidential settlement, it was unclear if Lineker was offside when it came to his tax treatment of earnings from work with the BBC and BT Sports between 2013 and 2016.

Lineker’s case was different from most celebrity IR 35 cases, as rather than using a personal service company (PSC), Lineker operated through a general partnership with his ex-wife. 

For the intermediaries legislation, a contract for services from the worker must be entered into by the intermediary – usually a PSC. However, as Lineker operated via a partnership, and he personally entered into contracts with the BBC and BT Sports, the FTT held that the intermediaries legislation could not apply – he had contracted directly with these companies. 

The Tribunal held that if Mr Lineker’s ex-wife had been the one to sign the contracts then the intermediaries legislation could have applied.

HMRC had appealed to the Upper Tribunal, but now the case has been settled it is unclear if HMRC or Mr Lineker took 3 points from the encounter.

Daniel Parker shares his views with The Banker on senior banker bonus proposals

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

In a recent article for The Banker, Daniel Parker, Senior Associate in our Employment and Partnerships team, shared his thoughts on the Financial Conduct Authority and Prudential Regulation Authority’s proposals to make the current bonus regime more favourable for senior bankers.

The proposed changes aim to make it quicker for senior bankers to receive their bonuses. This move is designed to make working at UK banks more attractive in comparison to US and EU counterparts.

Daniel highlights that while these changes aim to enhance competitiveness, their impact will take time to assess:  “The proposals will need to filter through to revised remuneration policies and awards, before showing in hiring trends”. He emphasises that these reforms, including shorter bonus deferrals, align with the UK’s broader goal to attract top talent. However, Daniel cautions that these changes could risk re-igniting pre-2008 practices which were designed to reduce excessive risk taking.

He also explains that while banks may begin to manage individual’s expectations on salary growth, any efforts to reduce salaries are unlikely to be received well and should be carefully managed to avoid unfair dismissal claims.

You can read the full article here.

Lucy Barber speaks to PrimeResi and Property Week on Leasehold and Freehold reform plans

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

The announcement by Housing Minister Matthew Pennycook, relating to the Government’s intentions to deal with flaws in the existing Leasehold & Freehold Act 2024, has not moved matters forward for the enfranchisement industry and highlights how there are no quick and easy solutions to the issues that have been slowing up the legislation for years. The industry is effectively on pause, with leaseholders waiting to extend their leases with uncertainty around what might be changing. With a quick decision looking unlikely, and if reforms continue down this route, the industry may not be able to hit the play button for some years yet.

Read the full articles in PrimeResi here, and Property Week here.

 

“As a freeholder or leaseholder the announcement leaves you no further forward than they have been for many years. The two year rule whilst helpful has in practice never been too much of a hindrance as sellers are able to serve leave extension notices as part of the sale and the buyer  can be assigned the benefit of them when they complete their purchase and continue with the lease extension process.

The position is still uncertain, the timing is uncertain and the eventual drafting of the legislation is uncertain. Leaseholders and freeholders are in the same position they have been for many years. The announcement seems only to confirm what we all already knew and that is that the task is huge and complicated and not easy. There are no quick and easy answers to any of the issues that have slowed up the legislation to date, if there were we would no doubt be a lot further forward.

It has been dragging on for so long now that I suspect those that work in the enfranchisement industry would like to see a decision of some sort promptly on the valuation issues so that the industry that is largely on pause, and how now been for many years, can become unstuck and leaseholders can extend their leases and move on rather than being in this forever limbo of what might be changing.

A quick decision looks unlikely however unless they resolve to simply scrap the proposals to change the valuation basis of lease extensions and continue with the status quo and with the Human rights cases also now initiated, if the reforms continue down this route those in the industry may not be able to hit the play button for some years yet.”

Joanna Brown speaks to CoStar on why data sharing between landlords and tenants is on the rise

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

The concept of data sharing to improve the energy efficiency of buildings is not new, with data sharing clauses featuring in lease negotiations since around 2012. What is new, however, is a growing acceptance of data-sharing clauses. 

Previously it would be the case that data-sharing clauses would be pulled out of contracts early on in negotiations between the two parties.

This shift towards tenants generally accepting data-sharing clauses within leases is often predicated on there being no additional cost for the tenant to bear and no obligation for them to increase energy efficiency as a result of the data being shared. While it is positive to see increased acceptance, it is worth noting that the provisions in the leases are not particularly robust. It is usually just the right for a landlord to request information at reasonable intervals.

It is important here to differentiate between new lettings, where it has become more commonplace for tenants to accept green provisions, made simpler if they are included in the heads of terms. But this is not the case with Landlord and Tenant 1954 Act renewals, where pushback is still par for the course. 

This article was published on 06 November 2024. The full article can be read on CoStar’s website here

 

New High Street Rental Auction powers for Councils from 2 December 2024

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

The High Street Rental Auction provisions in the Levelling-up and Regeneration Act 2023 will come into effect from today (2 December 2024). 

In an aim to save our diminishing high streets, the new powers will enable Councils to:

  • Designate areas as high streets or town centres which are important to the local economy because of a concentration of high-street uses (such as shops, cafes, restaurants).
  • Serve notice on landlords in these designated areas requiring them to let vacant premises (for a high-street use for a minimum of 1 year) if the following two conditions are met:
    • the “vacancy condition” – the premises must have been vacant for at least 1 year out of the last 2 years – the use must have been substantial, sustained and involve the regular presence of people at the premises; and
    • the “local benefit condition” this is that the Council considers the occupation of the premises for suitable high-street use would be beneficial to the local economy, society or environment.
  • If the landlord is unable to let the premises within 8 weeks of the notice, then the Council will be entitled to hold a Rental Auction for the letting of the premises (for a 1-5 year lease, with the rent determined by the successful bidder) within 14 weeks.

These new powers have serious muscle, allowing for Councils to enter into tenancies on behalf of landlords and granting deemed consent of superior lessors/mortgagees. There is also criminal liability for unauthorised works to premises whilst there is an active letting notice in place. Landlords will have a right of appeal against a letting notice on grounds such as the vacancy condition not being met, the Council unreasonably holding consent to a letting or the landlord requiring possession of the property for redevelopment or refurbishment works. 

To support these provisions, there is a new permitted development right (Class DB: Use of qualifying high-street premises changing to a suitable high-street use) to facilitate any required change of use of the premises. As with any permitted development right, the ability to rely on the right will be subject to any conditions on the operative planning permission restricting use, which is something to look out for. 

How the rental auction process will work remains unclear, with further regulations required in this area. Detailed Government Guidance is also expected in December when the provisions come into force. To date, it is understood four Councils have signed up with the Government to trial the powers and provide their feedback. 

With only £1m of funding allocated to Councils collectively to implement these measures, it seems unlikely there will be sufficient resources for these powers to have the Government’s desired clout. It also feels that a complex problem may have been wrongly distilled into a simple conclusion; that it is landlords choosing not to let their premises that is leading to such low occupancy on our high streets. Other factors such as online shopping habits, market forces and tighter regulations on lettings in terms of EPCs are undoubtedly also playing their part in the high street’s downturn. 

Only time will tell if these new powers are able to breathe the life back into our town centres that the Government hopes they will.

 

“High streets are the beating heart of our communities. But for too long, too many have been neglected, with more and more empty lots and boarded up shopfronts.”

https://www.gov.uk/government/news/high-streets-to-be-revitalised-with-new-legal-powers

COP 29 Conference in Baku – Your Morning Coffee Digest

Vertical garden flourishing on a building facade, with lush green plants covering multiple levels, set against a backdrop of tall glass skyscrapers.

The COP 29 climate change conference took place in Baku, Azerbaijan, from November 11 to 24 2024. Key takeaways included:

New Climate Finance Agreement: A new goal, the New Collective Quantified Goal on Climate Finance (NCQG), was agreed upon to significantly increase financial support for developing countries. Developed countries will triple their annual climate finance to $300 billion by 2035. Overall, climate finance will rise to $1.3 trillion annually, including contributions from all sectors (public and private). There is a focus on grants and avoiding further debt burdens. This funding aims to help meet the goals of the Paris Agreement, particularly limiting global temperature rise to well below 2°C, ideally 1.5°C.

Carbon Market Rules: The conference finalised rules under Article 6 of the Paris Agreement, which allows countries to cooperate on emissions reduction via carbon trading. Carbon trading allows countries or companies to buy and sell “carbon credits” or “carbon allowances” as a way to meet their emissions reduction targets. The new rules cover both voluntary emission reductions (ITMOs) and a multilateral mechanism for carbon credit trading, ensuring transparency and environmental integrity.

Overall Reception: Despite progress in climate finance, developing nations criticized the outcome as insufficient, with many calling for more ambitious financial commitments. There were also concerns about the lack of consensus on fully phasing out fossil fuels. However, the rules for carbon markets were hailed as a positive step, offering new opportunities for private sector finance in emission reduction projects.

Looking Ahead: COP 30 will be held in Belém, Brazil in 2025, where discussions will continue on how to achieve the NCQG and further climate goals.

Comment: The overall sentiment at COP 29 was mixed, with some praising the finance agreements, while others felt the pledges were not ambitious enough to address urgent climate needs. While the tripling of climate finance and the establishment of clear carbon market rules are important steps forward, they may not be sufficient to meet the scale of the climate crisis. The lower-than-expected financial commitments, particularly for developing countries, highlight the ongoing gap between promises and actions. Moving forward, it is crucial for future COPs to not only secure more substantial financial pledges but also implement stronger, more binding commitments to reduce emissions and phase out fossil fuels if we are to avoid the most catastrophic impacts of climate change.

Companies House Update: ECCTA transition plan published

Glass building walls curve gracefully, reflecting geometric patterns. The structure's sleek, modern design contrasts with a vibrant blue sky, while golden foliage accents the foreground.

On 16 October 2024, Companies House published an outline transition plan for reforming the role of Companies House in connection with the Economic Crime and Corporate Transparency Act 2023 (ECCTA). The plan summarises provisions that are already in effect and provides an indicative timeline for implementation of the remaining changes.  

The aim of ECCTA is to reform the role of Companies House and improve transparency around UK companies and other legal entities by strengthening Companies House’s ability to identify and prevent economic crime, while also enhancing the accuracy and reliability of the information it holds. As such, ECCTA brings the most significant changes to Companies House since corporate registrations began in 1844.

The changes to be brought in by ECCTA are being implemented in phases, with full implementation expected by 2027. However, a firm timetable cannot be set as timelines are dependent on suitable Parliamentary time in both Houses. Indicative key dates as set out in the transition plan are: 

Enhanced powers for the Registrar of Companies (Registrar) – since 4 March 2024, several key measures have already been introduced which enhance the Registrar’s powers. These include questioning company-submitted information and requesting evidence when necessary, applying stricter checks on proposed company names to prevent fraud, annotating misleading or inconsistent information in the public record, cleansing the public record using data matching technology, and sharing data with other government departments and law enforcement bodies. 

Financial penalties – since 2 May 2024, Companies House has had the power to issue financial penalties for offences under ECCTA and the Companies Act 2006. It published guidance on how it will exercise this new power in September of this year, setting out the steps it will take to impose penalties, the types of penalty, penalty calculations, and actions a person can take if the Registrar suspects that they have engaged in conduct amounting to a relevant offence.

Striking off – by winter 2024 / 2025, Companies House will be able to expedite the striking off of companies if the Registrar concludes they have been formed for a false basis. 

Identity verification – 

By spring 2025: 

  • UK anti-money laundering service providers will be able to register as Authorised Corporate Service Providers (ACSPs). This will enable them to offer identity verification (IDV) services and confirm details to Companies House.
  • Individuals will have the option to voluntarily identify their identity.
  • Companies House will be able to assess applications from individuals seeking to have residential addresses suppressed from public disclosure.

By autumn 2025: 

  • Upon incorporation, all directors and Persons with Significant Control will have to verify their identity. Existing companies will have a 12-month transition period to comply.

By spring 2026:

  • IDV will be mandatory for anyone filing a document at Companies House.
  • Third-party agents filing on behalf of companies must be registered as an ACSP.
  • Companies House will be able to reject documents delivered by disqualified directors. 

In light of the phased implementation of ECCTA, the process and planning for director appointments will be paramount to ensure timely verification and the validity of these appointments, especially as, once ECCTA has been fully implemented, directors will not be able to act until their identity has been verified. Compliance activity against those who have failed to verify their identity is expected to start in 2026 (i.e. the end of the 12-month transition period), making it prudent for individuals to take advantage of the voluntary IDV procedure in early 2025. 

Limited Partnerships (LPs) – reforms to LPs will not take place until 2026. From spring 2026, LPs must:

  • provide each partner’s name, date of birth and residential address;
  • verify the identity of general partners;
  • provide a registered office address in the UK;
  • provide a standard industrial classification (SIC) code; 
  • file an annual confirmation statement; and
  • file information through an ACSP.

Companies House will also have new powers to:

  • close and restore LPs;
  • apply sanctions;
  • protect partners’ information; and
  • operate a statutory compliance process. 

Accounts –following accounts reform, Companies House should be able to:

  • mandate software-only filing for all accounts;
  • remove the option for small companies and micro-businesses to file abridged accounts;
  • require all companies to file profit and loss accounts;
  • require companies claiming an audit exemption to provide an enhanced statement from their directors on the balance sheet; and
  • limit the number of times a company can shorten its accounting reference period. 

Corporate directors  following the implementation of restrictions on corporate directors, only UK corporate entities will be eligible to serve as corporate directors; overseas companies will be prohibited from doing so. Any corporate director will be required to have an all-natural person board, and each member of the board must verify their identity in order to be registered.  

Accounts reform and the implementation of restrictions on corporate directors have not yet been timetabled.

The Companies House reforms which ECCTA will implement are wide-ranging but the expected timetable allows companies and their advisers time to put in place the necessary processes and effect the changes. Companies are advised to begin thinking about what these reforms mean for them as soon as possible to avoid any unexpected surprises.  

For guidance on how to confidently navigate the new rules, please get in touch through our website or through your usual Forsters’ contact. Our corporate team is primed to answer your questions.   

 

The Act gives Companies House the power to play a more significant role in disrupting economic crime and supporting economic growth.

https://www.gov.uk/government/publications/economic-crime-and-corporate-transparency-act-outline-transition-plan-for-companies-house/economic-crime-and-corporate-transparency-act-outline-transition-plan-for-companies-house

Leasehold Reform – it’s a date!

In his statement today, Matthew Pennycook, Minister of State for Housing and Planning, finally shed some light on the steps that the government intend to take to implement reforms to the leasehold system.

Pennycook confirmed that, over the course of this Parliament, Labour are determined to honour the commitments made in their manifesto, and “do what is necessary to finally bring the feudal leasehold system to an end”.

Pennycook acknowledged the need to act urgently, but was careful to emphasise the need for speed to be balanced with care, to ensure that all measures brought into force are fit for purpose.

Proposed timetable

LAFRA – ENFRANCHISEMENT / RIGHT TO MANAGE
Removal of the two year qualification rule for freehold acquisitions and lease extensions January 2025
Right to Manage reforms in LAFRA (expanding access, reforming its costs and voting rights) Spring 2025
Consultation on capitalisation rate and deferment rate Summer 2025
Primary legislation (amending errors in LAFRA) and secondary legislation to commence LAFRA (including rates) After summer 2025 consultation (but no commitment to a date)
LAFRA – RESIDENTIAL PROPERTY
Consultation on detail of LAFRA’s ban on buildings insurance commissions  “Very shortly”
Consultation on estate charges Summer 2025
LAFRA’s provisions on service charges and landlord’s costs of service charge proceedings 2025
Consultation on reforms to section 20 ‘major works’ process No date
Consultation on regulation of managing agents 2025
Consultation on private estate management arrangements  2025
COMMONHOLD
White paper on commonhold Early 2025
Consultation on banning leasehold flats 2025
Draft Leasehold and Commonhold Reform Bill published (including banning ground rent and forfeiture) Second half of 2025

Leasehold and Freehold Reform Act 2024 (“LAFRA”)

The first step is for a small number of specific but serious flaws in LAFRA, as well as some omissions, to be rectified via primary legislation. 

Thereafter, an extensive programme of detailed secondary legislation will be required. 

Only then, will LAFRA be ready to be fully “switched on”.

Further reform

In addition to the government’s plans to amend LAFRA, Pennycook confirmed an intention to address the Law Commission recommendations omitted from LAFRA.  As mentioned in the King’s Speech, this will take the form of a new draft Leasehold and Commonhold Reform Bill, to be published in the second half of next year.

The Bill will consider a number of reforms to the existing leasehold system but its main focus will be to reinvigorate commonhold, with a view to making it the default tenure by the end of the Parliament.

 

I am today updating the House on the steps the government intends to take to implement those reforms to the leasehold system already in statute and to progress the wider set of reforms necessary to end the feudal leasehold system for good.

https://questions-statements.parliament.uk/written-statements/detail/2024-11-21/hcws244

An update on the challenges made against the Leasehold and Freehold Reform Act 2024

Black and white chess pieces are positioned on a chessboard, focusing on two knights facing each other amid rows of pawns, set against a blurred, neutral backdrop.

Following the passing of the Leasehold and Freehold Reform Act (“LAFRA”) in May 2024, a total of 7 judicial review claims have now been made challenging its provisions.  They each argue that the provisions of LAFRA are contrary to Article 1 of Protocol 1 (“A1P1”) to the European Convention on Human Rights, and amount to an expropriation of the value of each claimants’ property without any or adequate compensation. 

The following 4 claimants have had their claims stayed (“the Stayed Claims”):

             1.  Abacus Land 1 (HoldCo) Limited and Others

             2.  Annington Property Limited and Others

             3.  Arc Time Freehold Income Authorised Fund and Others

             4.  Cadogan Group Limited and Others

The remaining 3 claimants are (“the Unstayed Claims”): 

             5.  The Trustees of the Portal Trust

             6.  John Lyon’s Charity

             7.  Wallace Partnership Group Ltd and Others

On 30 October 2024, a hearing took place in the Royal Courts of Justice, to decide (i) whether the Secretary of States’ applications to stay the Unstayed Claims should be granted and (ii) (assuming these applications were refused) whether the stays imposed in the Stayed Claims should be lifted, so as to allow the cases to proceed.

The Secretary of States’ arguments included…

… an assertion that the requested stays were both proportionate and necessary.  

They reminded the court that the government is in the process of drafting secondary legislation, which will include prescribed deferment and capitalisation rates, and argued that a small change to either or both could have a significant impact on the premium payable on enfranchisement, and therefore the overall balance between freeholders’ and leaseholders’ interests. It was their case that, without having sight of this secondary legislation (and the legislative scheme as a whole), it was not possible for the court to assess whether LAFRA complies with A1P1.

Further, and in relation to the Unstayed Claims, the Secretary of State submitted that the alleged impact of LAFRA was either exaggerated or non-existent. 

The position of the claimants in the Unstayed Claims was

…that that there was no proper basis for a stay, asserting that LAFRA was already having a real effect on them and that they should not have to endure this for an indefinite period.

Various submissions were put forward to support this, including the following:

  • that there is no rule that requires the court to stay so-called ab ante claims;
  • that the prescribed rates have to reflect market value, so secondary legislation could not be used lawfully to compensate freeholders or mitigate the impact of LAFRA on them;
  • that any financial benefits that could accrue to freeholders are irrelevant to the proportionality of LAFRA; it is for the Secretary of States to justify the public interest need for a “pound for pound” transfer of assets from freeholders to leaseholders;
  • that the impact of LAFRA (once commenced) would be felt over time, and the court could not rely on the initial rates to conclude that LAFRA is compatible with A1P1: any mitigation or compensation supposedly achieved now could be reversed again in the future;
  • that the effect of a stay would be to determine the substantive applications for judicial review; and
  • that it would be antithetical to the principle of good administration to stay clearly formulated claims challenging primary legislation until after the commencing regulations had been made.

The position of the claimants in the Stayed Claims was…

 more neutral – some agreeing with the Secretary of States’ view that, without the secondary legislation, there was presently no reliable way of measuring the impact of LAFRA and others submitting that, should the Unstayed Claims be allowed to proceed, then all the claims ought to proceed together.

The court’s decision

It was held that the Unstayed Claims should proceed at least to the stage of determining whether permission to apply for judicial review should be given – and that the stay should be lifted for the Stayed Claims also.

The main reasons for this were as follows:

  • there is no jurisdictional reason why the court can’t entertain a challenge seeking relief in the form of a declaration of incompatibility in respect of primary legislation that has received Royal Assent but has not yet been commenced;
  • the legislation may already be exposing the claimants to potentially considerable financial losses; 
  • it is likely to take many months, if not years, for the secondary legislation to be passed; and
  • even if the claimants are successful in establishing the incompatibility of the provisions, the remedy that the law affords them is not damages but a declaration of incompatibility.  There will therefore be no right for them to recover losses incurred before the remedial order is made, which makes it very important from the claimants’ perspective that, if a declaration of incompatibility is to be made, it should be made as soon as possible.

The parties have been directed to file an agreed draft order containing directions leading to a permission hearing to take place in the first week of January.

At the close of the hearing, I refused the Defendant's applications and directed the parties to file an agreed draft order containing directions leading to a permission hearing in the first week of the Hilary Term.

https://www.bailii.org/ew/cases/EWHC/Admin/2024/2753.html

Statute or guidance? The BSA continues to vex.

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Two recent decisions on the Building Safety Act 2022 (“BSA”) have shone a light on the continuing difficulties being experienced by the courts in interpreting its provisions, when viewed against the genesis of the Act and the government’s own guidance. 

The first, known as the Smoke House [2024] decision, shows the difficulty in determining exactly how the height of a building is to be measured. 18 metres/7 storeys is the magic number for the purposes of the BSA, as it designates a Higher-Risk Building, and thus engages a raft of leaseholder protections and developer obligations.  Supplemental 2023 Regulations to the BSA even go to the lengths of explaining how to measure buildings and how to treat rooftop machinery and plant when deciding if it constitutes a ‘storey’.  The regulations only require rooftops which contain nothing but plant/machinery to be excluded from the calculation.   Armed with this, the FtT in Smoke House (para 59-91) found that an open rooftop which contained both a roof garden and plant/machinery should be counted in the number of storeys. The problem? The government’s own guidance, published 21 June 2023, says:

A storey must be fully enclosed to be considered a storey. The roof of a building should not be counted as a storey. Open rooftops such as rooftop gardens are not considered storeys and should not be counted as such when determining the number of storeys or measuring the height.

As the FtT pointed out, this is directly at odds with the statutory provisions, and also undermines the purpose of the BSA which is to consider residents’ safety in the event of a fire.  A person might just as easily be in the rooftop garden when a fire breaks out, as a flat.  Why, then, shouldn’t it constitute a storey? However, the FtT held that it did not have the jurisdiction to determine whether a building is, or is not, a Higher-Risk Building.  Subsequent commentary from MHCLG has stood by the guidance.  With buildings coming in an endless variety of designs, it may not be long before this issue crops up again.

The second decision, Nuernberg v Adderstone [2024] (full judgment awaited but see Falcon Chambers’ summary here), concerned the criteria to be met for a leaseholder to qualify for certain protections under the BSA, and specifically, how many properties they can own and still qualify. Section 119(2) of the BSA says:

“A lease is a “qualifying lease” if—

(a)  it is a long lease of a single dwelling in a relevant building,

(b)  the tenant under the lease is liable to pay a service charge,

(c)  the lease was granted before 14 February 2022, and

(d)  at the beginning of 14 February 2022 (“the qualifying time”)—

(i)  the dwelling was a relevant tenant’s only or principal home,

(ii)  a relevant tenant did not own any other dwelling in the United Kingdom, or

(iii)  a relevant tenant owned no more than two dwellings in the United Kingdom apart from their interest under the lease.”

Read literally, and applying the usual rules of interpretation, this means a qualifying leaseholder can either own no more than 3 properties in England and Wales (but need not live in the Relevant Building in question) or can own more than 3 properties, but only the flat in which they live can have a qualifying lease.  And the FtT found accordingly. 

The problem? The FtT in the first instance Triathlon Homes [2024] case had reached a different conclusion, saying (at para 26) that the conditions are in effect cumulative – the leaseholder must live in the flat and own no more than 3 properties in total in order to have a qualifying lease.  To be fair, the FtT in Triathlon was more focused on various other knotty BSA issues and this part of the judgment is arguably obiter, which might be just as well, since para 941 of the Explanatory Notes which accompany the BSA matches the conclusion in Nuernberg:

“The provision at subsection (2)(d) means that a leaseholder will qualify for the leaseholder protections for their properties if they own up to three properties in the United Kingdom in total. If more than three properties in total are owned, then the principal home qualifies for the protections, but the other properties do not.”

It is always a vexed question how much reliance a court can place on explanatory notes and government guidance when trying to interpret statute, and we may have to wait for further judgments to give us some definitive answers.  In the meantime the FtT will have to continue to grapple with the complex drafting of the BSA, ever mindful of the tragic reason it was enacted in the first place. Where Parliament has so deliberately chosen to move the goalposts of the landlord/tenant relationship, it is understandable that the policy objectives behind the Act are carrying great weight with the courts. 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Will unlawful development trigger CIL?

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

The Community Infrastructure Levy – many people dislike it and for good reason. It is complex, confusing, and most importantly, unforgiving.

The CIL Regulations are procedural and require various notices to be submitted to the Collecting Authority (“CA”), including the submission of a commencement notice “no later than the day before the day on which the chargeable development is to be commenced”. Failure to do so will result in a surcharge becoming payable. 

A developer recently appealed a surcharge which had been imposed by the CA after the CA had deemed development to have commenced. The developer appealed, claiming the breach which led to the surcharge did not occur. Their reasoning was that as condition precedent conditions had not been discharged prior to the works commencing, the works carried out were not those permitted by the planning permission. Instead, they were in respect of a separate development. The separate development did not benefit from planning permission and so the works were unlawful. As such, no commencement notice was required. 

The Inspector considered whether commencement of a chargeable development had in fact occurred. Case law states that a development is commenced following a ‘material operation’. Such an operation must be more than ‘de minimis’ when considered in the context of the development as a whole.  The Inspector found that “whilst the work might fall within the scope of a material operation… the access is insignificant when considered in the context of the whole residential scheme”. The works did not pass the ‘de minimis’ test and the Inspector concluded that a chargeable development had not commenced.  On that basis, the appeal was successful. 

Sadly, the Inspector declined to opine on arguably the more interesting point as to whether implementation has to be lawful in order to trigger CIL. 

The underpinning CIL legislation relies on development being “…commenced in reliance on planning permission”, with “chargeable development” defined as “…the development for which planning permission is granted”.  

However, what happens if development is commenced unlawfully?  It is a well established principle that development which has been carried out in breach of pre-commencement planning conditions is incapable of lawfully commencing development.  The CIL Regulations are silent on this point.  In the absence of explicit authorisation, it is certainly arguable that no charge could or should be levied by a charging authority.  Obviously, once the position is regularised, then CIL will be payable.  

Whilst this is not permission to commence development unlawfully (!), it is a reminder to seek legal advice when it comes to CIL as nothing is ever straightforward!

 

 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Victoria Towers comments on the rise of the multi-let and mid-box market for Property Week

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Multi-let and mid-box industrial and logistics developments serve a vast array of tenants, from small-time mechanics offering car tune-ups to delivery firms seeking last-mile distribution centres. And while this section of the market might not attract the biggest industrial and logistics occupiers paying top market rents, it has started to gain a reputation for high rental growth and for delivering decent returns for investors. It is also seeing occupiers seeking higher-quality units. 

Alongside the comments of other real estate leaders, Victoria Towers adds her thoughts where she warns that the emergence of higher-quality units in the market has made potential occupiers “more forthright” in their demands and willing to break off negotiations on lets.

“If negotiations get too complicated or they are not agreeable, they will go down the road to another estate. There is competition out there and tenants are keen to find the right space, but on their terms.”

Read the full article, including the thoughts of other real estate professionals, in Property Week’s Industrial and Logistics supplement published on 25 October 2024.

There is competition out there and tenants are keen to find the right space, but on their terms.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The rise in non-financial misconduct should be a cause for concern – Jo Keddie quoted in Insurance Day and MLex

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

Whilst the Budget may have dominated the headlines over the past few weeks, some news that may have passed you by, but worth highlighting is the publication by the FCA of its long-awaited survey covering non-financial misconduct. 

The survey of over 1,000 investment banks, brokers and wholesale insurance firms found that the number of reported allegations of non-financial misconduct had risen between 2021 and 2023.  I have shared my thoughts on these concerning statistics with Insurance Day and MLex. 

Of concern is the worrying increase in sexual harassment, discrimination, and bullying reports since employees returned to the office post-pandemic. With new legislation effective from 26 October, aimed at preventing sexual harassment in the workplace it is hoped that at least this type of unlawful behaviour will come into sharper focus with regulated businesses as they take steps to comply with the new legal requirements.

It is troubling to read that where non-financial misconduct has been upheld there were rarely financial repercussions for the perpetrator. The FCA’s publication of these statistics makes it appropriate, if not necessary, for non-financial misconduct to become a more important feature of annual pay reviews especially in the context of bonuses. 

However, I am pleased to see the importance placed by the FCA on Settlement Agreements not being used to prevent public interest disclosures to it by departing employees. It is also encouraging to read that the FCA is aware of the important but nuanced role which settlement agreements play in the context of non-financial misconduct.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The Budget 2024: SDLT on second homes set to rise at midnight

A modern building with sleek black columns supports a white structure overlooking a vast, calm ocean under a clear, blue sky.

“The government is supporting first-time and main home buyers by increasing the Higher Rates for Additional Dwellings of Stamp Duty Land Tax from 3% to 5% from 31 October 2024. These higher rates apply to purchases of second homes, buy-to-let residential properties and companies purchasing residential property and the increase will provide those looking to move home or purchase their first property with a comparative advantage over those purchasing additional property. This is expected to result in 130,000 additional transactions over the next five years by first-time buyers and other people buying a primary residence. Those who exchanged contracts prior to 31 October 2024 are not affected by this rate increase”
Autumn Budget 2024

With all the rumours circulating about tax changes in the first Labour budget, an increase to the higher rates of SDLT was not on the list. The surprise announcement means not only a long and late night for most property lawyers, but yet another deterrent for domestic and overseas investors in the residential property market – where the top rate of tax is virtually now on par with VAT for those who are residents overseas. This will lead to the inevitable consequence of less rental stock at a time when the rental market is already facing challenges, and when being a landlord becomes increasingly less attractive with ever changing legislation.

This adds to the list of quirks to be aware of when purchasing a UK home. Visit our latest campaign hub to learn more.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

ESG development puzzle – are lawyers the hidden piece?

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

As the EGI ESG Summit kicks off next week, this is an excellent piece from EGI looking at the delivery of net zero real estate. As John Davies, head of sustainability, at Derwent London says: “it is like inflating a balloon and trying to stop the air from leaking out”. Good intent can seep out between design and operation. 

Notably, Davies comments on the role that professional advisors have to play – as the industry pays more attention to the “operational” phase on the net zero journey (e.g. with the increasing prevalence of NABERS). 

He cites the typical dichotomy between occupier aspirations (e.g. for sustainability certifications) and the natural aversion, which can often be advisor-driven, to lease provisions that are perceived as intrusive or onerous. 

I think it’s a valid point. All parties must align on the same pathway, with an understanding of motivations and rationale for specific provisions e.g. the sharing of operational data. This is all the more true with an increasing focus on operational performance, where all parties must buy into the process – even if that includes the acceptance of lease provisions that were once never encountered. 

Plus, it is not just Davies that makes the point. Kathryn Barber, head of ESG, Orchard Street Investment Management: “When it comes to leases, it is vital to work with the solicitor to make sure they have understood the CRREM scorecard the fund must maintain and then work out what that looks like in terms of requirements on the lease and incoming occupier.”

So perhaps stating the obvious – lawyers and agents have such a significant piece to play in the puzzle. We can’t afford to be the missing piece. We must keep that balloon afloat. 

  

“It is a unique situation that we are trying to work out and the transactional services – the agents and the lawyers – are all very critical in helping decode that for an occupier and explaining that they do not need to be afraid of it.”

https://www.egi.co.uk/news/piecing-together-the-esg-development-puzzle/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Owen Spencer quoted in Property Week on the role of the government’s industrial strategy for film and TV studios

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Owen Spencer, Counsel in the Commercial Real Estate team, has been quoted in Property Week where he welcomes the government’s recent industrial strategy and its aim to consult with businesses – however, he warns there is much more to be done to preserve the sector’s growth. 

He calls for greater tax incentives to attract more international productions and for urgent attention to be paid to the shortage of skilled crew. He points out that there is little point in building millions of square feet of studio space unless you have crews to work them.

He goes on to warn, that in the South East, where the majority of studios are concentrated, the power supply issues could limit growth. The growing influence of AI in the film and TV sector should not be underestimated and calls for the UK to become a centre for AI skills as this would be a force multiplier across many sectors, not least in the creative industries. However, he cautions, AI significantly increases the demand for power.

The full article, published on 23 October 2024, can be accessed here behind a paywall. 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Jo Keddie shares her views with the FT on reforms needed to the UK employment tribunals and enforcement regime following the UK worker’s rights bill

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

The UK’s employment tribunal system, already under strain, is set to face more pressure due to the recent reforms to workers’ rights. These significant reforms, include “day one” job rights, ending fire and rehire practices, and modernising trade union laws. However, without proper enforcement these changes will be ineffective.

Head of Employment and Partnerships, Jo Keddie’s comments on the impact of the reforms were quoted in the Financial Times article: Lawyers and MPs warn UK workers’ rights push will fail without enforcement reforms. Jo expresses “serious concerns” about the impact of the reforms. In particular, the new right for workers not to be unfairly dismissed from the start of their employment, will likely lead to an “influx” of claims and that without urgent resources, “there will be further delays and cancellations” in the tribunal system.

The article highlights that the open caseload in employment tribunals rose to 37,000 single claims by June, an 18% increase from the previous year. The government estimates a 15% rise in claims due to the reforms, adding 4,750 claims annually. To address this, the government plans to create a new Fair Work Agency, to alleviate some of the burden on tribunals.

Jo Keddie, partner at law firm Forsters, said she had “serious concerns about the impact” of the government’s planned reforms. In particular, Keddie said the creation of a new right for workers not to be unfairly dismissed from the start of their employment would result in a claims “influx”.

https://www.ft.com/content/8094ad63-f791-4e29-9169-5c6d647eb6b9?FTCamp=engage%2fCAPI%2falert%2fChannel_signal%2f%2fB2B
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Clarity around grey-belt land is crucial, what do we need to know?

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

I authored a piece for Property Week which explored the proposed introduction of grey-belt land in the National Planning Policy Framework consultation – highlighting some of the concerns raised by respondents.

“For the purposes of plan-making and decision-making, grey-belt is defined as land in the green belt comprising previously developed land and any other parcels and/or areas of green-belt land that make a limited contribution to the five green-belt purposes, as defined in paragraph 140 of this framework, but excluding those areas or assets of particular importance listed in footnote 7 of this framework, other than land designated as green belt.”

The definition raises key points including:

  1. A lack of clarity in the definition means the interpretation is likely to be played out at appeal and in the courts, taking longer and incurring additional costs. 
  2. By way of example, it is not clear whether the ‘limited contribution’ limb of the definition applies to both ‘previously developed land’ and ‘other parcels of green-belt land’, or just the latter? 
  3. There was a lot of scrutiny over the proposed ‘golden rules’ that grey-belt land will need to comply with to facilitate planning permission being granted. Concerns have been raised that the government is placing responsibility on the private sector to improve existing local shortfalls, and not only to mitigate the impact of their developments. Examples of this may include a number of public sector bodies, from health trusts to police authorities, looking for developers to fund deficits through financial contributions. 

The government would be wise to take its time to ensure the drafting of the grey-belt provisions is as clear and as precise as possible, otherwise there are likely to be greater delays in the delivery of its much-promised housing.

Read the full article in Property Week here.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Central London Property – trophy assets?

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

With the speculation surrounding the upcoming budget leading to sensational headlines about the exodus of the wealthy leaving the UK, is there any truth in this? There are numerous factors affecting the changing population, with many of whom leaving being non-dom. These range from tax to lifestyle benefits, but not everyone is saying goodbye to the UK.

Speaking to The Telegraph, I provided an insight into the current Central London property market, and how there are still benefits to retaining a bolthole here.

“Many clients continue to hold their properties as investments or trophy assets – somewhere to stay when they invariably spend some time in London throughout the year. So we haven’t seen the fear of tax changes result in a glut of properties coming to the market”

Key takeaways from the discussion with numerous experts are that while some are indeed leaving the UK and setting up home in more economically advantageous countries, such as Dubai and Singapore, the property market isn’t inundated with new listings – showing there is still a charm to Central London and the UK. 

Read the full article in The Telegraph here.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Making Hay from Carney

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

Mark Carney’s recent comments about the impact of negative zero and stranded assets have led to quite a few column inches, with the FT’s Lex column (£) on Monday looking at the link to EPC “B” by 2030. Never one to ignore a bandwagon, I thought I would share some thoughts arising from the article and its comments:

  • Law versus practice – while there is currently no legislative requirement to hit this target, in practice we are seeing investors and institutions treat it as a requirement in order to de-risk their assets. The comments also suggested a general acceptance that EPC “B” was the new standard.
  • Preparation pays off – the article refers to some big players, British Land and Landsec, who have disclosed precise numbers for their transition to net zero.  Landsec have set aside £135m for its ‘net zero transition plan’, while British Land estimates approximately £100m is required to bring the 42% of its assets currently sitting with lower than a “B” up to standard. Two thirds of British Land’s costs are expected to be recoverable through the service charge. British Land own or manage a portfolio with an estimated value of £13bn (their share being £8.7bn according to their website) while Landsec’s sits at £10bn. In that context the figures highlighted are extremely reasonable and that will not be down to luck – energy efficiency has been on the horizon and risk register for as long as I can remember, and the best advised and run entities have been working on it for even longer. The hard yards that these institutions and their teams have put in are paying off.  
  • EPC “B” is not for everyone – the legislation around minimum standards currently exempts various types of properties from the requirement, including importantly where the only improvements that could be done would not meet the seven year payback test (i.e. they would cost more to carry out than they would save in energy bills over seven years). The article does not cover this, but it is an important point to remember amongst all the headlines. We also should not forget that not all occupiers are the same; some rely on the slightly tired or scruffy assets, as they provide options for creatives, start-ups, and businesses that operate on tighter margins in less flashy, but still important parts, of the economy. That diversity is also what makes life more interesting. 

Regardless of the moveable legislative feast, in our experience the industry really is grasping this issue and the people involved are motivated to try to improve things for themselves and for future generations. With progress in the last few years I am cautiously optimistic that things may not be as bad as the doomsayers think. 

See our Sustainability Page for more on EPCs, MEEs, and the Sector Race to Net Zero.

About 70 per cent of floor space in England and Wales currently has an EPC rating of C or below, estimates Knight Frank.

https://www.ft.com/content/199acbae-f7ef-475b-90ad-985eb25fe6f6
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Discharging covenants: not a “piecemeal” of cake

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

The case of Patel & Ors v Spender & Ors [2024] UKUT 62 (LC) (15 March 2024)  is a warning to aspiring developers wishing to discharge or modify restrictive covenants to get their ‘ducks in a row’. 

The developer applicants did not succeed with an application under s. 84 of the Law of Property Act 1925 to modify covenants affecting their land. Their argument that the covenants no longer secured practical benefits of substantial advantage failed because: 

  1. they lacked an agreed plan between them to undertake the works at the same time; and 
  2. they did not demonstrate that each of them could immediately fund their respective part of the development; and 
  3. given the above, any future remedy for injunctive relief would not have any ‘teeth’.

The Tribunal considered the risk that a ‘gap toothed’ and ‘piecemeal’ development might arise, which would be inconsistent with the architecture of the estate and street scene. On this basis (and on a thin-edge of the wedge argument not considered in this article) the Tribunal did not consider that it had jurisdiction to modify the covenants.  

Background

The five applicants owned a run of 11 terraced properties in St. David’s Square, London.  The Square comprises numerous blocks of flats, bounded to the south by the Thames and to the north and east by terraced housing. The development has a particular architectural style of brickwork and patterns which runs through not just the terraced housing, but also the blocks of flats.

The applicants wished to undertake two sets of alterations to the premises. To extend the ground floor kitchen/dining areas to the rear, and to convert the loft space of the properties to habitable rooms with shower facilities (creating four bedrooms where there had been three).

The properties are burdened by restrictive covenants against additions or alterations. These covenants form part of a building scheme across the whole square and, as a consequence, any one of the 104 other flats or houses in the development could object to the application. 

The decision

An application to modify the covenants and allow the proposed development was brought under s. 84(1) of the Law of Property Act 1925 on grounds (aa) and (c), these being respectively that:

  • the covenants continued existence would impede a reasonable use of the land for public or private purposes; and 
  • that the proposed modification would cause no injury to the persons entitled to the benefit. 

The Tribunal was concerned that the five applicants may not all immediately be in a position to undertake the works in ‘one go’. The costs per property were estimated to be in the order of £50,000.00, and with various applicants of varying financial means and who might do the works at different times, there was a high chance of a ‘gap toothed’ form of development arising that would be at odds with the existing uniformity of the estate.   

The applicants did offer a covenant that they would undertake all of the works at once, but the Tribunal was not persuaded (for the reasons set out above) that this would be effective. Enforcing this would be difficult with so many parties and factors that could not be controlled.

The warning to developers here is to make sure your plans are in order (beyond simply obtaining a planning permission), before applying to the Tribunal. In assessing whether covenants secure benefits of substantial advantage the Tribunal will consider the risks and realities of the development, and a hypothetical development scenario that may arise from those risks. To that end, being able to demonstrate that scheme is deliverable assumes considerable importance, especially when there are multiple applicants.  

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The biggest upgrade to workers’ rights in a generation? Labour introduces its new Employment Rights Bill

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

The Labour government is due to publish the first draft of its Employment Rights Bill today, fulfilling one if its key manifesto pledges within 100 days of being elected. They have already announced some of the key proposals in Parliament and via a press release. The Bill sets out a raft of proposed changes to the employment law framework in Great Britain and has been described by the Deputy Prime Minister Angela Rayner as “the biggest upgrade to rights at work for a generation”.

Yet, despite the furore surrounding the Bill, question marks persist about the timeframe for its implementation. The government has indicated that most of the Bill’s key reforms will not pass into law until 2026 or 2027. Until that time, the Bill is likely to be subject to extended periods of Parliamentary debate and public consultation, reflecting the scale of the changes proposed. That process may water down the proposals and therefore, as currently drafted, the Bill may be the strongest reflection of Labour’s vision for employment reform. 

The actual content of the Bill is largely as expected, building upon the policy promises made in Labour’s Plan to Make Work Pay earlier this year. However, the Bill is not without its surprises and some key omissions. Chief amongst those is the government’s proposal to introduce a statutory probationary period of which is anticipated to be around nine months, during which time employers can follow a lighter-touch approach when dismissing staff. Provisions relating to the “right to switch off” and to introduce a single status of worker are notably absent in comparison to the original plans.

The headline proposals of the Bill are as follows:

  1. Day 1 protections
    From day one of their employment, employees will benefit from protection from unfair dismissal. The current two-year qualifying period required to bring an unfair dismissal claim will be removed.  The detail of Labour’s proposals around a statutory probationary period will therefore become extremely important. 
     
  2. Zero hours contracts 
    The Government has proposed a clampdown on ‘exploitative’ zero-hour contracts. Workers on low and zero hours will be provided with the right to receive a contract reflecting the hours that they regularly work.
     
  3. Enhanced family leave
    From day one of their engagement, workers will be able to benefit from rights such as parental leave and sick pay. 
     
  4. Statutory Sick Pay overhaul
    The lower earnings limit and the initial three-day waiting period for receiving statutory sick pay will be removed, meaning that workers will be able to receive statutory sick pay from their first day of absence. 
     
  5. Fire and re-hire
    Safeguards will be introduced to protect employees against ‘fire and re-hire’ and ‘fire and replace’ practices, although it does not appear that they will be made entirely unlawful.

 

 

The bill will bring forward 28 individual employment reforms, from ending exploitative zero hours contracts and fire and rehire practices to establishing day one rights for paternity, parental and bereavement leave for millions of workers.

https://www.gov.uk/government/news/government-unveils-most-significant-reforms-to-employment-rights
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Summary judgment in “unopposed” lease renewal proceedings

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

Pleased to have secured summary judgment on behalf of our client, in circumstances where the landlord refused to engage in unopposed lease renewal proceedings. 

We made the summary judgment application after we had filed and served our client’s witness and expert evidence and the landlord had failed to serve theirs.  The Court decided that the landlord had wilfully not participated in the litigation process and found in our client’s favour on the term, rent, and all other material terms on the basis that there was no viable alternative but to accept our client’s evidence. 

Interestingly, the Court even made provision for one of the partners in our firm to sign the lease on the landlord’s behalf because it anticipated that the landlord would refuse to do so.

An unusual case (even the most reluctant of landlords or tenants still tend to comply with the Court’s directions and partake in the process), but a reminder of the efficacy of a carefully deployed summary judgment / interim application, and the importance of submitting admissible and CPR-compliant evidence.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Some “aren’t going to make it”

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

It’s a rather bleak assessment from former central banker, Mark Carney- those “stranded” real estate assets that will not keep apace with the regulatory transition to Net Zero. And as the FT reports, he doesn’t hold back: “There will be people…who either implicitly or explicitly think that these timelines are going to shift, or that somehow or another it is not going to become a binding constraint. But that is a big risk to take.”

This follows industry calls, reported in EGI news, for clarity on EPC rules. As Flora Harley, head of ESG research at Knight Frank, says: “We just need certainty. It’s the one thing investors and asset owners really want and need to make these sometimes-big investments. If we get that clarity, there will be more impetus to act and we can move faster.” Clearly, Carney thinks there is no time wait for that certainty. 

Yet there is reason for industry optimism. The FT article and this EGI article both cite AEW’s recent research report on climate-related risk in the European real estate sector – predicting that the costs of hitting Paris Agreement targets will be almost 30% higher than its 2023 thinking and that the current energy intensity of European buildings is 31% behind Paris 2050 targets. But with predicted annual returns, as Hans Vrensen, head of research and strategy for Europe at AEW, says: “…even if investors need to catch up and meet more challenging decarbonisation capex targets going forward, they remain achievable.” Many will no doubt hope so.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Tax Reliefs for EIS and VCT Investments Extended Until 2035

Glass building walls curve gracefully, reflecting geometric patterns. The structure's sleek, modern design contrasts with a vibrant blue sky, while golden foliage accents the foreground.

New regulations have been introduced bringing important changes for investors in the Enterprise Investment Scheme (EIS) and Venture Capital Trust  (VCT) scheme. 

These tax reliefs were set to expire on 6 April 2025. They have now been extended for an additional 10 years to 5 April 2035. This means that qualifying investments in EIS and VCT shares made before that date will benefit from tax reliefs (provided other conditions are met). The extension took effect on 3 September 2024.

As a result, investors who invested in qualifying companies through the EIS or VCT schemes will continue to enjoy tax benefits, such as income tax relief, until 2035, so making these schemes even more attractive for long-term investment planning. While, from a business’s perspective, start-ups and growing companies that rely on investment through the EIS and VCT schemes will benefit from continued access to capital.

With the extension providing stability for investors and businesses and encouraging investment in high-growth, high-risk companies, the measure ensures that the EIS and VCT schemes are likely to remain key in the UK’s efforts to support small businesses and encourage entrepreneurial investment well into the 2030s.

 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The alternative medal table

At the recent Paris Olympics and Paralympics, surely I cannot have been the only sport fan closely watching the day-to-day fluctuations in the medal table? Perhaps most interestingly, would France outperform GB? Did France ultimately get the upper hand (hint: see below)?

Yet on a recent visit to France, I also considered another point of comparison. Looking at numerous car parks with solar PV overhead, an uncommon sight in the UK, it struck me that our continental neighbours are perhaps well ahead of the game in one critical area – the path to net zero commercial real estate, and in particular, regulation to “drive” that transition.   

So where, arguably, does France demand a gold medal?  Well, mandating solar is one such area, with requirements to install 30% of solar panels on any new non-residential buildings with a footprint bigger than 1,000 sq m and in coming years, install solar panels over car parks bigger than 1,500 sq m. Perhaps something to follow on this side of the English Channel? Notably, the BPF’s “Towards Net Zero: Challenges, opportunities, and policy recommendations” cited this as “best practice in action”, alongside a policy recommendation from the BPF on increasing on site renewables.

Yet perhaps the medals shouldn’t stop there. France’s Décret Tertiaire mandates energy consumption reduction in buildings over 1,000 sq m – an obligation to reduce energy consumption of 40% by 2030, 50% by 2040, and 60% by 2050. Again, cited by the BPF as “best practice in action”. All validated by data – with mandatory owner/ occupier commitments on disclosure. 

So whilst as reported by EGI (“Government moots EPC rule relaxation”), the government is looking at loosening anticipated energy efficiency targets, perhaps, as part of its “review” of those regulations, it should look over the Channel for not just inspiration, but also a reminder that it is at risk of being left behind in the regulatory “race” to net zero. 

nb final table…

Olympics        
France 16 26 22 64
Great Britain 14 22 29 65
Paralympics        
France 19 28 28 75
Great Britain 49 44 31 124

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Day One Rights? The Financial Times shares detail of Labour’s anticipated Employment Bill

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

As we await further detail of the new Labour Government’s hotly-anticipated changes to employment law, the Financial Times has reported on one of the most eye-catching pillars of its planned reforms: the idea of ‘day one’ protections from unfair dismissal. 

Under the current law, the Employment Rights Act 1996, employees are not eligible for protection from most forms of unfair dismissal until they have accrued two years’ continuous service. Labour’s proposal to remove that service requirement entirely would potentially represent a sea change in employee relations. 

As speculated, however, the Financial Times’ reporting suggests that employers will be able to fairly dismiss employees for failing to meet expectations within a probationary period of up to six months.

Nevertheless, even in this form, the proposed legislation is likely to require employers to exercise a higher degree of care in recruiting and then managing new hires.  In particular, we are yet to receive detail of what will constitute a fair probationary process.  That may well be considerably more involved, and require more active performance management, than many are currently familiar with.

At present, there remains a considerable degree of uncertainty, despite these latest reports; we will be keeping a keen eye on further news and the draft legislation, and providing additional updates as Labour’s proposals progress. 

 

Companies will be able to keep new hires on probation for up to six months under a compromise Labour plan despite an election pledge to give employees “day one rights”.

https://www.ft.com/content/c399f7e9-7a31-4a3d-b964-8baf7fab596e?accessToken=zwAGIn5uSbWgkdPDmffpejFKPdO5ZIuvf6tZbg.MEYCIQCnzzJz0LL_aNKagf4unSefNiWSBhjCyOakWhUKkOWegQIhALt9t9jUZl0TYyVzBDhVDqpGsxRBES34a22ofDp2fJkw&sharetype=gift&token=045da974-ba26-4c05-ab0c-cd98479c5326
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The Winds of Change: lifting the ban on onshore wind projects

In a recent article for Property Week, I joined industry experts in speaking on our evolving landscape in regards to the changing stance on onshore wind.

In Rachel Reeves’ inaugural speech as chancellor, she indicates her intent on equalising onshore wind in the renewable energy realm. Despite the prevalence of this renewable energy source in Scotland, there are caveats and reservations on the practicalities of implementing this throughout England.

Here are our planning takeaways:

  1. An initial difficulty lies in appropriate sites – identifying and mapping suitable locations for large developments will incur substantial more effort than proportionally small land parcels. However, with the evolution of wind turbine technology since the implementation of the initial ban, sites for onshore wind farms may be more abundant than ever before?
  2. Negotiations between renewable energy providers and landowners will be a challenge to overcome. A lot of time has passed since these initial conversations, many may have to start again from scratch.
  3. Comparisons may be drawn between photovoltaics (solar) with regards to public opinion and acceptance of renewable energies in close proximities to homes. However wind-turbines are far more visual and may incur more push-back than anticipated. Homeowners may be more receptive if there is a tangible benefit to them.
  4. This may be a key to unlocking industrial or new settlements outside of the urban environment. There is potential to overcome the difficulties of connecting sites to the National Grid, and bringing benefits to the community, by including this renewable energy source in site planning. 

It’s very early days yet, and there are many planning considerations to take into account before onshore wind farms start appearing across England, however this development is encouraging and gives yet another insight into the plans of the Labour government. 

The full article can be read here.

“Historically, what we’ve seen are agreements with landowners about bringing these sorts of things forward,” he says. “What will be interesting is how long those options have been maintained. Effectively, is everybody going to have to start from scratch? I think they’ll be reigniting those discussions. No one was expecting [the ban] to be removed so quickly.”

https://www.propertyweek.com/markets/winds-of-change-3
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Retrofitting – are national planning policy changes afoot?

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

The Government has launched a consultation on the role of retrofitting and demolition in development. Following the High Court M&S decision in this area earlier this year, it is clear that national planning policy and guidance does not currently prioritise retrofitting over demolition. The consultation is broad, seeking views on when retrofitting is considered in the development process, to the reasons why demolition is chosen over retrofitting. 

The environmental benefits of retrofitting are clear. However, they are not the only consideration. What can be achieved through retrofitting is usually limited by the structural bones of the building. In many cases, these simply will not allow for reconfigurations that are viable, particularly in the current economic climate. 

It will be interesting to see the findings of the consultation, and whether they will lead to a change in national planning policy. It is difficult to imagine a position where retrofitting is mandated over demolition. It would seem more likely that the requirement to demonstrate that retrofitting has been properly considered will be strengthened. Otherwise, constrained sites will become the ugly ducklings, decreasing in value and becoming the outdated relatives of snazzy new kids on the block. 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

UPDATE – The Renters’ Rights Bill introduced to Parliament

Following its publication on 11 September 2024, the Renters’ Rights Bill (“the Bill”) has already received first hearing and looks set to become law before the new year.

Whilst we can be reasonably confident that it will be amended before then, we now have more detail about how the government intends to reshape the private rented sector in England. 

There remain similarities with the previous government’s Renters (Reform) Bill but there are some key differences.  We take a look at those below and provide comment on how landlords and tenants alike may be affected when the new legislation becomes law.

Abolishing Section 21 ‘no fault’ evictions

  • It is now clear that this will be achieved by ending assured shorthold tenancies (“ASTs”) and instead creating periodic assured tenancies without fixed terms.  This will allow tenants to remain in occupation until a landlord has proper grounds for possession (e.g. if there are rent arrears or the tenant is causing a nuisance) or until tenants serve two months’ notice, which they will be able to do at any time during a tenancy.
  • Crucially, the Bill contains no transitional provisions for existing ASTs.  This means that existing ASTs in the private sector, regardless of whether they are still in their fixed terms, will become periodic assured tenancies on a prescribed date unless possession proceedings in relation to the AST have already been issued. This date is likely to be shortly after the Bill comes into force. Landlords would be wise to review their PRS portfolios now.

Removing the threat of arbitrary evictions and increasing tenant security and stability 

  • New and expanded possession grounds will be introduced to try to ensure that landlords can reclaim their properties when they need to.  As with the previous Renters (Reform) Bill these grounds include where the landlord wishes to sell the relevant property or they (or a family member) wish to live in the relevant property.  Both of these grounds will require four months’ notice to be given and neither will be able to be exercised in the first 12 months of a tenancy. 
  • Additionally, if notice is served on the basis of either of these grounds, landlords will be restricted from re-marketing or re-letting the property from the date of service of the notice and for 12 months from the date of expiry of the notice (or 2 months from the date of the particulars of claim if possession proceedings are issued).  Non-compliance will be subject to a potential fine of up to £7,000 so, again, landlords need to properly assess their portfolio and long terms property requirements now.
  • Four weeks’ notice will need to be given if landlords cite ground 8 as reason to seek possession. There will need to be three months’ worth of arrears at the date of service of the possession notice and at the possession hearing (rather than the current two).
  • Except in a case where grounds 7A (antisocial behaviour) and/or 14 (nuisance) have been made out, no possession order will be made where the deposit protection requirements have not been complied with or the landlord has failed to register the property on the new private rental sector database.  There is no similar restriction (as there is currently) where gas safety certificates, EPCs and/or how to rent guides have not been served.
  • Tenants may give two months’ notice to end a tenancy at any time during their occupation. This effectively ends the need for tenants’ break clauses and is something that landlords will need to be mindful of.
  • Whereas illegal eviction pursuant to Section 1 of the Protection from Eviction Act 1977 is currently a criminal offence, under the Bill landlords can be subject to civil penalties by the Local Authority of up to £40,000. It hoped this will limit the costs to both parties of dealing with criminal proceedings.

Rent Increases

  • All rental increases will be made using the same process.  Rent review clauses will be banned and, instead, landlords will be able to increase rents once per year to the market rate – i.e. the price that would be achieved if the property was newly advertised to let. To do this, they will need to serve a “section 13” notice, setting out the new rent and giving at least two months’ notice of it taking effect. 
  • Tenants will then be able to challenge proposed increases in the First-tier Tribunal which will decide what the market rent should be.  This will not be more than the rate initially proposed by the landlord, cannot be backdated and can be deferred for up to two months in cases of undue hardship.
  • Additionally, landlords and agents will no longer be able to ask for or accept offers above the advertised rent.  They will be required to publish an asking rent and it will be illegal to accept offers made above this rate.

Pets

  • Tenants will be able to request keeping a pet in the property.  Landlords must consider such requests and cannot unreasonably refuse them.  They will, however, be able to require that pet insurance is taken out by the tenant to cover any damage caused to their property by the animal.

Standard of homes

  • The Decent Homes Standard will be applied to the private rented sector for the first time. It is intended that the Housing Act 2004 will be amended to allow the Secretary of State (currently Angela Rayner) to set standards of repair, heating and safety, security and comfort provision so that Local Authorities can take action where there are issues.
  • “Awaab’s Law” will also apply to the private sector for the first time and will set clear legal expectations about the timeframes within which landlords must take action to make homes safe where they are found to contain serious hazards.
  • In addition to the above, as part of the additional regulation and dispute management processes being introduced by the Bill, there will be a PRS database (register) and a PRS Landlord Ombudsman will also be set up. Landlords of assured and regulated tenancies will be required by law to register themselves and their properties on the database and join the Ombudsman scheme which will allow tenants to bring complaints against landlords.

With so many changes on the horizon for those living in or renting out homes in the private rental sector in England there is a lot to consider for landlords and tenants alike.  Whilst we anticipate that the Bill will change before coming in law as it passes through Parliament, you should carefully consider your rental requirements for the coming years now and act early. 

Forsters is on hand to answer any queries about the Bill and to provide you with updates and advice in this area, including a detailed review of your existing tenancy precedents and renewals processes.

 

A functioning private rented sector can provide a secure stepping stone for aspiring homeowners and flexibility for those who want it. But the insecurity embedded in the current tenancy system fails both those tenants looking for a stable home for their families and those landlords who are undercut by the rogues and chancers. It is a drain on aspiration and reform is central to our opportunity mission so all have the chance to achieve their potential.

https://www.gov.uk/government/publications/guide-to-the-renters-rights-bill/82ffc7fb-64b0-4af5-a72e-c24701a5f12a

‘Right to switch off’ plans spook businesses – my thoughts on the impact for businesses quoted in The Times

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

As the Labour government seeks to reassure business leaders about proposed employment law changes aimed at improving work-life balance, I share my thoughts with The Times (5 Sept) on the impacts these proposals will likely have on businesses. Here is a summary of the insights that were included in the article “’Right to switch off’ plans spook businesses”: 

Implementation Costs: Businesses will need to incur substantial time and cost in understanding and implementing the planned changes. Companies will need to review their contracts, policies, and procedures, and consult with employees to agree on new ways of working. 

Rise in Grievances and Claims: There’s likely to be an increase in grievances and claims from employees who will be more aware of their new rights through. Employees are likely to be vocal in requesting certain rights like flexible working.

Unfair Dismissal Claims: The changes to unfair dismissal rights, allowing employees to challenge their dismissal from day one, could be challenging for businesses. Many employees who find themselves without a job will likely assert claims in the hope of a settlement. Therefore, it is crucial for companies to implement robust recruitment and probationary processes to ensure fair grounds for dismissal.

Fair Work Agency: The creation of the Fair Work Agency, which promises to have “teeth,” will only be effective with significant government investment, given what we know about the government’s current limited resources, there is a question of how this will be meaningfully resourced. 

As we await the full detail of the government’s proposed employment law changes, businesses should ensure they are sufficiently resourced to properly manage and deal with these requirements. 

The government’s “smorgasbord of employment law changes will have a significant impact on businesses, and many will likely suffer in some way, especially to begin with”.

https://www.thetimes.com/article/5b7a5a50-3ea7-49b9-90df-4613c40fca0e
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Grenfell Tower Inquiry recommends further regulatory change for the construction industry

Construction workers in high-visibility vests and helmets stand and communicate amidst metal scaffolding at a construction site, with sunlight streaming through an open structure.

The conclusions of the Grenfell Tower Inquiry’s final report, published today, are damning. In his statement the Inquiry’s Chair stated that the deaths of the victims were all avoidable, and named numerous organisations who played a part in causing the tragedy either via their incompetence or, in a minority of cases, as a result of greed and dishonesty. 

Amongst its findings, the Inquiry made clear that the system of regulating the construction and refurbishment of high-rise residential buildings that existed at the time of the fire was seriously defective. That system has already undergone significant change since the fire, primarily as a result of The Building Safety Act 2022 (“the Act”) which brought in various measures aimed at ensuring the safety of residential buildings. However, the Inquiry has concluded that more can and should be done to bring a change of attitude to the construction industry.  

The Inquiry has made various recommendations across a variety of issues which, if adopted, will have a significant impact on the construction industry. These are recommendations only at this stage but are likely to be acted upon by the government, given the severity of the issues and the past failures to act on advice.

We summarise the key recommendations below:

A review of the definition of “higher-risk building”

Of particular note is the Inquiry’s recommendation that the government urgently reviews what is considered to be a higher-risk building. 

The concept of a “higher-risk building” was introduced by the Act. Those buildings which meet the definition are subject to the onerous regulations contained in the Act, which govern the design, construction and occupation of those buildings. It is of paramount importance for a developer, and those working for it, to know whether or not its building will be a higher-risk building. 

Under the current rules a higher-risk building is (in broad terms) a building that is at least 18 metres in height (or has at least seven storeys) and contains at least two residential units. The Inquiry considers the current test by refence to height to be arbitrary, and flagged that it does not take into account other important factors such as the building’s use or the presence of vulnerable individuals. 

A review of this definition could have a significant impact on which buildings are subject to the enhanced regulatory regime under the Act, and significant consequences for the viability of developments which were previously understood to be outside of that regime. 

A review of building regulation guidance

The Inquiry found that building regulations are satisfactory, but considers that the statutory guidance to those regulations, particularly the guidance contained in “Approved Document B”, is unsatisfactory. This has been the source of many problems, as it has been the tendency of many in the industry to treat Approved Document B as a definitive statement of what the regulations require. 

It is recommended that:

  • the statutory guidance is reviewed and a revised version of Approved Document B is published as soon as possible; 
  • the revised guidance should contain a clear warning that compliance with the guidance may not result in compliance with the regulations; 
  • any assumption that there is effective compartmentation within a building, which would make a “stay-put” fire response strategy appropriate,  should be reconsidered;
  • the revised guidance should draw attention to the need for a qualified fire engineer to calculate the likely rate of fire spread and the time required for evacuation, including those with physical or mental impairments, as an essential part of the fire safety strategy; and
  • fresh minds, including experienced and skilled representatives of the academic community as well as those with practical experience of the industry (including fire engineers), should advise on the revisions to the guidance.

Changes to the “gateways” building control regime

The Inquiry makes a number of recommendations which would have an impact on the “gateways” building control regime for higher-risk buildings introduced by the Act.

It is recommended that the following additional documents are submitted with the building control application (Gateway 2):

  • a fire safety strategy for the building produced by a registered fire engineer, which takes account of vulnerable people;
  • a statement from a senior manager of the principal designer that all reasonable steps have been taken to ensure that on completion the building as designed will be as safe as is required by the building regulations; and
  • a personal undertaking from a director or senior manager of the principal contractor to take all reasonable care to ensure that on completion and handover the building is as safe as is required by the building regulations.

It is also recommended that the fire safety strategy submitted at Gateway 2 should be reviewed and re-submitted at the stage of completion (Gateway 3).

Regulation of professionals within the construction industry

The Inquiry makes the following recommendations as to how professionals working within the construction industry should be regulated. 

  • A licensing scheme operated by the construction regulator should be introduced for principal contractors wishing to undertake the construction or refurbishment of higher-risk buildings;
  • The Architects Registration Board and the Royal Institute of British Architects should review the steps they have taken since the Grenfell Tower fire to improve the education and training of architects, to check that they are in line with the Inquiry’s findings;
  • The profession of fire engineers should be recognised and protected by law and that an independent body be established to regulate the profession. A group of practitioners and academics should be convened to define the knowledge and skills to be expected of a competent fire engineer. An understanding of the principles of fire engineering should be encouraged in construction professionals and members of the fire and rescue services; and
  • The government should establish a system of mandatory accreditation to certify the competence of fire risk assessors by setting standards for qualification and continuing professional development and such other measures as may be considered necessary or desirable.

Changes to those exercising Building Control functions

The Inquiry found that, at the time of the fire, many of those involved in major construction projects regarded building control primarily as a source of advice and assistance. It also found that approved inspectors had a commercial interest in acquiring and retaining customers that conflicted with the performance of their role as guardians of the public interest.  

In light of these findings, the Inquiry recommends that the government appoints an independent panel to consider whether it is in the public interest for building control functions to be performed by those who have a commercial interest in the process, or whether building control functions should be performed by a national authority.

Fire safety responsibility within government

The Inquiry was critical of the fragmented approach to fire safety issues within both government and the construction industry. It recommends that the following appointments be made, with a view to consolidating the various responsibilities, driving change and enabling effective information sharing between those responsible for different aspects of the industry.

  • A single Secretary of State with responsibility for fire safety functions.
  • A Chief Construction Adviser, with good working knowledge and practical experience of the construction industry,  to provide advice on all matters affecting the construction industry. 
  • A new Construction Regulator overseeing a single independent body, reporting to the Secretary of State, who should exercise all of the following functions:
  1. the regulation of construction products;
  2. the development of suitable methods for testing the reaction to fire of materials and products intended for use in construction;
  3. the testing and certification of such products;
  4. the issue of certificates of compliance of construction products with the requirements of legislation, statutory guidance and industry standards;
  5. the regulation and oversight of building control;
  6. the licensing of contractors to work on higher-risk buildings;
  7. monitoring the operation of the Building Regulations and the statutory guidance and advising the Secretary of State on the need for change;
  8. carrying out research on matters affecting fire safety in the built environment;
  9. collecting information, both in this country and abroad, on matters affecting fire safety;
  10. exchanging information with the fire and rescue services on matters affecting fire safety;
  11. accrediting fire risk assessors; and
  12. maintaining a publicly available library of test data and publications.

The Inquiry also recommends that the government should have a legal requirement to maintain a publicly accessible record of recommendations on fire safety issues made by select committees, coroners and public inquiries together with a description of the steps taken in response. 

Testing and certification of products

The Inquiry makes various recommendations regarding the testing and certification of products.

The small-scale test methods which have previously been used to assess the fire performance of an external wall were found to be unreliable. The Inquiry therefore recommends that steps be taken in conjunction with the professional and academic community to develop new test methods to reliably assess the fire performance of external walls. In the meantime, the government should make clear that BS 9414 should not be used as a substitute for an assessment by a suitably qualified fire engineer.

As set out above, it is recommended that the construction regulator should be responsible for assessing the conformity of construction products. As part of this process:

  • certificates of conformity should include all test results;
  • manufacturers should be required to provide the construction regulator with the full testing history of the product or material to which the certificate relates and inform the regulator of any material circumstances that may affect its performance; and
  • manufacturers should be required by law to provide on request copies of all test results that support claims about fire performance made for their products.

"Although some steps have already been taken to respond to the many failures that we have identified, we think that more can and should be done to bring about a fundamental change in the attitudes and practices of the construction industry."

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Government signposts further changes to building safety regulations

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

In advance of the Phase 2 report from the Grenfell Inquiry, the Government yesterday set out proposals to update various building regulations.

  1. Fire safety and evacuation
    1. Residential PEEPs
      1. The Government propose to introduce Personal Emergency Evacuation Plans (or PEEPs), which will be known as “Residential PEEPs”. As highlighted in the Grenfell Inquiry, there was a clear lack of information and personal plans in place for the evacuation of vulnerable residents. Requiring “person-centred” risk assessments to be undertaken to produce a Residential PEEP should assist in evacuations.
      2. Additionally, funding is to be committed to social housing providers to deliver Residential PEEPs for their renters. It is not clear how much funding has been allocated and whether this will be sufficient. As well as the financial cost involved in undertaking a risk assessment, it will also be necessary to have trained staff members with the time to undertake such assessments. This may not be straightforward, given the other building safety compliance work that is currently being undertaken by such organisations.
    2. Evacuation Alert Systems (known as sounders) – An amendment is to be made to the statutory guidance to the building regulations requiring sounders to be fitted in new buildings over 18 metres in height (as such, “higher-risk buildings” under the Building Safety Act 2022). The Government has confirmed they will consider whether a requirement to install sounders in existing buildings is required once the Phase 2 report has been published. It is not clear whether these changes are in anticipation of further criticism of the “stay-put” policy in respect to fighting fires in high rise buildings or whether there will be a recommendation that the stay-put policy is dropped in favour of full evacuation. 
  2. Sprinklers in new care homes – There will be an update to Approved Document B that makes provision for sprinklers in all new care homes. The guidance update will be subject to a 6-month transition period and then there will be a further 6 months to enable work on current development projects that are underway or about to start to continue (we assume this means that any projects currently or to commence in the next 12 months will not need to have complied with the requirement to include sprinklers in the design). The Government acknowledges that it is already relatively common for sprinklers to be included in new care home designs.
  3. Extension of the recognition of the CE marking for construction products  –Recognition of the CE mark was to expire at the end of June 2025. The Government has confirmed that recognition will continue for the CE mark in the UK indefinitely, which will allow for a wider reform of construction products regulation. When they do look to make further changes to the CE mark recognition this would be subject to a minimum 2-year transitional period, which is designed to give certainty and to support supply chains.
  4. Rationalising and removing duplication in regulations – The Government is withdrawing the outdated National Classes fire testing standards (within the building regulations Approved Document B) which ends a period of dual specification in favour of the “more robust European standard” (known as BS EN 13501). There will be a transitional period of 5 years for fire resistance products and 6 months for reaction to fire products to allow for manufacturers to switch to the European standard. This reflects recommendations from the Hackitt Report for a clearer, transparent and effective testing regime.

"A compassionate society protects its most vulnerable"

https://questions-statements.parliament.uk/written-statements/detail/2024-09-02/hcws62
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Government unveils ‘New Homes Accelerator’ team to solve planning delays

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

The government are launching a team dedicated to helping new housing developments. 

The New Homes Accelerator team are charged with ‘overcoming planning red tape’, to allow construction to begin on these new homes development sites.

I shared my thoughts on this with Property Wire:

“Developments stall for a myriad of complex reasons and it is difficult to see how these will be overcome, especially where the environment is concerned.

Protected species are covered under separate legislation, requiring licenses and work to be carried out at specific times of the year, while the proposed additional mitigation around nutrient neutrality is still ambiguous.

We need to see greater clarity on how the planning regime and other statutory regimes will work in tandem, and it’s not clear how parachuting in a team of planners will rectify this challenge.

Another key issue is the ability for Registered Providers (RP) to take on the affordable housing on development sites. Section 106 agreements will often require developers to transfer the affordable units to a RP before further building work or occupation can happen and this currently isn’t feasible for providers who are focusing resources on current stock maintenance and operation.

A final challenge is sufficient infrastructure provision, sites are increasingly stalling due to inadequate water supply or grid capacity, these issues need to be looked at holistically and across Government departments.

While I welcome the government’s commitment to unlocking sites that are stalling post planning, the solution is by no means simple and it won’t be possible to bypass other statues or legislation.”

You can read the full article here.

 

 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Grenfell Inquiry Final Report expected next week

Construction workers in high-visibility vests and helmets stand and communicate amidst metal scaffolding at a construction site, with sunlight streaming through an open structure.

The Grenfell Inquiry has confirmed that it will publish its report on Phase 2 of the Inquiry next week, on 4 September 2024.

The report on Phase 1 of the Inquiry was published in October 2019. As well as summarising the tributes paid to the deceased by their family and friends, it explained the events that took place on the night of the fire and the steps taken in response, reached conclusions about the origin and development of the fire and the emergency response, and made various recommendations as regards the Inquiry’s initial findings. 

The report on Phase 2 is expected to look at how the state of affairs described in the initial report came about. Its principal focus will be on the decisions which led to the installation of a highly combustible cladding system on a high-rise residential building and the wider background against which they were taken. It is also expected to discuss a number of other issues: of particular relevance to the Construction Industry will be the findings and recommendations made regarding the testing and certification of construction materials and regarding the efficacy of building regulations and guidance around them. 

Forsters’ Construction team will be reviewing the Phase 2 report once published, and commenting on those issues arising from it which are of importance to the Construction Industry. 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Home is where the happiness is

Recent Homes England research has found that, on average, people living in specialist older people’s housing reported higher life satisfaction scores when compared with people living in non-specialist general market housing. This research looked at different types of older people’s housing, and focused on age-restricted general market housing (Type A), retirement living or sheltered housing (Type B), and Extra Care housing or housing-with-care (Type C).

The research found that both Type B and Type C specialist housing offers healthcare benefits, by generating financial savings for the national healthcare system. In particular, this research estimates a fiscal saving of £1,840 per person per year for those living in Type C accommodation.

Given the backdrop of an ageing population in the UK, this research is certainly well-timed. Demand for specialist housing for older people continues to grow, and has much to offer both in terms of occupants’ well-being and wider economic benefits.

The research comes at a critical time for the UK in thinking about future provision of housing for older people.

https://assets.publishing.service.gov.uk/media/66a8cb89a3c2a28abb50d984/Measuring_the_Wellbeing_and_Fiscal_Impacts_of_Housing_for_Older_People.pdf
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Landmark Employment Tribunal Equal Pay ruling for Next Store Staff

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

In a ground breaking ruling, thousands of store staff at the retailer Next have triumphed in a six-year battle for equal pay. The Employment Tribunal’s decision, which found that Next had unjustifiably paid its predominantly female retail consultants less than their warehouse counterparts, marks a significant milestone in the fight for gender pay equality.

My comments on the “very significant” ruling were quoted in the Financial Times article as I highlight the wider consequences of the news on the retail industry as “retailers facing similar class actions will be paying very close attention,”.  The news is also significant in the current context of the new Labour government’s upcoming employment rights bill which includes a commitment to extending equal pay protections to ethnic minority and disabled workers.

This ruling paves the way for over 3,500 current and former Next staff to receive back pay, potentially totalling more than £30 million. It also sets a precedent for automatic equalisation in existing contracts, ensuring fair pay for all.
 

Jo Keddie, head of employment at law firm Forsters, said Next might struggle to find grounds to appeal against a “very significant” judgment. Retailers facing similar class actions would be “paying very close attention”, she added, especially given the new Labour government’s pledge to extend equal pay protections to ethnic minority and disabled workers.

https://on.ft.com/3ySQY2o
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Take Notice: Supreme Court rules on procedural failure in RTM Claim

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

On 16 August 2024 the Supreme Court gave its judgement in A1 Properties (Sunderland) Ltd v Tudor Studios RTM Co Ltd [2024] UKSC 27, which upheld a ruling that failure of a right to manage (“RTM”) company to serve a claim notice under s79(6)(a) of Part 2 of the Commonhold and Leasehold Reform Act 2002 (“CRLA”) on an intermediate landlord did not invalidate the transfer of the right to manage the accommodation in question. 

 The issues for the court to address were:

 “(1) Whether a failure to serve a claim notice on a landlord as required by section 79(6)(a) will always invalidate the acquisition of the right to manage powers by the RTM company pursuant to the process purportedly commenced by service of the claim notice on other relevant landlords; and

 (2) If not, whether nevertheless the failure to serve the claim notice in this case on all relevant landlords had the effect of invalidating the purported acquisition of the right to manage powers by the RTM company pursuant to the CLRA acquisition process.

 In addressing these issues, the Supreme Court’s main focus was to consider Parliament’s intention as to how the statutory regime of the CRLA should be interpreted and its purpose. It noted that the CRLA was designed to minimise opportunities for obstructive landlords to thwart the transfer of the right to manage. It also acknowledged that the absence of a central register made the process of identifying relevant landlords inherently difficult.

The Supreme Court held that in evaluating whether a procedural failure under the regime invalidated the process, the questions to be addressed were whether a relevant party has been deprived of its opportunity to oppose the making of an order to transfer the right to manage, having regard to (a) what objections they could have raised and would have wished to raise and (b) whether, despite the procedural omission, they in fact had the opportunity to have their objections considered.   

 As the appellant in this case had been joined to the Tribunal proceedings, it had been afforded the same opportunity of participating in the statutory procedure as it would have had if it had been served with a claim notice in accordance with s79(6)(a).  Accordingly, the failure to serve notice on it had not invalidated the process. 

 The Supreme Court considered the similar Court of Appeal case of Elim Court RTM Co Ltd v Avon Freeholds Ltd [2017] EWCA Civ 89 (“Elim Court”) where Lewison LJ concluded that failure to serve a claim notice on an intermediate landlord of a flat with no management responsibilities did not invalidate the notice.  Although the Supreme Court upheld the result in Elim Court, it departed from the reasoning on the basis it did not consider it was sufficient to say that the right to participate may be ignored if the intermediate landlord has no power of management.  

 It also considered the case of Osman v Natt [2014] EWCA Civ 1520  which followed the guidance of R v Soneji [2006] 1 AC 340 , a case that questioned whether it was the purpose of the legislation that an act done in breach of a provision should be invalid.  The Supreme Court ruled that in accordance with the approach in Soneji, the respondent’s failure to serve a notice of claim upon the appellant did not render the transfer of the right to manage void, it instead rendered it voidable unless, or until, the tribunal approved the transfer scheme.

 The judgment reduces the “traps for the unwary” involved in the process of transferring rights to manage, and will be welcomed by tenants and their advisers alike. 

 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The Ones Who Live…

Much talk over the years – and around Covid times particularly – was around zombie companies that carried on shuffling along, not growing, not folding and when this might come to land. Contrasted to that, was the other extreme – a significant rise in the US for start ups and those trying to back the next unicorn (my experience is that UK and Europe wasn’t as hot as the US market).

Against that backdrop it is interesting to see this FT article highlighting the increased number of start up failures which has (on US data) increased 60% over the last year. Part of the (seemingly illogical – but consistent) reason for this increase appears to be that they raised too much money and were encouraged to focus on growth and not to worry overly about costs and revenue. Having found themselves encouraged to grow at all costs (pun intended!) – they to seem to have been unexpectedly caught by their backers, who want them to change strategy and focus on cost control and profits. With a changing environment on interest rates and the ability to raise further cash by these companies, this has lead to some start ups simply just running out of cash and being unable to raise further finance and therefore having to make the decision to close.

So, what are the lessons? Probably the usual old hat cliches:

  • Cash is king – businesses go bust not because they don’t make profits but because they run out of cash
  • Make sure you know why you are raising funds and what you are going to use them for
  • Make sure you execute your revenue plan well
  • Choose your VC backer with one eye on whether they have capacity and willingness to fund the next round
  • Be lucky…..

Whether we will see this increasing as more monies flow in to AI, and whether AI will deliver what many proclaim it will or whether this might be a new dot com boom and bust, we will have to wait and see.

 

“an abnormally high number of companies raised an abnormally large amount of money during 2021-2022”

https://www.ft.com/content/2808ad4c-783f-4475-bcda-bddc0299095e
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Tenant administration on the rise?

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

Following a decision to place the company into administration in March of this year, Ted Baker has this week announced steps to close its final 31 shops in the UK and Republic of Ireland. This follows a number of other high profile tenant administrations over the last year, including the likes of Wilko and The Body Shop. 

From a landlord’s perspective, tenant administrations present a high degree of uncertainty and often leave them facing shortfalls in rent and other sums due under the lease. As unsecured creditors, this can often leave landlords with little prospect of recovery.  

To help navigate what can be an unfamiliar and technical process we have put together a short guide dealing with some of the first questions landlords will often ask when they find themselves in this position. 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The Olympics are over but the race is on

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

After two-and-a-half weeks of memorable competition, the Olympics are over, leaving many (surely most of us?) with that four year wait before our next dose of Greco-Roman wrestling. There is plenty of positive noise around sustainability at LA2028, with no new permanent venue construction. Yet, for the built environment there is no time to wait on decarbonisation. The race to Net Zero is on. Some Olympic themed reflections: 

Pacemaking 

Just out of the blocks? Mid-race? At the bell? Dipping for the line? Where is the built environment on the decarbonisation journey? For the UK, the Committee on Climate Change (CCC) annual assessment of the Government’s progress in cutting emissions is a helpful reference point, looking at inter alia emissions from the built environment. The latest report is helpfully summarised by the BPF here. Perhaps fair to conclude that the UK is on the way, but needs a significant acceleration to keep pace, and the CCC sets outs various recommendations to realise this. For me, the priority on achieving Net Zero outcomes in the planning system is an important play. 

New sports

Baseball, lacrosse, flag football etc. plenty of new Olympic sports to come in LA2028. Yet for the built environment, what can we expect in 2028? Without doubt, onsite and offsite renewable energy infrastructure will have an ever important sector role. On another note, the CCC report again highlights the contribution of surface transport to UK emissions, trending above buildings (see Fig 1.3 here). Perhaps no surprise that a CCC “priority action” is “the market share of new electric cars needs to increase from 16.5% today to nearly 100%”. Whilst there is plenty of governmental (and car industry) chatter around mandatory EV targets, one thing is for sure – the EV infrastructure network will only expand, becoming an ever more prominent part of real estate (check out previous blog here). When will petrol stations make way…

Raising the bar

The industry continues to grapple with that question – what is “Net Zero”? How high do you have to jump/ vault?  On that note, we expect the UK Net Zero Carbon Building Standard to launch at the end of September 2024 (you can attend the next quarterly update here). One area of interest: how the standard will apply across the built environment, different sectors in the sector race to Net Zero, heritage buildings etc. The same bar cannot apply across the board. After all, we are not all Armand Duplantis. 
 

The UK has committed to reduce emissions in 2030 by 68% compared to 1990 levels...It is the first UK target set in line with Net Zero. Now only six years away, the country is not on track to hit this target despite a significant reduction in emissions in 2023.

https://www.theccc.org.uk/publication/progress-in-reducing-emissions-2024-report-to-parliament/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Employers should be ‘cautious’ about sacking staff for rioting – our employment advice reported by Sky News

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

My advice to employers dealing with staff involved in rioting were recently published by Sky News: 

It’s correct for employers to be concerned about employees’ actions outside of work.  Rioting could call into question an employee’s character and/or likely to be contrary to an employer’s inclusive polices (especially given the nature of the current riots).  Such behaviour could also have adverse reputational consequences for businesses.

However, before dismissing an employee it’s important that an employer considers its own internal disciplinary procedures.  It’s important that matters are investigated and employees are given the opportunity to state their case (even if the evidence is clear).  Failure to do so could give rise to an unfair dismissal claim.  

This is also true where an employee has been arrested.  In most cases it would still be appropriate for an employer to carry out its own internal process, rather than simply relying on the fact he or she has been arrested (especially where an employee has only been criminally charged, rather than convicted).  The position is more complicated where an employee is remanded in custody and cannot attend the workplace – in those circumstances, it might be less risky for an employer to dismiss or argue that the employment relationship has ended due to “frustration” – because the employee is unable to perform their contract.

 

But one legal expert told us employers need to be careful before sacking staff for getting involved. "Rioting could call into question an employee's character or likely to be contrary to an employer's inclusive polices and such behaviour could also have adverse reputational consequences for businesses," said Joe Beeston, who is a partner at law firm Forsters.

https://news.sky.com/story/uk-riots-far-right-protests-latest-southport-police-anti-racism-counter-live-13186819?postid=8096085#liveblog-body

Capitalising on the energy transition

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Unquestionably, energy infrastructure is a sector to watch. As the ULI Emerging Trends in Real Estate Europe 2024 stated: “For the third year running, new energy infrastructure is identified as the sector offering the greatest overall prospects for investment, development and rents”. Surely 2025 will be no different? 

In particular, development activity continues at pace in the the sub-sector of “EV” real estate. EGI news has just reported the latest acquisition by Infinium Logistics of its latest site for a proposed charging facility, part of which was originally an open storage investment asset. Plus developers are even transforming “unproductive” office stock into EV facilities. One thing is for sure – if essential transport and grid availability are in play, there is a new shopper for sites in the aisle. Plus, trade of these assets will no doubt increase (e.g. the sale of this Gridserve freehold ground lease – a purpose-built electric forecourt – by Pigeon Investment Management) – as investments with “ESG” credentials at the core. 

As those in the EV sector will appreciate, planning frustration and limited grid infrastructure are key hurdles. Yet, with the latest government noise, optimism is in the air. Already, the political wind is behind onshore renewable infrastructure. Perhaps political weight can unlock even more opportunity in EV infrastructure too? 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The industry reacts: Government unveils details of planning system overhaul

The National Planning Policy Framework (NPPF) sets out the Government’s economic, environmental and social planning policies for England. 

The NPPF consultation is now underway – this consultation will seek views on the Government’s proposed approach to revising the NPPF, in order to achieve sustainable growth in our planning system.  The consultation will close at 1145pm on Tuesday 24 September.

I shared my thoughts with BE News:

“Updating the NPPF was always going to be the lever the Labour government could quickly pull to implement changes to the planning system. The proposed changes to the NPPF show that the government recognises that the planning system has become a barrier to delivery and fundamental change is needed to unlock investment and create a more development friendly environment. The re-introduction of mandatory housing targets, an increased focus on Local Plan making and enforcement, and a commitment to the 13-week decision timetable are all helpful in ensuring the right development is delivered in the right places.  The Government now wants to put the onus on the industry to bring forward the schemes to cater to the obvious demand.”

Mandatory housing targets of 370,000 new homes per annum have been introduced and deputy prime minister Angela Rayner has written to every council leader and chief executive in England to make clear that there is “not just a professional responsibility but a moral obligation to see more homes built”.

https://benews.co.uk/government-unveils-details-of-planning-system-overhaul/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The King’s Speech – what did we learn about Labour’s property plans?

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

Earlier this month, I joined industry experts in speaking to Property Week on the outcomes of the King’s Speech – the next piece of the jigsaw in understanding the priorities of the new Government. 

In planning terms, our 5 key takeaways are:
1) More new legislation – the “Planning and Infrastructure Bill” – but no reference to mandatory housing targets… yet!
2) Increasing LPA capacity and improving local decision making. Emphasis on “predictable” decision making, but also reference to the “modernisation” of planning committees – if those two go hand in hand that could genuinely be a game changer.
3) Key improvements to bus/train infrastructure which (in conjunction with the National Wealth Fund targeting key objectives in the Government’s industrial strategy) could unlock vast swathes of the country for redevelopment.
4) Devolution – and aggressively so. Will this be a meaningful version of “localism”, or the end of it? Will the post-election goodwill between Westminster and the elected Mayors hold and provide the necessary impetus?
5) A national underground asset register – slightly niche but this could genuinely be very helpful, particularly in the context of providing certainty when scoping out sites, and determining where key services are located.

There are 40 pieces of legislation proposed which cover a vast array of topics – there is a lot of work to be done. My colleagues have helpfully summarised plans for the Private Rental Sector and Leasehold Reform.  

Please get in touch if you want to understand more.

Matthew Evans, Counsel at law firm Forsters, says the RRB now leans more “towards occupiers and renters rather than landlords”. He adds: “It’s the things like decent home standards – that’s really encouraging to see and it’s now leaning towards almost regulation of the rental sector.”

https://www.propertyweek.com/analysis/kings-speech-what-did-we-learn-about-labours-property-plans
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

N v J: the Last Word on Domestic Abuse as Conduct?

Interesting article by Samantha Hillas KC, Olivia Piercy and Anita Mehta analysing Mr Justice Peel’s judgment in N v J [2024] EWFC 184 (15 July 2024).

As the authors note, they are leading a Resolution working party, looking at the way in which the Family Court approaches allegations of domestic abuse in financial remedy proceedings. Looking forward to reading their recommendations!

"This is unlikely to be an area in which N v J is the last word."

https://financialremediesjournal.com/content/em-n-v-j-em-the-last-word-on-domestic-abuse-as-conduct.97c663553e724e758657fa38c505e938.htm
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Legal Viewpoint: A summary of the Finch decision on oil production

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

I recently provided a detailed analysis of the Supreme Court’s decision in the Finch case for Planning Resource. 

A majority decision by the Supreme Court overturned decisions by the High Court and Court of Appeal, and found in favour of a local resident objecting to expansion of oil production at a site in Surrey. 

Here are the key takeaways:

  1. EIA Scope and Greenhouse Gas Emissions
    • The environmental impact assessment (EIA) should consider the indirect effects of the emissions from burning the oil produced, and not just the project to extract it.
    • The argument that these emissions were beyond the scope of the development were rejected.
  2. Direct vs. Indirect Effects
    • The case really centred on the issue of causation.
    • Dissenting judgments highlighted the difficulty for local authorities in assessing all such indirect effects – these are “big picture” issues that really should be grappled by central Government.
  3. Climate Change Litigation
    • Decision likely emboldens climate change litigation.
    • Assessing all potential indirect affects from greenhouse gas emissions from a project would represent a huge burden on any developer and any decision-making authority – care will be needed to correctly scope such effects.

In summary, the case highlights the importance of assessing greenhouse gas emissions comprehensively while acknowledging the practical difficulties faced by decision-makers. Climate change litigation will undoubtedly be influenced by this landmark ruling.

My full analysis can be read here

The court ruled that the emissions that will occur when the oil produced is burnt as fuel, do fall within the scope of the environmental impact assessment (EIA).

https://www.planningresource.co.uk/article/1881518/legal-viewpoint-supreme-court-requires-assessments-include-indirect-greenhouse-gas-emissions
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Don’t lose hope:- Tips for seeking “loss of rent” in dilapidations claims

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

As most experienced landlords will know, dilapidations claims can be a tricky business.  In particular, landlords can find themselves in a grey area when it comes to evidencing their loss of rent claim, where the law is somewhat unclear.   

It is generally accepted that a landlord needs to show that, were it not for the premises being left in disrepair, they would have been re-let earlier than they were. 

However, it is not clear what the burden of proof is, or how the Court will approach the landlord’s claim, and the following are some commonly encountered issues when it comes to pursuing such a claim:

  • Not knowing, prior to the lease expiry date, whether the tenant is going to leave the premises in repair. 
  • The chicken-and-egg issue of being required to prove that the premises would have been re-let had they been left in repair (i.e. how can a landlord be expected to market the premises to prospective tenants on the assumption that the premises are in repair, in circumstances when the premises are in fact in disrepair?).
  • Having no evidence as to the state of the local property market as of the lease expiry date, or the likelihood that the premises would have been re-let shortly after lease expiry.
  • Landlords sitting on the premises for weeks / months / years after lease expiry, without carrying out repair works (and therefore failing to mitigate their losses). 
  • Not knowing what the burden of proof is (i.e. does the landlord merely need to convince the Court that the local market was so strong that a tenant probably would have been found, or does the landlord need to provide actual evidence that there was concrete interest or bids from prospective tenants?).

Unfortunately, landlords are not offered much guidance from the Court in matters such as these. In one recent decision*, the Court spent only one paragraph analysing the landlord’s loss of rent claim, before concluding with the high-level assessment that the landlord was entitled to a very round figure of £100k (compared to the c.£128k claimed by the landlord), on the basis that “…It would be unrealistic to adopt a mathematical approach to this exercise. Instead, I am satisfied that recovery of approximately two thirds of these losses is justified…”). 

Until such time as the Court provides greater clarity, some tips for landlords to increase the likelihood of their loss of rent arguments succeeding:

  • Serve the schedule of dilapidations, and attempt to understand the tenant’s intentions for the premises, as early as possible.
  • Consider the tenant’s reinstatement obligations, and serve any reinstatement notices, as early as possible. Otherwise, the landlord may lose the ability to compel the tenant to reinstate the premises (or conversely, to compel the tenant to leave its fit-out in situ).
  • Take advice (in writing, and prior to the lease expiry date, ideally) from a lettings agent, with regard to: i) the strength of the local market; ii) the likelihood of the premises being re-let on the day after lease expiry, were the premises left in repair; iii) what the likely open market rent for the premises would be (including any incentives such as rent-free periods).
  • Repair, market, and re-let the premises at the earliest possible juncture, and keep a paper trail of the landlord’s efforts in doing so (in order to mitigate the landlord’s losses, and fend off arguments that the landlord did not re-let the premises as early as reasonably possible).  

* Peachside Ltd v Lee [2024] EWHC 921 (TCC)

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Did the briefing note to the King’s Speech indicate an appetite for more extensive leasehold reform?

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Draft legislation will be published on leasehold and commonhold reform ” – this was the fleeting reference to leasehold reform that was included in the King’s Speech – delivered on 17 July 2024, being the first for the new Labour Government.

Thankfully, the briefing note published by the Prime Minister’s Office soon after the King’s Speech provided more of an insight into what this means – and it looks like significant leasehold reform is in the offing with the introduction of a draft Leasehold and Commonhold Reform Bill.

Repeating almost exactly the wording of the Labour Party manifesto, the briefing note confirms that the Leasehold and Commonhold Reform Bill will deal with the following five key enfranchisement points:

It will:

  1. Enact remaining Law Commission recommendations – to bolster leaseholders’ rights to extend their leases, buy their freeholders and take over the management functions of their buildings.
  2. Tackle existing ground rents – with an intention to regularise these so that leaseholders avoid facing unaffordable costs; ensuring that their homes are more affordable and marketable.
  3. Reinvigorate commonhold – by modernising the legal framework and restricting the sale of new leasehold flats, to ensure that future generations benefit from absolute home ownership. 
  4. Bring “fleecehold” to an end – by implementing new protections for homeowners on private estates.
  5. Implement the provisions of the Leasehold and Freehold Reform Act 2024 – in an attempt to provide homeowners with greater rights, powers and protections over their homes.  The briefing note confirms that the Government will “act quickly” to do this, which is pleasing although still frustratingly vague.

All of this clearly confirms Labour’s commitment not only to “complete” the process of leasehold reform started by the last Government but also to take it much further.

Whilst this is all encouraging, at this stage, there is of course no roadmap for how any of it can or will be done. 

With the promise of further (much needed) consultation on the best way of achieving a shift to commonhold, and on how best to implement new protections to bring the injustice of the “fleecehold” system to an end, it doesn’t feel like any radical changes will be imminent.

We will just have to wait and see…again!

“Draft legislation will be published on leasehold and commonhold reform”

https://www.gov.uk/government/speeches/the-kings-speech-2024
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

UPDATE – Labour’s plans for the Private Rental Sector

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

Following this week’s King’s Speech, we now have more detail about the wide ranging changes that Labour intend to make to the Private Rental Sector (PRS).

They will introduce a Renters’ Rights Bill which, whilst following roughly the same form as the Conservative’s Renter’s (Reform) Bill that was abandoned ahead of the General Election, includes some key differences (highlighted in the excerpt from the government’s briefing paper set out below):

  • Abolishing Section 21 ‘no fault evictions’, removing the threat of arbitrary evictions and increasing tenant security and stability. New clear and expanded possession grounds will be introduced so landlords can reclaim their properties when they need to.
  • Strengthening tenants’ rights and protections, for example we will empower tenants to challenge rent increases designed to force them out by the backdoor and introduce new laws to end the practice of rental bidding wars by landlords and letting agents.
  • Giving tenants the right to request a pet, which landlords must consider and cannot unreasonably refuse. Landlords will be able to request insurance to cover potential damage from pets if needed.
  • Applying a Decent Homes Standard to the private rented sector to ensure homes are safe, secure and hazard free – tackling the blight of poor-quality homes.
  • Applying ‘Awaab’s Law’ to the sector, setting clear legal expectations about the timeframes within which landlords in the private rented sector must make homes safe where they contain serious hazards.
  • Creating a digital private rented sector database to bring together key information for landlords, tenants, and councils. Tenants will be able to access information to inform choices when entering new tenancies. Landlords will be able to quickly understand their obligations and demonstrate compliance, providing certainty for tenants and landlords alike. Councils will be able to use the database to target enforcement where it is needed most.
  • Supporting quicker, cheaper resolution when there are disputes – preventing them escalating to costly court proceedings – with a new ombudsman service for the private rented sector that will provide fair, impartial and binding resolution, to both landlords and tenants and reducing the need to go to court.
  • Making it illegal for landlords to discriminate against tenants in receipt of benefits or with children when choosing to let their property – so no family is discriminated against and denied a home when they need it.
  • Strengthening local councils’ enforcement powers. New investigatory powers will make it easier for councils to identify and fine unscrupulous landlords and drive bad actors out of the sector.

There was no indication of when the Renters’ Rights Bill will be introduced, but its title as well as the highlighted differences between the Conservative version, indicates that tenants really will be at its heart and landlords should start considering how their PRS portfolio is managed.  It will be very interesting to see the detail when the Bill is published and we will keep you updated.

Forsters is on hand to provide you with updates and advice in this area, including a detailed review of your existing tenancy precedents and renewals processes.

“Legislation will be introduced to give greater rights and protections to people renting their homes, including ending no fault evictions and reforming grounds for possession”

https://assets.publishing.service.gov.uk/media/6697f5c10808eaf43b50d18e/The_King_s_Speech_2024_background_briefing_notes.pdf
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The King’s Speech: Government Plans to Enhance Employment Rights

This morning, the King’s Speech affirmed Labour’s plans to introduce an Employment Rights Bill to “legislate to introduce a new deal for working people to ban exploitative practices and enhance employment rights”.

The Prime Minister’s briefing notes on the King’s speech suggest that Labour will be implementing their New Deal for Working People in full.  We prepared a detailed summary of the proposals in May 2024 but according to the briefing notes, the Employment Rights Bill will:

  • make unfair dismissal available to workers from day one, although employers will still be able to operate probationary periods to assess new hires;
  • ban exploitative zero-hour contracts, making sure that workers have a contract which reflects the hours they regularly work;
  • end “fire and rehire” practices by reforming the law and replacing the statutory code;
  • make parental leave and sick pay available to workers from day one of employment;
  • strengthen statutory sick pay by removing the lower earnings limit and the waiting period;
  • make flexible working the default from day-one for all workers;
  • strengthen protections for new mothers by making it unlawful to dismiss a woman who has had a baby for six months after her return to work, except in specific circumstances;
  • establish a new Single Enforcement Body, also known as a Fair Work Agency, to strengthen enforcement of workplace rights; and
  • simplify the process for trade union recognition, repeal the laws on minimum service levels relating to industrial action, and introduce rights for workers to access a union at work.

In addition, a draft Equality (Race and Disability) Bill will be published to “enshrine the full right to equal pay in law” for ethnic minorities and disabled people.  It will also introduce mandatory ethnicity and disability pay reporting for larger employers. 

“My Government is committed to making work pay and will legislate to introduce a new deal for working people to ban exploitative practices and enhance employment rights”

https://assets.publishing.service.gov.uk/media/6697ac9cab418ab05559271d/King_s_Speech_2024_background_briefing_GOV.uk.pdf
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Heard It Through The Grapevine

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

The past, L.P Hartley told us, is a foreign country. Unfortunately for Jeremy Vine, that foreign country can rear its head at any point.

HMRC has been pursuing Mr Vine’s personal services company (“PSC”), Jelly Vine Productions Limited (“Jelly Vine”), for tax that HMRC believes is unpaid.  

Jelly Vine was engaged by four BBC productions between 1 July 2013 and 30 December 2015. HMRC believes that Mr Vine was really a disguised employee of the BBC for these productions and that the fees paid to Jelly Vine should have been subject to employment taxes. In reality, HMRC contends, the BBC were not paying Jelly Vine to provide someone to front programmes but were directly hiring Mr Vine and had an employer/employee relationship with him.

In 2018 Mr Vine appealed HMRC’s decision on the basis that the amount of tax that HMRC was claiming was “estimated and excessive”, that HMRC’s decisions were made prematurely and invalidly and that he was not an employee for some or indeed all of the payments concerned.

In a preliminary hearing it was judged that HMRC is entitled to issue a determination if it “appears” to HMRC “that there may be tax payable for a tax year” and as such HMRC “may determine the amount of that tax to the best of their judgment and serve notice of their determination”. Therefore there was nothing invalid or premature about HMRC’s determinations.

The case will now proceed to the First-Tier Tribunal to determine whether Mr Vine does have an unpaid tax liability.

Mr Vine is far from the first TV star to battle with HMRC under IR35, the rules brought in to tackle the perceived tax gap resulting from an individual’s employment status being hidden through engaging a PSC. As the PSC provides the individual to fill the role, the relationship is presented as client/contractor rather than employer/employee. 

Introduced in 2000, it was the PSC’s responsibility to determine if there was really an employment relationship between the end client and the individual who provided the services. The rules changed for public bodies in 2017, such that the determination had to be made by the end client and in 2021, the private sector was brought into the net, meaning that the determination has to be made by the engaging company, rather than the PSC who received the funds.

Fellow TV stars Lorraine Kelly, Gary Lineker, Eamonn Holmes, Kaye Adams, Adrian Chiles and others, have all faced challenges from HMRC, with varying degrees of success. Whilst uncertainty about the full extent and applicability of the rules rages, with some commentators branding them as not fit for purpose, HMRC has shown no signs of stopping its pursuit of celebrities for taxes it believes should have been paid. 

 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Landlord refused declaration permitting it to switch off existing heating system

Summary

On 12 June, the Chancery Division of the High Court gave its judgment on Triplark Limited v Whale & Ors [2024] EWHC 1440 (Ch). The landlord in this case wanted to install a new heating system, which the defendant tenants argued would make their repairing obligations more onerous. The Court ruled that, because installing a second heating system was not in the contemplation of the parties when they entered into the lease, the declarations that the landlord sought (which would have confirmed its ability to do this) were not granted. This case will be of importance to landlords wanting to upgrade their heating systems, particularly with the need to adhere to new environmental regulations. 

The Decision

The landlord wanted to change the way that the heating system (which supplied 194 flats) operated. The proposed new system required heat exchanger units (HUI) to be installed in each flat. These had not been necessary under the previous system.

The landlord sought declarations from the court that it could replace the hot water and/or the central heating system even though the new system was not identical to the last, but provided the same service. It also sought a declaration that it could disconnect the flats from the old system and reconnect them to the new system. 

At the heart of this judgment lay the Judge’s interpretation of the clauses in the tenants’  leases. The landlord had an obligation to maintain, repair and renew the communal system.  There was also a covenant in each lease that required the tenant to repair the central heating and water apparatus that was solely serving their own flat, whether within the flat or outside of their demise. 

Importantly, the tenants were also obliged to keep in repair the heating and hot water apparatus as well as any additions to these. 

The Judge commented that it seemed an “exorbitant construction” of the repairing covenant that the landlord could make any additions it wished and then expect the tenant to carry out repairs to those additions as if they were fixtures within its demise. The Judge commented that if the landlord argued that it would only ever make reasonable additions, that would require reading words into the leases that were not there. 

The Court refused to grant the declarations sought by the landlord. If the declarations had been given, then the way that the leases operate would have changed. It would have changed the repairing covenant because it would have fallen upon the tenants to repair the HUIs that would need to be added- this would have been an additional burden on the tenants that was not contemplated by the parties when they entered into their leases. 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Summer heat proving too much for UK offices?

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Josh Oliver, correspondent at the Financial Times, has reported this morning (https://on.ft.com/460sq3v) that large London office buildings (valued in excess of £100 million) are proving impossible to sell in the current market as the high cost of debt hampers buyer appetites. This aligns with the view of Andrew Jones, chief executive of LondonMetric, who recently likened office buildings to “melting ice cubes” for investors due to how fast they are depreciating in the current market. A fitting metaphor for this day and age.

These are timely reminders that the office market is fraught with challenges given political, economic and environmental uncertainties. With hybrid working around to stay and Net Zero looming ever closer, tenants will continue to expect high quality, green office space which provide incentives for their workforce to make the commute – all of which require investment and engagement from landlords.

Some are seeing this as an opportunity. Having recently withdrawn sales of some of its larger office buildings, Great Portland Estates is now seeking to raise £350 million to invest in new ‘prime’ real estate across London, particularly in the West End (https://on.ft.com/3WNHRtp). A rare moment of optimism where otherwise the market holds its breath while the Bank of England makes a decision on lowering interest rates later this year. 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Supreme Court ends statutory adjudications on collateral warranties

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Over the past 11 years, the question of whether a collateral warranty is, or can be, a construction contract for the purposes of section 104(1) of the Housing Grants, Construction and Regeneration Act 1996 (“the Act”) has been considered twice by the TCC, and once by the Court of Appeal.  However, that question was finally settled on Tuesday (9 July) when a five-judge panel (three Lords, two Ladies) of the Supreme Court handed down its judgment in Abbey Healthcare (Mill Hill) Ltd v Augusta 2008 LLP (formerly Simply Construct (UK) LLP) [2024] UKSC 23.

In short, the Supreme Court held that:

  • A collateral warranty will be a construction contract if it is an agreement by which the warrantor undertakes a contractual obligation to the beneficiary to carry out construction operations which obligation is separate or distinct from the warrantor’s obligation to do so pursuant to the underlying construction contract.
  • A collateral warranty will not be a construction contract where (as is often the case) the warrantor is merely warranting the performance of the obligations it owes to the employer under the construction contract.

Reasoning

The first issue for the Court to decide was the meaning of the following words in section 104(1) of the Act: “an agreement with a person for…the carrying out of construction operations”, which required consideration of the meaning of the word “for” (eliciting a collective groan from non-lawyers!).  The Supreme Court rejected the Court of Appeal’s suggestion that “for” meant “in respect of” and held that for an agreement to fall within section 104(1), it is necessary for that agreement itself (i.e. the collateral warranty) “to give rise to the carrying out of” construction operations: there must be an obligation in the agreement to carry out construction operations that is “separate or distinct” from the obligation to do so in the underlying construction contract.  If the obligation in the agreement is “merely derivative and reflective of obligations owed under the building contract”, the agreement will not fall within section 104(1). 

The second issue was for the Court to interpret the relevant wording of the collateral warranty provided to Abbey, which wording is typical of the collateral warranties with which we are all familiar:

4.1 The Contractor warrants that:

(a)  the Contractor has performed and will continue to perform diligently its obligations under the Contract;

(b)  in carrying out and completing the Works the Contractor has exercised and will continue to exercise all the reasonable skill care and diligence…

The Court agreed that 4.1(a) was a promise to carry out future works, but reasoned that the collateral warranty had to be drafted in these terms in order to cover the warrantor’s past and future obligations. Critically, the Court held that the warrantor was not, by this clause, “promising anything that is not already promised to the employer under the Building Contract. It does not in itself give rise to any construction operation”. 

As such, Abbey’s collateral warranty contained no separate or distinct obligation and was not a construction contract for the purposes of the Act, and so neither will be the many warranties that contain this typical wording. 

Reaction

The judgment may be seen as disadvantageous to beneficiaries of collateral warranties who will now be deprived of the potential benefit of having their dispute decided in adjudication (at lower cost over the course of weeks), rather than in litigation (at a higher cost over the course of months or even years). Nevertheless, that is the consequence of the criteria that parliament set for statutory adjudication to apply, and perhaps warrantors – contractors, subcontractors, and consultants – will breathe a sigh of relief that the group of parties who might bring potentially onerous statutory adjudications against them has been reduced. 

In any event, it remains open to the parties to agree express drafting in their collateral warranties giving them a right to bring contractual adjudication proceedings should they so wish (indeed, it will be intriguing to see whether the market reacts to the Supreme Court’s ruling by doing so).   Moreover, as the Court itself noted, the decision brings certainty to the question of a collateral warranty’s status under the Act, the answer to which will no longer be dependent on whether the works were complete at the time the collateral warranty was executed, or whether there is a right of step-in, or on the “niceties of the language” and “fine distinctions” in drafting, and that is surely a good thing. 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Supreme Court Judgment allows nuisance claims to be brought for the pollution of waters

On 2 July 2024, the Supreme Court gave its judgment on The Manchester Ship Canal Company v United Utilities Water Ltd (No. 2).  The Court ruled that a nuisance claim could be brought in a situation where effluent was discharged into a canal, unless the action had been authorised by Parliament or the common law right of action had been excluded. The case will be of interest to owners of watercourses who are seeking to understand their rights as regards pollution by sewage undertakers. 

United Utilities Water Ltd was the sewerage undertaker for the north west of England. This case rested on the question of whether United Utilities could discharge foul water into the canal without the consent of the canal company, and if it must pay a licence fee to do so. The question was whether The Water Industry Act 1991 prevents owners of watercourses or bodies of water from bringing nuisance or trespass claims for the pollution of their waters by foul water from the infrastructure of statutory sewerage undertakers, in the absence of negligence or deliberate misconduct.

The judgment examined case law in this area, particularly the case of Marcic v Thames Water Utilities Limited. Marcic focused on whether or not the failure of a sewage authority to construct new sewers constituted an actionable nuisance, when it led to severe flooding. It found that the court is not in a position to decide if a party should have constructed a new sewer that would have prevented this from happening, but that it could decide on a situation where there is a discharge of sewage from a sewerage system which is operating as it was designed to operate- if that is the case, the operator of the sewage system is responsible for the resultant nuisance. 

When the case was considered by the Court of Appeal, it was held that the facts in this case were indistinguishable from Marcic: although the discharge of inadequately treated effluence was unlawful, it occurred without United Utilities doing anything to cause it and so there was nothing that United Utilities could do to help stop this, apart from carrying out improvements to their sewerage system. The Court of Appeal therefore found that there was no cause of action with either trespass or nuisance. 

The Supreme Court disagreed with this. It took the view that the claim in Marcic had been dismissed because it considered the defendant’s breach of obligation to construct a new sewer, which the court could not give judgment on. 

The Supreme Court held that Marcic had no bearing here, as United Utilities were responsible for polluting waters through its sewers, sewage treatment works and associated works which occurred from these systems being exceeded in their capacity. The Supreme Court ruled that this was something that United Utilities caused or adopted, seen by how their system is designed in a way that deliberately involves the discharge of effluent into the canal.  So, unless this action had been authorised by Parliament or the common law rights of action had been excluded, the Canal Company had a cause of action under nuisance. 

The Supreme Court ruled that the Canal Company was able to claim in nuisance against United Utilities. It also said that although there may be cases where it is not appropriate to grant an injunction as a remedy for claims of nuisance or trespass in relation to cases where sewerage undertakers have polluted watercourses, damages will be awarded instead. 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Press: The new Labour Government’s “Day One” rights

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

I am delighted to have contributed to The Lawyer’s rolling election coverage, providing my thoughts on the potentially significant changes facing employers under our new Government.

Forsters’ head of employment Jo Keddie says: “Giving all workers more rights from day one will be a significant shift for employers, as is Labour’s plan to do away with the two-year minimum period for bringing an unfair dismissal claim. “We expect this will result in far more litigation in the Employment Tribunal, which is already overworked with cases taking well over a year to be heard, as well as far more focus by employers on recruitment policies and dismissal strategies. “Indeed, the first impact of a Labour government may be a spike in dismissals as the employers look to remove any employees with less than two years’ service where there is any doubt over their long-term future.”

https://www.thelawyer.com/election-2024-live/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The Private Rental Sector (PRS) – Ahead of the result of today’s General Election, Forsters examines the main parties’ manifesto pledges

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

Following publication of the various party manifestos and prior to the result of today’s General Election, we have reviewed and summarised each parties’ intentions for the private rental sector.

Whilst it is impossible to predict any legislative amendments at this stage,  widescale changes to the Assured Shorthold Tenancy market,  particularly as to how such tenancies can be terminated, seems very likely regardless of the successful party.  Any changes  will dictate the way in which your lettings portfolio is managed during  the next Parliament.

Labour

We will immediately abolish Section 21 ‘no fault’ evictions, prevent private renters being exploited and discriminated against, empower them to challenge unreasonable rent increases, and take steps to decisively raise standards, including extending ‘Awaab’s Law’ to the private sector.”

Labour have echoed the Conservative’s long held desire to end the use of section 21, ‘no fault’ evictions.  Whilst this could not, in fact, be introduced immediately upon Labour taking office, we presume that an urgent reintroduction of the Renters (Reform) Bill (“the Bill”) would occur, with tweaks and changes (see recap below).

It seems likely that a Labour version of the Bill would be more tenant friendly, though the manifesto stops short of confirming the introduction of a rent cap.

Awaab’s Law already exists in the social housing sector, and this is something that you are likely to be complying with already in relation to defects, but an extension into the private sector of the requirement for landlords to adhere to statutory timescales to address hazards such as damp and mould in their properties is likely.

Conservatives

“[would] pass a Renters Reform Bill that will deliver fairness in the rental market for landlords and renters alike. We will deliver the court reforms necessary to fully abolish Section 21 and strengthen other grounds for landlords to evict private tenants guilty of anti-social behaviour.”

There will be a renewed effort to pass the Bill that was going through Parliament before the General Election was called.  It is likely that a Conservative version of the Bill would take account of Landlords’ concerns about being able to obtain possession of their properties without evidence of default or other grounds and the time this would take under the current Court system.

The Conservative Manifesto therefore also refers to the need to reform the Court process before this is done.  Key areas to be addressed had been identified and include:

  • Digitising more of the court process to be simpler and easier for landlords to use.
  • Exploring how the courts can prioritise cases that involve antisocial behaviour. This includes mandating that tenancy agreements should have clauses that antisocial behaviour can result in an eviction.
  • Improving bailiff recruitment and retention – reducing administrative works in order to prioritise possession.
  • Providing early legal advice and better signposting to help tenants.

RENTERS’ REFORM BILL RECAP

To recap, the key items of the Bill as it existed prior to the dissolution of Parliament were:

  • Abolishing section 21 notices and ending Assured Shorthold Tenancies (“ASTs”)

Section 21 notices were to be abolished under the Bill, which would mean that all notices seeking possession would be ground-based notices under section 8 of the Housing Act 1988 (“the HA 1988”). This would also mean that all tenancies going forward, subject to any transitional provisions, would be assured tenancies. 

It is thought that tenancy deposit protection, a key feature of the current AST regime, would continue to apply so that a failure to comply with the tenancy deposit rules will prevent service of a valid section 8 notice for almost all grounds.

There was no indication that service of a section 8 notice would be made conditional upon landlords complying with their other duties, such as serving a gas safety certificate or EPC.

  • Ending fixed-term tenancies

Instead all tenancies would be periodic (open ended). The periods of a tenancy would have to be monthly or not longer than 28 days. Tenants will be able to end the tenancy by giving two months’ notice to quit.

A carve out for student lettings may be inserted.

  • Reform of possession grounds

Some existing possession grounds would be kept, together with the introduction of new grounds. Key changes included the expansion of Ground 1, where the landlord requires possession as their own or their spouse’s/civil partner’s only or principal home, to include close family members. There would also be a new Ground 1A for landlords who intend to sell the property. Both grounds could only be used after six months and where a tenant leaves following service of a notice, the landlord is prohibited from letting or marketing the property for three months.

There would be a new mandatory rent arrears ground (Ground 8A) where a tenant is in at least two months’ arrears on three separate occasions over a three-year period prior to service of the notice. The current mandatory Ground 8 (two months’ arrears at the date of service of the notice and the hearing) would remain, but the notice period would be increased from two weeks to four weeks.

  • Discretionary Ground 14 (nuisance) would be broadened, so that any behaviour ‘capable of causing’ nuisance or annoyance will provide a ground for possession (as opposed to behaviour ‘likely to cause’ nuisance or annoyance).

There would also be a new mandatory ground (Ground 6A) for compliance with enforcement action, allowing a landlord to seek possession if, for example, the landlord is in breach of a local authority enforcement notice or the landlord has been refused a property licence.

  • Restricting rent increases

Landlords would only be able to increase rent annually using the statutory notice procedure set out in section 13 of the HA 1988 and the notice period will be increased from one to two months. Tenants could challenge a rent increase in the First-tier Tribunal (Property Chamber). Crucially it was intended that Landlords would no longer rely on contractual rent review clauses in their tenancy agreements.

  • Right to request a pet

A new term would be implied into assured tenancies that a tenant may keep a pet with the landlord’s consent unless the landlord’s refusal is reasonable.  Landlords would be able to require tenants to obtain insurance to cover pet damage and the Tenant Fees Act 2019 would be amended to make this a permitted payment.

Whatever the result today, reform in this area is a key part of both Labour and the Conservative’s manifestos and it is likely that we will start to obtain clarity about the changes that will be introduced in fairly short order. 

Forsters is on hand to provide you with updates and advice in this area, including a detailed review of your existing tenancy precedents and renewals processes.

Building Liability Orders – Insight into a New Remedy

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

Willmott Dixon Construction Limited v Prater & Ors [2004] EWHC 1190 (TCC) (“Willmott”) is an High Court case that recently provided some judicial insight into the newly created remedy under the Building Safety Act 2022, the Building Liability Order (“BLO”). 

The case is an ongoing multiparty dispute concerning a mixed-use commercial and residential property in Woolwich which has a range of alleged fire safety defects with both the design and construction of the external wall system.

Insight

In general terms, a BLO  is an order providing that any liability (under the Defective Premises Act 1972 or as a result of a building safety risk) relating to a specified building is also a liability of an associated body corporate, or a joint and several liability of two or more associated bodies corporate. The High Court may make a BLO if it considers it just and equitable to do so. 

Willmott provides useful guidance on the procedural considerations of mounting a BLO against associated body corporates. Whilst this novel remedy is still in its infancy, Willmott provides some clarity on the way forward.

In Willmott, the application for a BLO was made by one of the defendants (“the BLO Applicant”) against companies which it claims are associated with the other defendants (“the BLO Respondents”). The BLO Respondents had asked for the BLO application to be stayed, pending a decision in the main claim (which sought to establish liability of the defendants, including the BLO  Applicant) . They argued that, as their liability would be wholly dependent on the Court first finding liability on the part of the BLO Applicant in that main claim, the circumstances in which a BLO might be made might never arise. 

Mrs Justice Jefford DBE found, amongst other things:

  • As a matter of principle, the legislation does not require a party against whom a BLO is sought to be made a party to the main claim which seeks to establish the liability of the original party. 
  • Notwithstanding this, if a BLO is contemplated prior to the commencement of the main claim then it would generally be efficient to make both claims together. 
  • In particular, it seems that an associated company will not be able to challenge a finding re the liability of the original entity. But it may still be open to the associated company to argue that the circumstances in which that liability was established mean it is not just an equitable to make a BLO. Those arguments will be avoided if the associated company is party to proceedings.

In essence, it is likely the case that a BLO will not need to be run at the same time as the main claim, notwithstanding the efficiencies described by the Judge. That said, it may well be in the best interests of those applying for a BLO to ensure that it is. 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Start-ups/Founders: Be truly authentic

I’ve spent a lot of years advising start-ups and founders and being authentic and having a great back story has always been a core element of their success. A recent, very contrasting, experience feels timely to reflect on this principle.

One consumer start-up that I purchased from (I do tend to lean towards the start-up for purchases where I can I admit) sent a great follow-up email after a purchase. It was a classic “Hi, I’m X and thanks for your purchase. We want to improve so please email me and tell me your feedback”. Having some thoughts on the experience I did just that and shared some insights (I thought good ones too). This resulted in a reply which was a generic thank you from the marketing team – very far from the original email about how the founder personally wanted to hear feedback. 

The second experience is that of another company that I order coffee from (www.manumitcoffee.co.uk). Another small business and with a great purpose – ethical coffee roasted by survivors of modern slavery.  Every single order with Manumit comes with a card detailing the coffee blend and every single time, without fail, a Manumit card with a handwritten note saying thank you for the order. After a number of years of ordering, this has remained consistent; taking the time to connect authentically with the customer.

So, perhaps just a personal reflection and a personal soapbox point but the message to Founders is that I know it is a tough market and competitive and you are looking for every edge, but if your brand story is going to be authenticity and the personal touch, make sure you live up to it or your brand will fall on that premise.

One business won’t be getting my custom in the future, while the other will continue to be my morning coffee of choice.

 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Leasehold reform – how will this be affected by the General Election?

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

On 24 May 2024, the Leasehold and Freehold Reform Act (“LAFRA”) was the last Bill passed in the current Parliament. It was pushed through the Commons at speed to ensure it received Royal Assent before Parliament was prorogued.

However, it’s worth pointing out that LAFRA is not yet in force.

Some parts of LAFRA will come into force next month i.e. those that amend the Building Safety Act 2022 and those that deal with rent charge arrears but the remainder needs to be commenced by the Secretary of State via statutory instrument and, as Parliament is now in purdah, this responsibility will fall to the next Government.  

Exactly when the next Government will do this is difficult to predict but it is pleasing to note that leasehold reform features heavily in the manifestos of each of the three main political parties, all of which were published last week.

Here is a summary :

Liberal Democrats:

“Liberal Democrats are committed to tackling these housing failures head-on by…: 
Abolishing residential leaseholds and capping ground rents to a nominal fee, so that everyone has control over their property.”

  • This is the most leaseholder-friendly manifesto – suggesting that the Liberal Democrats will go much further than LAFRA.

Conservative and Unions Party:

We will complete the process of leasehold reform, to improve the lives of over four million leaseholders. We will cap ground rents at £250, reducing them to peppercorn over time. We will end the misuse of forfeiture so leaseholders don’t lose their property and capital unfairly and make it easier to take up commonhold.”

  • This appears to acknowledge that LAFRA was rushed through and suggests that the Conservatives are committed to “completing” the process of leasehold reform by dealing with the omissions in LAFRA that relate to the ground rent cap, forfeiture and commonhold. 

Labour Party:

Labour will act where the Conservatives have failed and finally bring the feudal leasehold system to an end. We will enact the package of Law Commission proposals on leasehold enfranchisement, right to manage and commonhold. We will take further steps to ban new leasehold flats and ensure commonhold is the default tenure. We will tackle unregulated and unaffordable ground rent charges. We will act to bring the injustice of ‘fleecehold’ private housing estates and unfair maintenance costs to an end. ”

  • This confirms Labour’s commitment to continue with the process of leasehold reform, and again suggests that they would go much further than the proposals set out in LAFRA – implementing all of the proposals recommended by the Law Commission. 

It does seem that the passing of secondary legislation to bring LAFRA (and more?) into force  is likely to be high on the next Government’s agenda – this something that will certainly be welcomed by the industry, as this period of limbo benefits no-one.   

However, the policies are frustratingly vague and at this point, we are really still none the wiser as to the likely timescale for enactment.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

UK Election 2024: The Liberal Democrats’ Manifesto – Employment Round Up

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

Earlier this week the Liberal Democrats published their Election manifesto, which contains a number of pledges for working people and employers if they win the election on 4 July. 

We have set out their key employment pledges below.

Status and the gig economy

  • Establish a new ‘dependent contractor’ employment status inbetween employment and self-employment, with entitlements to basic rights such as minimum earning levels, sick pay and holiday entitlement.
  • Review the tax and National Insurance status of employees, dependent contractors and freelancers to ensure fair and comparable treatment.
  • Set a 20% higher minimum wage for people on zero-hour contracts at times of normal demand to compensate them for the uncertainty of fluctuating working hours. 
  • Give zero-hours and agency workers a right to request a fixed-hours contract after 12 months (a right not to be unreasonably refused). 

Family and carer rights

  • Double statutory maternity pay and shared parental pay to £350 per week.
  • Introduce an extra ‘use-it-or-lose-it’ leave of one month for fathers and partners, paid at 90% of earnings (with a cap for high earners).
  • Parental leave and pay to be a day 1 right, which will also apply to self-employed parents.
  • Require large employers to publish their parental leave and pay policies.
  • Make caring and care experience protected characteristics, as well as introducing paid carer’s leave and a Carer’s Minimum wage.

Sick pay 

  • Statutory sick pay to be payable from day 1 of sickness.
  • Ensure that statutory sick pay is available for employees who earn less than £123 per week and align it with national minimum wage.
  • Introduce a right for every disabled person to work from home, unless there is a significant business reason not to.
  • Simplify the Access to Work scheme.
  • Introduce “Adjustment Passports” to record all adjustments, modifications and equipment that a disabled person has received, and ensure that Access to Work support and equipment stays with the individual if they change jobs.

Employee protection

  • Make flexible working a day 1 right.
  • Encourage employers to promote employee ownership by giving staff in listed companies with more than 250 employees a right to request shares.
  • Scrap the lower apprentice rate and ensure that apprentices receive at least national minimum wage.
  • Shift the burden of proof for employment status claims in the Employment Tribunal from the individual to the employer.

Equality, Diversity and Inclusion

  • Require larger employers to monitor and publish data on gender, ethnicity, disability, LGBTQ+ employment levels, pay gaps and progression and publish 5-year aspirational diversity targets.
  • Provide support and advice to employers on neurodiversity in the workplace.
  • Extend the use of the name-blind recruitment process.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

UK Election 2024: The Conservative Party Manifesto – Employment Round Up

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

The Conservatives released their manifesto on Tuesday this week. On a first glance, the manifesto did not include much by way of employment-related announcements.  However, we have included a summary of pledges that will impact working people and employers below. 

  • As announced by Kemi Badenoch earlier this month, change the definition of “sex” in the Equality Act 2010 to mean biological sex.
  • Reform the assessment system for, and reduce the number of individuals claiming, disability benefits.  Those with “moderate” mental health issues or mobility problems will be given tailored support to work rather than disability benefits.  Although not necessarily “employment-related”, organisations would need to be prepared to provide the relevant “return to work” support to those individuals affected by this change.
  • Overhaul the “fit note” process by moving the responsibility for issuing fit notes from GPs to specialist work and health professionals. 
  • Cut tax for workers by reducing employee national insurance contributions to 6%.
  • Abolish the main rate of self-employed national insurance by the end of the next Parliament.
  • Continue with the implementation of minimum service level agreements in relation to industrial action.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Workplace Relationships in the Spotlight

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

In the wake of the dismissal of CEO Bernard Looney last year for failing to disclose personal relationships at work, BP has drawn publicity for changes to its relevant policies.

Most notably, individuals will no longer have the discretion to determine for themselves whether personal relationships ‘at the office’ are likely to pose a conflict of interest.  Instead, BP intends to take a more expansive view of which relationships senior managers in particular are required to disclose to their employer.  

While policies regarding workplace relationships are not necessarily the norm, there is tangible and growing scrutiny of the dynamics which they can lead to.  Such relationships can give rise to accusations of undue favour and improper influence on decision-making and governance.  The impacts when they end are potentially even more difficult to manage.

My comments on these latest developments can be found in the Daily Mail (online and also in print, 11 June 2024 edition). 

Removing the discretion for individuals to decide whether their relationship poses a conflict of interest is potentially wise.

https://www.dailymail.co.uk/news/article-13515151/BP-staff-office-romances-SACKED.html
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

A new code of conduct for directors?

In today’s business environment being a director has probably never been more complex or challenging in terms of expectation of scrutiny, governance and decision-making by boards. The Companies Act 2006 already has a clear set of obligations (section 172 duties) on directors as to how they should take decisions (and larger corporates should report on how they satisfy those obligations in their annual report).

Against this backdrop the Institute of Directors has launched a public consultation on a new code of conduct for directors. The proposed code, on which consultation is open until 16 August 2024, is intended to be voluntary and, reading the press launch, appears to be a tool or framework which boards can look to when tackling decisions and help frame decision-making – but obviously not replacing their existing duties in that regard. The intention is that there will be six key principles of director conduct:

  • Leading by Example – demonstrating exemplary standards of behaviour in personal conduct and decision-making.
  • Integrity – acting with honesty, adhering to strong ethical values and doing the right thing.
  • Transparency – communicating, acting and making decisions openly, honestly and clearly.
  • Accountability – taking personal responsibility for actions and their consequences.
  • Fairness – treating people equitably, without discrimination or bias.
  • Responsible Business – integrating ethical and sustainable practices into business decisions and taking into account societal and environmental impacts.

It would be hard to imagine any board that might object to those principles but equally it is also hard to imagine that many boards would consider that they don’t already meet those standards and levels in their decision-making and in extinguishing their legal duties. So, this might be a further helpful framework for directors to help bring their debates and decisions to life and it will be fascinating to see the response by directors, investors and advisers as to the proposal to create this new voluntary standard.

 

“The role of director has never been more vital, complex and challenging.

https://www.iod.com/news/governance/iod-launches-public-consultation-on-a-code-of-conduct-for-directors/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

UK Election 2024: “Labour’s Plan to Make Work Pay”

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

On 24 May 2024, Labour published its “Plan to Make Work Pay”, which sets out its proposals for the workplace if it wins the election race this summer. Labour pledges to improve “job security, treat workers fairly and improve low pay”.  The party has also promised to introduce legislation within 100 days of entering government, subject to consultation with businesses, trade unions and civil society.

We have summarised Labour’s key pledges below.

  1. Day one right for employees not to be unfairly dismissed.  Labour intends to reform unfair dismissal protection (which is generally only afforded to those employees with 2 years’ service) so that it applies to all employees as a day one right.  This will not prevent fair dismissal, or probationary periods with transparent rules and processes, but it will  make it unlawful for employers from being able to fire employees without a fair reason or a proper procedure.  
  2. Banning “exploitative” zero hours contracts to improve job security and predictability and introduce a right to have a contract that reflects the hours regularly worked.  Workers can still be paid overtime and employers will not be prevented from offering fixed-term contracts including for seasonal work.
  3. Restricting “fire and rehire” practices by introducing a new and strengthened code of practice.  Fire and rehire would only be permitted as part of a restructure where there is “genuinely no alternative”, but there would still need to be discussion and consultation with employees.
  4. Single status of worker. Subject to consultation, Labour intends to remove the current three-tier system for employment status (where people are classified as employees, self-employed or workers).  Labour aim to move towards a single status of worker and transition towards a simpler two-part framework for employment status where people are either workers or self-employed. 
  5. Improving rights for the self-employed. Labour would give those self-employed the right to a written contract and intend to strengthen trade union rights to benefit self-employed workers.
  6. Flexible working.  Labour will strengthen the right to request flexible working to ensure that it is genuinely a default from day one for all workers, except where this is not reasonably feasible.  The party also intends to bring in the ‘right to switch’ off giving workers and employers the opportunity to have constructive conversations and work together on bespoke policies to implement this right. 
  7. Family friendly rights. Parental leave would become a day one right and additional protection from maternity discrimination will be introduced such that dismissal will be unlawful within six months of return to work (except in specific circumstances).  Labour also intend to review the Carer’s Leave regime and clarify the law and entitlement to bereavement leave.
  8. Right to fair pay. Labour would look to link the national minimum wage with the cost of living and remove the 18-21 age band.  In addition to increasing national minimum wage, labour would strengthen statutory sick pay by making it available to all workers from day one of sickness (rather than day 4) and removing the lower earnings limit.  Labour also intend to ban unpaid internships (unless they are part of education or a training course) and to ensure that all hospitality workers receive their tips in full.  
  9. Equality at work. Labour pledge that they are committed to tackling the gender pay gap and would make ethnicity and disability pay gap reporting compulsory for employers with more than 250 employees.  Labour will also require employers with more than 250 employees to produce Menopause Action Plans, setting out how they will support employees through the menopause. 
  10. Improving rights at work. Labour propose to strengthen redundancy rights and protections including the trigger for collective redundancy consultation being determined by the number of people impacted across the business (rather than in one establishment).  It also aims to enable employees to collectively raise grievances about conduct in their place of work to ACAS in line with the existing code for individual grievances. The party also intends to strengthen TUPE, whistleblowing and sexual harassment protections.
  11. Increasing employment tribunal claim limitation periods from 3 to 6 months.
  12. Improving employment tribunals and enforcement. Labour intend to establish a state Single Enforcement Body for workers’ rights, including powers to inspect workplaces and take action against exploitation.  In addition, the party propose to improve enforcement through the Employment Tribunal. 
  13. Improving employee representation and voice.  Labour plan to strengthen the rights of workers to organise collectively through trade unions, simplify trade union recognition and regulation, and improve access for trade unions in the workplace.  They also intend to repeal the Strikes (Minimum Service Levels) Act 2023, Trade Union Act 2016, and the introduction of electronic balloting. 
  14. Technology and AI. Labour would require employers to consult worker representatives before introducing surveillance technologies.

"Labour’s New Deal for Working People is our plan to make work pay. It’s how we’ll boost wages, make work more secure and support working people to thrive – delivering a genuine living wage, banning exploitative zero hour contracts, and ending fire and rehire."

https://labour.org.uk/wp-content/uploads/2024/05/LABOURS-PLAN-TO-MAKE-WORK-PAY.pdf
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Defra criticised over biodiversity net gain

At the request of the Environmental Audit Committee, the National Audit Office has published a Report on the progress Defra and Natural England have made in implementing statutory biodiversity net gain (“BNG”) introduced by the Environment Act 2021. 

Notably, the Report confirms that “Defra is relying on a market for biodiversity units emerging, but does not know how rapidly this market can scale up, or whether the market can satisfy demand.” Securing the requisite BNG via off-site units is fundamental in developers being able to meet the new statutory requirements. Where this is not possible, the fall-back is the purchase of statutory credits which have been presented as a last-resort option. The reliance on off-site units as part of the mitigation structure, without proper management or future planning from Defra, may result in delays for developers in satisfying their planning obligations. 

A topic which has been the subject of much discussion is local authority resourcing in order to effectively manage and monitor the new BNG requirements.  The Report notes that “for now, there is doubt about whether local authorities will be able to discharge these duties effectively.” The Report acknowledges that Defra has not allocated local authorities additional funding for monitoring or enforcing on-site gain, despite calculating that local authorities would need additional full-time employees for such purposes. 

It remains to be seen how the conclusions of the Report will be adopted going forward particularly in the context of the upcoming General Election. 

 

"Defra launched its policy before having all the elements in place that it needs to ensure statutory BNG is a success in the long term. Although it considered that the arrangements it had in place at launch were sufficient, it has a long way to go before it can be confident that damage to biodiversity through development will not be understated and that the benefits of biodiversity enhancements will actually be delivered."

https://www.nao.org.uk/wp-content/uploads/2024/05/implementing-statutory-biodiversity-net-gain.pdf
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The student race to Net Zero

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

For those in the student sector, colleague and sector expert, Nicola Copsey is well worth a follow. Check out her takeaways from the LD Events Student Housing Conference. Her latest takeaway note touches on ESG, and more particularly, repurposing existing stock. 

This coincides neatly with this research from JLL: “Is UK student housing ready for minimum EPC standards by 2030?” What is the threat of obsolescence in the sector? Where does the sector sit in the race to Net Zero? Interesting reading. 

In terms of energy efficiency and from a regulatory stand-point, the statistics indicate that the sector is fairly well placed, with a minority of assets at risk of regulatory obsolescence. That said, as Nicola identifies, there is one notable investment driver – all inclusive rents. There is no surprise that the pursuit of energy efficient stock is key. 

Do also check out the team’s #ForStudentAccommodation Mini-Series – crucial thinking on Building Safety Act, planning, rent control and reform, tax etc. 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Return of the MAC (report)

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

I was delighted to attend the LD Events Student Housing Conference last week, and my first takeaway has to be the effect of politics on the student sector. One of the most startling stats from the day was that 80% of the most populous nations will have a general election this year, which means 50 million students will be voting in 2024. Last Friday, the FT released their podcast “Election battle lines drawn up” and their public policy editor Peter Foster outlined the dangers facing the UK’s university sector if the government decides to axe the graduate visa route. 

The graduate visa route is designed to make the UK’s education offer to international students attractive and allows them to stay in the UK for 2 years after they graduate, essentially it is a “looking for work visa”. James Cleverly felt that this route was being misused so gave the Migration Advisory Committee (MAC) 14 weeks to investigate. The report came back on the same day as the conference and (much to Downing Street’s disappointment but the student sector’s delight) found 1) the route is not being misused and 2) these graduates are net contributors to the Exchequer. 

This is a relief to everyone involved in the higher education sector given that Knight Frank’s research revealed that 48% of prospective international students polled would likely change their study destination if the graduate visa duration was reduced. The sector is already seeing a reduction in international student numbers following a change to the visa which means that students can’t bring family members with them (despite there being no evidence that these family members are a burden on our welfare system). This is particularly vital because the fees paid by domestic students (£9,250 per year) are deeply subsided by international student fees and a report last week by the office for students warns that over the next 3 years, 90% of English universities could be in deficit. International students are not taking places away from domestic students, they are funding them. 

The MAC report specifically highlights that as the graduate route has increased the attractiveness of the student visa offer, this has implications for international student housing. But rather than dealing with this by reducing the number of students coming to study in the UK, I would hope that the solution is building more housing. Let’s hope that the positive findings by the MAC report encourage the government (whichever party that may be) to see international students as part of the solution to the funding crisis in our higher education sector, rather than a burden.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Smarter regulation: employment law reform

Yet another consultation for employment lawyers and HR professionals to grapple with.  This one seeks views on proposals including:

  • reaffirming that only employees are protected by The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE)
  • removing the complex obligation to split employees’ contracts between multiple employers where a business is transferred to more than one new business.

Those of us who handle or advise on TUPE transfers know just how complicated they can be.  This is especially so where an organisation has “workers” (and no one can decide whether or not they are really employees and should therefore transfer!) and/or where a business or service provision is transferred to multiple organisations.  Certainty in this area is always helpful and having some clear parameters on these points is arguably in all parties’ interests.  However, might it deter buyers or new service providers who are required to take on more employment liabilities?  It will be interesting to see how this plays out.  

Smarter regulation: employment law reform

https://www.gov.uk/government/consultations/smarter-regulation-employment-law-reform
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Boundary Disputes & Experts

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

The plague of many formerly happy neighbourly relationships is the boundary dispute.   Often costly and time consuming, they can be some of the most contested claims moving through the courts.

The High Court has recently decided the case of Charlton & Anor v Forrest & Ors [2024] EWHC 1014 (Ch) which provided a useful reminder of the role of expert evidence in such disputes.  The Claimants alleged that the Defendants had trespassed by cutting down trees that they claimed were in joint ownership, and the Court was asked to determine where the boundary between the parties’ properties lay. The conveyance severing the land (which would usually be the starting point when considering where a boundary lies) was long lost. As a result, it was necessary to look at the evidence of any topographical features marking the boundary between the properties which existed at the time of the conveyance when the land was divided into the two parcels. Both parties employed expert building surveyors to prepare reports covering those features, which also reached conclusions as to the location of the boundary.  

The Court ultimately found in favour of the Defendant and the claim in trespass fell away. In giving its decision, the Court made it very clear that, whilst the expert evidence was useful to the extent that it identified and collated potentially relevant evidence, the conclusions reached by the surveyors were not admissible expert opinion.  A cogent reminder that the question of where a boundary lies is a question of fact which is for the Court, and the Court alone, to determine.

 

I do not think, however, that their conclusion (essentially, that is, the conclusion of Mr Jones with whom Mr North now agrees) constitutes admissible expert opinion. The ultimate question in this case is where the boundary lies. That is a question of fact to be determined by the Court.

https://www.bailii.org/ew/cases/EWHC/Ch/2024/1014.html
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Sophistication in ESG drafting

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

BGO’s maxim of “E” is for easy, and the “G” is given, but “S” is sophisticated, set out in this Estates Gazette article, is a nice way of demonstrating the different aspects of incorporating ESG into leases. 

Recognition of the sophistication of social drafting in leases was demonstrated in the updated BBP Green Lease Toolkit (released in January 2024) and commented on by my colleague Ed Glass in this article. The Toolkit now incorporates the concept of “Social Impact” which includes initiatives relating to local employment opportunities to a real estate asset and local community engagement. Similar to the “Social Value Charter” that BGO has implemented at its 105 Victoria Street development as mentioned by Alexander Morris in his article. 

The Toolkit’s proposed drafting has also reflected the point made by Alexander Morris (see quote below) by weaving in the “Social Impact” references into their existing drafting for environmental factors. For example, the data sharing provision clause includes data about not just environmental performance, but also social impact data. 

A couple of areas where there is potentially scope for further innovation in the Toolkit are:

  1. Alexander Morris’s proposal of a service charge agreement where the landlord effectively devises a social or CSR policy linked to its asset’s local area which tenants (and landlord) contribute to through the service charge. This could provide an easy way for businesses to meet their own social or CSR targets through the landlord’s social initiative.
  2. The potential interplay between environmental initiatives in new developments such as meeting biodiversity net gain requirements and the benefit that such green spaces might have for a local communities accessing nature or being involved in nature (such as community garden, orchard or allotment). 

These innovative ideas would require more sophisticated drafting (and possibly bespoke drafting per development), which further emphasises BGO’s branding of “S” in ESG as “sophisticated”. 

 

"The fact that green leases have already brought occupiers on board with making absolute commitments means much of the heavy lifting has already been done. And social attitudes have also primed occupiers for these conversations...,the next generation of occupiers are already looking for ways to improve social impact."

https://www.egi.co.uk/news/rebels-without-a-clause-the-growth-of-responsible-leases/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

VAT School Fees Anti Forestalling

We all know that Labour, if elected, wants to abolish the exemption from VAT on private school fees. There will be some grey areas: when is a nursery a school, what to do about faith schools that accept large donations from parents/grandparents of pupils, what about special needs schools and so on and I’ve written about some of these issues before. 

Today’s FT article highlights the vexed issue of prepayment. HMRC are clear: “Under the normal time of supply rules the receipt of a payment in advance of the basic tax point will always create a tax point.” To subject a payment to VAT before legislation is put before Parliament seems a little premature, and not in keeping with general principles regarding fairness and certainty for taxpayers, i.e. they should know the tax treatment of their transaction when they enter into it. What is meant by the phrase “official announcement” in the quotation below? How far back would the forestalling go? If someone had made an advance payment in 2018 for the entirety of the child’s secondary school fees and has one academic year within a change of government is that one year VATable?

Undoubtedly, people will be rushing to make advance payments now but not all advance payments are VAT-motivated; some are due to legacies, grandparents may want to give away money whilst they are alive and the nervous may wish to ensure that they have secured their child’s education even if they lose their current well paid job, for example.

Before rushing to make a payment do take investment and tax advice; not only may you not be saving the VAT but there may also be an opportunity cost of using the money in this manner and, if you are a remittance based user, there may be significant tax issues to consider.  

Obviously, if the private school offers your child  a place in their offshore “sister” school you may not need to worry about VAT or remittance…

 

Labour is expected to introduce some form of “anti-forestalling” measures if it changes tax policy to cover the period between an official announcement of a tax change and its imposition.

https://www.ft.com/content/b61d4b9b-6584-495e-be4d-023aa36538ac?accessToken=zwAGGBe0eF9wkdO2HUubZYRJXtO-TQI6o2U4rA.MEUCIQCrG7KpOwjcGzgoqRbPZPeetP-NvpfFDbj-zO7JvX5ybAIgPK1WHoXWwoRkvG8RwZMMlFmnnlvXpG5Wr-iPzMmFMqs&sharetype=gift&token=0a6af07d-346e-413a-8c79-c03c96590ce4
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Are there glimmers of hope in the commercial real estate market?

Green and white line graphs and bar charts fluctuate against a background of blue financial data panels in a digital stock market display, showing numbers like 47.5, +4.78, and 780,516.

Although, as this article from the FT suggests, commercial real estate has been badly hit by sustained high rates of interest and declining values, perhaps in an election year and with the ever-promised reduction in interest rates looming, it’s not all bad news after all. The major focus through 2023 and beyond has been on refinancing loans which, although not leading to generation of new acquisitions, is at least indicative of relationship banking being key here. Borrowers who can maintain good communication and co-operation with their lenders throughout the term of their loan may find their lenders are more willing to help them through the tougher times.

After all, the last thing any lender wants is to be handed the keys.

If you require any assistance with your existing or new banking facilities, the Forsters banking team is ready and willing to assist with all your financing needs!

 

 

She said “there are some difficult conversations going on” but that as long as borrowers are co-operative, taking back control of a building is “the last thing any lender wants”.

https://www.ft.com/content/664e2c02-5a54-4e95-aebe-0e35e8edf411?accessToken=zwAGF41ZC6lgkc9mTiwCWlROldOuvg416O30EQ.MEQCIH-HMd6znN_GdGI_A-WF8YEKMdvg8Bc5eSIZIKBs3Z-_AiAxxzQBUbW7issbHss3AlfZtRR7sDbeVZET7k2MYsljqw&sharetype=gift&token=ed819f8a-f7b5-40fb-8ff2-4b277f812e0c
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Are changes afoot for the National Security and Investment Act 2021?

Back in November 2023, the government issued a call for evidence in respect of the National Security and Investment Act 2021 (the NSI Act), seeking views on how the regime could provide national security protection while being more “business friendly”. The government’s response has now been published, setting out that there will be five areas of focus between now and the autumn. 

  1. An updated Section 3 Statement will be published next month. This is the statement that explains how the government decides whether to exercise its call-in power under the NSI Act. The responses make clear that stakeholders would value more clarity around the areas that the government perceives to be sensitive and how it goes about assessing the nature of any risk. However, a fast-track procedure which was suggested by some respondents, is not on the cards; the government’s view is that each transaction needs to be considered on a case-by-case basis 
  2. Updated market guidance will also be published next month covering specific topics which were raised by respondents and in particular, dealing with the application of the NSI Act to academia and Outward Direct Investment. Despite being suggested by a number of stakeholders, there will be no exemption for transfers of control which arise as a result of automatic enforcement provisions in secured finance agreements, although more guidance in relation to these transactions may be provided
  3. A consultation about updating the 17 sensitive areas of the economy that fall within the NSI Act’s mandatory notification requirements will be published by the summer. This may result in amendments and additions to the current list
  4. Technical exemptions to the mandatory notification regime will be considered, although this will be subject to legislation being laid before Parliament in the autumn if time (and the General Election?) permit. Exemptions may include certain internal reorganisations; a sensible move in my opinion
  5. Improvements to the actual NSI Act notification and review process will be considered. Areas for improvement suggested by respondents included better communication between the Investment Security Unit (the ISU) and parties involved in the notification process

The government’s view has always been that although the regime would result in a significant number of notifications being made, only a few of those would result in a final order and the current statistics seem to bear this out. As at the date of the response, over 1700 notifications had been reviewed by the ISU, yet only 20 final orders had been made. While this is encouraging from a transactional point of view, it does suggest that, with a little thought, the system could be streamlined, so reducing the number of required notifications (especially those which are purely “technical”) which only serve to increase costs for the transactional parties and delay completions. Perhaps the call for evidence was just what was needed… 

It is vital, therefore, that businesses are able to start up, scale up, buy, sell, trade and invest in the UK with minimal impediment

https://www.gov.uk/government/calls-for-evidence/call-for-evidence-national-security-and-investment-act/outcome/national-security-and-investment-act-2021-call-for-evidence-response
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Will law firms have to embrace AI in the future?

The legal sector is evolving as firms try to incorporate AI into their daily tasks, and judges try to incorporate it into their work in the court room. Using AI is both exciting in helping the sector to evolve, but it can also be unnerving when the future of it is so unknown. In March 2024, the Master of the Rolls (Sir Geoffrey Vos) spoke in Manchester, giving a speech titled “AI- Transforming the work of lawyers and judges”. Some of the key takeaways are laid out below.

The speech started with a reassurance that AI itself is not a scary concept.  Sir Geoffrey Vos said that we use AI each and everyday as we pick up our smartphone, and it only becomes scary and ‘dangerous’ when misused. There was a suggestion that AI will actually become ‘necessary’ in the workplace, in order to protect against claims of negligence and assure clients that we, as solicitors, have used reasonable skill, care and diligence in our work. 

Sir Geoffrey summarised the judicial guidance for working with AI, which emphasises a need to use it with care. Sir Geoffrey said that generative AI like Chat GPT does not provide completely reliable information, should always be checked by the individual and warned that the platform may not be confidential.

Examples of when AI will be used in the legal sector included drafting contracts, predicting case outcomes, drafting advice and submissions and writing memos, briefs and opinions. 

So, why will it need to be adopted by solicitors? Firstly, if other law firms are using AI then they will be cheaper for clients. Secondly, it can speed up a solicitor’s job. Thirdly, AI can do some tasks more comprehensively than a human.  

Sir Geoffrey Vos also discussed why judges will need to start using AI. He said that it can enhance judges’ efficiency and research capabilities by analysing vast amounts of documents and law; it can help with subconscious bias awareness, and it can be useful for the new online systems of pre action online dispute resolution processes.

Sir Geoffrey Vos was optimistic about the prospect of incorporating AI into the legal sector, saying that it has “great potential” and that the process “cannot be started soon enough”. 

 

You can read the speech in full below: 

https://www.judiciary.uk/speech-by-the-master-of-the-rolls-ai-transforming-the-work-of-lawyers-and-judges/

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

“AI for a greener built world”

EGI reports this month that Blackstone (never one to miss a trick) is under contract to buy the ex-Britishvolt site in Northumberland  for a “major hyperscale cloud and/or AI data centre campus”. It is a reminder of the real estate implications of AI, as AI (and cloud based) applications drive demand for underlying infrastructure. 

Indeed, on this note, the 2024 ULI Emerging Trends in Real Estate Europe 2024 report name-checked Blackstone and identified data centres as second in the list of “sectors to watch”:  “If a Blackstone decides data centres is our new office sector, they will make the market like they did in logistics, but there will be developments needed,” says an interviewee. Data centres will be the “next oil rush” , predicts another. An industrial property company head likens the stage of development of the data centres market today to the logistics market of 10 years ago, implying enormous scope for growth.”

However, how does that sit in an increasingly ESG-conscious industry? As the ULI report notes, “Large data centres can be a problematic investment from an ESG standpoint, however, because of their hunger for power, unsightliness, and limited direct employment generation potential”. Potentially, arguably, difficult to tick off those “E” and “S” investment criteria, which are without doubt, increasingly in play.  

With all this in mind, the recent White Paper (Sustainability Intelligent; AI for a Greener Built World) is worth a read, acknowledging the energy intensive nature of generative AI. Yet, as a counterweight, the paper explores the potential of AI in accelerating the net zero transition in the built environment. What are the environmental AI use cases along the real estate value chain (check out the graphic in the paper)? And as the paper asks with the question in the quote below, where does the balance lie – net positive or negative effect on its environmental footprint?  Can AI really deliver a “greener built world”?   

 

So what if the productivity improvements and technological advancements created through the wider adoption of AI in the built environment create disproportionate counterweights to the sector’s total emissions and wider environmental footprint, accelerating its transition to a more sustainable state?

https://pilabs.vc/research/sustainably-ai-h3fhc
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

BBP Green Lease Toolkit: Better boilerplate provisions?

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

It is now almost three months since the launch of the BBP’s excellent Green Lease Toolkit.  Many have now had the chance to digest and benchmark their current green lease positioning – take for example, Daniel Mead, Head of Asset Management at Bywater Properties, in this excellent blog, identifying work in progress.  

As someone heavily involved in green leases here at Forsters, across a varied client and asset base, here are my quick fire, instinctive reflections on the state of play. 

  1. Mutuality: The toolkit, notably, looks to move the dial in terms of mutual green commitments e.g. carrying out works in a sustainable manner, procuring renewable energy etc. Surely fair enough? However, for landlords, often only committing to limited, institutionally standard quiet enjoyment, insurance and service charge obligations in an FRI/ IRI leases, this can feel like uncomfortable territory. I sense a significant mentality shift is still needed but it will come. 
  2. Costs: For now, the BBP acknowledge that if a tenant benefits from improvement works with costs savings (e.g. utility costs), it is reasonable for the tenant to contribute to the landlord’s cost. However it has not, as yet, drafted for this, rather offering some examples from across the globe. I am a firm believer that whilst the “split incentive” is a negotiating challenge, the next iteration of the toolkit should look to hit this head on. The challenge is not insurmountable, as we are seeing across landlord/ tenant conversations.   
  3. Practicalities: As Mead says in his blog: “Starting with a precedent Green Lease and agreeing one with your tenant is one thing, however its more important to deliver on the clauses set out in the documents!” I couldn’t agree more. The wording may say one thing, but what really matters is that which is happening on the ground, no doubt typically the result of far more nuanced conversations with occupiers. For much of the toolkit, enforcement options in a lease feel draconian (e.g. forfeiture). On this note a couple of observations from the toolkit: (1) exploring specific dispute resolution mechanisms; and (2) squirreled away in the rent review section of the toolkit, the reference to rewarding a tenant for hitting specific green KPIs (in the context of index linked rent review). As landlords increasingly commit to sustainability linked loans, with the potential to benefit financially from achieving sustainability targets, should/ can a similar scenario play out at the landlord/ tenant level? 

Will the latest iteration of the toolkit steadily become boilerplate? This is an excellent industry resource and definitely points the industry in the right direction. To accelerate progress, my sense is that the City of London Law Society – Certificate of Title needs to move more quickly with the times. At the moment, on a simple level, it only demands data sharing provision and restrictions on alterations that impact on EPC ratings. As soon as something becomes a “must” in here, toolkit clauses will inevitably becomes more commonplace. 

And then of course, there is the Landlord and Tenant Act 1954. Whilst the toolkit is driving much needed modernisation, there is an obstacle on the statute books…the regulatory approach needs to change too in order to realise demonstrable change. 

 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

A step forward for clarity on the second staircase requirement or a step backwards for ensuring safer buildings?

A wooden door with a brass knocker stands between two columns, flanked by windows and potted plants. Text: "PRINCES GATE 71-72" and a sign, "THE OCCUPIER OF GLASGOW HOUSE," below foliage.

The Department for Levelling Up, Housing and Communities published on 29 March 2024 a change to the building regulation guidance (known as Approved Document B) so that from 30 September 2026 residential buildings over 18m in height will require second staircases. The real estate press (such as the React News article in the link below) have highlighted some of the key discussion points from the decision for the real estate industry:  

  • The real estate industry’s reaction to inclusion of a requirement for a second staircase: There is concern that the inclusion of the second staircase requirement in the building regulations guidance distracts higher-risk building (HRB) owners/designers/constructors from ensuring each building (on its own design and construction) is safe. This could lead to other important elements of making buildings safe being ignored or deprioritised, such as compartmentalisation, insulation or detection systems. However, the Building Safety Act 2022 (BSA 2022) imposes ongoing duties on HRB owners to actively manage building safety risks in the building and maintain the golden thread of information on a building from day one of construction so building safety risks should always remain at the forefront. 
  • Two tier values for HRBs? There are concerns of a creation of a secondary market for ‘older’ HRB stock with single staircases. The legal requirements implemented by the BSA 2022 on all owners of HRBs will hopefully ensure that the risk of a two-tier market in HRBs will be limited. Single staircase HRBs are still required to have appropriate safety measures in place and the BSA 2022 requirements will further ensure that owners keep a record of their maintenance and any safety risks that arise. As such, this could help minimise the likely impact on values for single staircase HRBs in the short term at least. In fact, ‘older’ HRBs may be cheaper to purchase than redesigning a new building that will require a second staircase (and will therefore have a smaller internal area for occupation in the building). 
  • Lenders concern? High-street lenders on apartments in single staircase HRBs have confirmed there is currently no change to their approach on lending as a result of the second staircase requirement. Whereas, lenders of whole building HRB loans have been noted as being “anecdotally hesitant”. However, much like the challenge for purchasers of HRBs in the new regulatory landscape for HRBs, as lenders become more familiar with the information being provided in respect to building safety it is anticipated they will get more comfortable with lending on HRBs (either with a single staircase or twin staircases). 

 

 

 

 

 

"The constant update of Approved Document B does not solve the problem Hackitt (Dame Judith Hackitt in the 'Hackitt Review' published in 2018) was describing. It pushes us towards a prescribed code-based culture, whereas Hackitt wanted us to demonstrate and ensure buildings are fit for purpose."

https://reactnews.com/article/twin-staircase-rules-risk-creating-two-tier-btr-market/?utm_term=0_b0728480f9-dc9aae8e34-%5bLIST_EMAIL_ID%5d&mc_cid=dc9aae8e34
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Due Diligence: Risky Business, Safe Results

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

The problem of gambling within professional football is well publicised, with recent cases hitting the press regarding the troubles faced by Sandro Tonali of Newcastle FC and Ivan Toney of Brentford FC. Former player and current pundit Paul Merson’s addiction troubles are also well-documented, and he has called the bans inflicted on each player “a disgrace”, highlighting it is an illness that requires urgent help. It appears we are just at the tip of the iceberg; this silent plague is reportedly ‘ravaging’ our beautiful game. However, is there more responsibility on the clubs, and are they doing everything they can to unearth these issues at the outset?

It was recently reported by BBC Sport that Newcastle FC were “unsure if AC Milan knew about the betting charges facing their former player Sandro Tonali”[1] after they sold him for £55 million last summer.

Although precise facts have not been disclosed, Dan Ashworth’s (Newcastle’s sporting director) comments to Sky Sports point to a potential lack of appropriate due diligence being undertaken: “You look at yourself. Could we have known? Should we have known? You look at your processes.”[2]

These ‘processes’ that Ashworth is alluding to centre around the basis of “caveat emptor” (let the buyer beware). This principle is a fundamental concept in the field of contract law, particularly in the context of the sale of goods. It places the responsibility on the buyer to exercise due diligence and caution when purchasing a product or entering into a contract. i.e. if the appropriate questions are not asked of the seller, for example on our facts, “are you aware of any outstanding or pending disputes, claims or disciplinary investigations relating to Sandro Tonali”, AC Milan might not be under an obligation to divulge that information voluntarily. 

These same ‘caveat emptor’ principles apply in a typical commercial property transaction – the seller/ landlord will provide the buyer/ tenant with replies to CPSEs (commercial property standard enquiries), and, frequently, replies to additional enquiries. 

If a seller provides inaccurate information in their responses to enquiries (or elsewhere) that the buyer depends on when determining whether to proceed with the contract and the buyer incurs losses as a result of entering into the contract, the seller can be held accountable for misrepresentation. A misrepresentation is a false statement of fact made by one party to another which is not a term of the contract but which induces the other party to enter into the contract. For misrepresentation to apply, the false statement must be significant and relied upon by the buyer. It is not necessary to demonstrate that the misrepresented information was the sole factor in the buyer’s decision to enter the contract; liability can arise even if the misrepresented information is only part of what the buyer relied on. 

Fraudulent misrepresentation arises when the provider of information fails to make enquiries to check whether the information is false. There need be no dishonest motive but this type of misrepresentation cannot be proved if the seller honestly believes the statement is accurate.

The statement must be made:

1. knowingly or without belief in its truth; or

2. recklessly and carelessly as to whether it is true or false

In McMeekin v Long, the seller, in replies to enquiries, informed the buyers that no disputes had arisen in respect of the property or its use and stated that the neighbours were ‘good and friendly’. However, there had been a long-running dispute with a neighbour over the use of an access road.

Following completion, the buyers became embroiled in arguments with the same neighbour over the use of the access road. The trial judge considered that the existence of the long-standing dispute was exactly the sort of information that the buyers were entitled to receive. He held that the sellers were liable for fraudulent misrepresentation. The answer given in replies to enquiries was not given in error; it was a fraudulent answer to enable the sale of the property to complete unhindered. It is inconceivable to consider AC Milan would knowingly divert Newcastle’s attention away from the issue but worth considering they would be on the hook if they did.

As a general rule, (and established in Smith v Hughes), silence does not amount to misrepresentation and a party has no duty to correct another party if they have failed to understand the information correctly. Yet there is a duty on the seller to disclose the truth when a statement becomes false due to a change in circumstances. If a seller becomes aware before exchange of contracts that a statement given in replies to enquiries has become false, they should correct the position, as in Schyde Investments Ltd v Cleaver

Indeed, in Morrell v Stewart, the sellers were found liable for fraudulent misrepresentation as they had failed to disclose to the buyers problems with the foul drainage on the property. It did not matter that the buyers had failed to carry out a survey. If they had been aware of the issues, they would have carried out a survey, whereas they had decided that it was not worth the expense of having a survey on the basis of the information provided by the sellers. If they had been aware that any substantial remedial costs would be required in connection with the drains, they would not have proceeded to buy the property at all.

Perhaps AC Milan knew that Tonali was under initial police investigation as the transfer neared completion but did not disclose those facts. It can be assumed that if Newcastle FC had been informed of this, they would certainly have probed further and possibly pulled out of the deal.

If AC Milan are found to be absolved from any fault or wrongdoing, Newcastle FC may be able to pursue Tonali for breach of contract and pursue damages and Ashworth has admitted this is a possibility (although any potential legal action has since gone quiet). An example of this is the enigmatic Italian, Mario Balotteli, who had his contract terminated by Brescia FC for failing to attend training. The scenario that appears to have since developed is a wage reduction for Tonali; a harsh lesson learnt for Newcastle FC and striking the lawyer who dealt with the due diligence off the Christmas card list!

 

[1] https://www.bbc.co.uk/sport/football/67313204#:~:text=He%20joined%20Newcastle%20from%20Milan,charges%20when%20they%20sold%20him.

[2] https://www.skysports.com/football/news/11678/12999527/dan-ashworth-newcastle-internally-investigating-sandro-tonali-transfer-after-massive-shock-at-betting-breaches

“You look at yourself. Could we have known? Should we have known? You look at your processes.”

https://www.skysports.com/football/news/11678/12999527/dan-ashworth-newcastle-internally-investigating-sandro-tonali-transfer-after-massive-shock-at-betting-breaches
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Updated ATED Tax Rates

The 2024/25 annual tax on enveloped dwellings (ATED) filing window opens on 1st April 2024 and closes on 30th April 2024. Corporate owners of qualifying residential property will need to file an ATED return during this window, even if, due to a relief, they have no ATED to pay. 

If you own property worth over a certain amount through a corporate vehicle, you are likely to be liable for ATED. The amount you need to pay depends on the value of your property. On 14th March 2024, the Treasury announced the latest tax rates for properties owned by companies under the ATED rules. The rates of ATED from 1st April 2024 are set out below. 

Property owners or investors are responsible for staying up to date with their tax filings and meeting their compliance obligations. If you require any advice in relation to your ATED filing please contact one of the Forsters’ Corporate Tax team.  

Value of the asset Annual chargeable amount 
Over £500,000 up to £1 million £4,400
Over £1 million up to £2 million £9,000
Over £2 million up to £5 million £30,550
Over £5 million up to £10 million £71,500
Over £10 million up to £20 million £143,550
Over £20 million £287,500

 

 

 

 

 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

About change! Reversal to recent financial promotion exemption changes

A modern building with sleek black columns supports a white structure overlooking a vast, calm ocean under a clear, blue sky.

I recently wrote about various changes which had been made to the eligibility criteria for the financial promotion high net worth and self-certified sophisticated investor exemptions. These changes came into effect on 31 January 2024 but less than two months later, the Spring Budget has swept them away.

A financial promotion is a communication that contains an invitation or inducement to engage in a relevant financial product or service. To protect potential investors, the UK has a strict regime governing various types of financial promotions, when, how and to whom they can be made and requiring their prior approval in certain situations. Several exemptions apply which essentially allow financial promotions to be made to anyone who satisfies certain eligibility criteria. Two such exemptions are high net worth individuals and self-certified sophisticated investors. Such individuals must sign investor statements confirming that they satisfy the eligibility criteria. 

At the end of January 2024, various changes were made to the eligibility criteria for these two exemptions on the basis that the financial thresholds were out of date, having been put in place in the early 2000s. As a result of inflation over the last 15 to 20 years, the exemptions were capturing many ordinary retail investors rather than only those investors with the financial backing and expertise for which they were originally designed. 

The reasoning for the about turn, provided in the Government’s explanatory memorandum to SI 2024/301, is that significant concerns have been raised since the January changes came into effect about their potential unintended impacts. In particular, the angel investing and technology sectors have flagged that the changes could adversely affect start-up businesses which will find it harder to obtain investment from small-scale investors. With the reduction of the financial thresholds back to where they were before the January changes came into effect, more people will be able to rely on the exemptions and so small businesses will have a wider potential investor base. 

The January eligibility criteria will be reversed with effect from 27 March 2024, although investor statements which have already been made that comply with the January changes will remain valid until and including 30 January 2025. After that date, such investor statements will have no effect and new investor statements will need to be made.

So, from 27 March 2024:

  1. high net worth individuals who: (a) have at least £100,000 of income in the previous financial year (from the current  threshold of at least £170,000); or (b) held net assets (excluding a primary residence or pension) of at least £250,000 through the previous financial year (from the current threshold of at least £430,000); and
  2. self-certified sophisticated investors who have: (a) made two or more investments in an unlisted company in the previous two years; or (b) been a director of a company with an annual turnover of at least £1 million in the last two years,

will fall within the respective exemption.

The UK financial promotion regime and the exemptions available are a complex area. Please get in touch with your usual Forsters’ contact or speak to a member of our Corporate team if you have any queries or would like more detail. 

The government has reversed its decision to raise the income and asset thresholds for promotions of potentially risky investments to high-net worth individuals after a backlash from investors and technology companies

https://www.ft.com/content/072ae6eb-e3cd-4c5d-b906-7c05436fa647
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Spring Budget 2024: Minor IHT changes affecting deceased estates

A modern building with sleek black columns supports a white structure overlooking a vast, calm ocean under a clear, blue sky.

Looking beyond the headline cuts in National Insurance and residential property CGT and changes to the non-domiciled individual tax regime, a couple of inheritance tax (IHT) provisions sneaked into today’s Spring Budget which may help some PRs (personal representatives, i.e. executors of a will or administrators of estates where a person has either not appointed executors or left a will) when they are dealing with deceased estates.  

We regularly see estates where the deceased left an estate liable to pay IHT, but the estate is illiquid and does not have enough liquid assets (cash) to settle its tax liability.  This often happens where the estate consists almost entirely of property assets, and is not limited to low-value estates.  

Illiquid estates pose a major problem for PRs as they are generally liable to settle the IHT due (or the first instalment of IHT due on a property, if it is being paid in instalments, which is often the case until a property is sold) before HMRC will authorise the probate registry to issue a grant of probate.  The catch-22 situation is that the grant of probate (as the document which confirms the PRs’ authority to administer the estate and authorises institutions to release assets to the PRs)  is the document required by the Land Registry which allows the PRs to sell the deceased’s properties.  

In such situations, unless the PRs or family members are in a position to loan the estate funds to settle the tax, PRs would typically apply to obtain a ‘grant on credit’ (i.e. without paying the tax due before issue).  In order to do so, PRs would need to demonstrate that they had exhausted all attempts to fund the IHT including showing that they had attempted to raise a commercial loan to discharge the liability before a grant on credit would be permitted by HMRC.  In the past, commercial IHT loans were relatively commonplace, but are now seldom offered by financial institutions.  

Following the Spring Budget, from 1 April 2024, personal representatives will no longer need to supply evidence they have sought to obtain a commercial loan to settle IHT before they can apply to HMRC for a grant on credit (paragraph 5.46). 

While certainly not a huge concession, in the face of the high rate of interest levied on unpaid IHT (currently 7.75%), it does remove one logistical hurdle for executors facing an illiquid estate who need to obtain a grant on credit in order to realise assets as quickly as possible in order to settle the estate’s IHT bill.  However, HMRC will still require a significant amount of information in the application for a grant on credit and at best, this concession will simply remove one task from the PRs ‘to do’ list and may possibly enable slightly quicker property sales (saving a little interest), but will not reduce the tax burden on death for families, nor make the process significantly easier for PRs.   

From 6 April 2025, agricultural property relief (APR) against IHT, normally only available for farmland and farm properties, will be extended to cover land subject to certain environmental land management agreements (paragraph 5.72).  Although only a very narrow extension of the current APR regime, it will provide a welcome addition for estates which have adopted environmental schemes.  Perhaps significantly, in light of the looming general election, the cost to the government is expected to be negligible until 2028-29 (at which point it is budgeted to cost £5 million). 

In terms of the future for IHT, the Spring Budget confirms that the government intends to consult on a change to a residence-based IHT regime, rather than the current domicile-based system (paragraph 2.38) but has confirmed no changes to IHT will take effect before 6 April 2025 (paragraph 5.29).  Were this to come into effect post-election, it would represent a sweeping change for inheritance tax, and would align IHT with the wider non-dom regime changes set out in the Budget. 

Administrative change to ease the payment of inheritance tax before probate or confirmation

https://assets.publishing.service.gov.uk/media/65e8578eb559930011ade2cb/E03057752_HMT_Spring_Budget_Mar_24_Web_Accessible__2_.pdf
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

AI provides advice that is plane wrong; who is liable?

Air Canada has recently lost a small claims court case against a passenger who had relied on the airline’s AI chatbot’s advice in relation to retroactive claims under the airline’s bereavement policy. 

The chatbot had advised the grieving passenger that he could apply for bereavement fares retroactively.

“Air Canada offers reduced bereavement fares if you need to travel because of an imminent death or a death in your immediate family

If you need to travel immediately or have already travelled and would like to submit your ticket for a reduced bereavement rate, kindly do so within 90 days of the date your ticket was issued by completing our Ticket Refund Application form.”

The chatbot message also included a link to a webpage which said, in part, that the bereavement policy did not apply to requests for bereavement consideration after travel had been completed.

The Air Canada chatbot is an AI driven chatbot that uses a large language model (LLM), which means that it can answer questions independently, without any human input. LLMs are vulnerable to AI hallucination, in other words the LLM may perceive patterns or objects that are non-existent or imperceptible to human observers, creating outputs that are nonsensical or altogether inaccurate.

Perhaps the most remarkable thing about this debacle is that Air Canada sought to argue that it could not be held liable for information provided by one of its agents, servants, or representatives – including a chatbot.

In his decision, Civil Resolution Tribunal Member Christopher Rivers, noted that the airline failed to explain why the webpage titled ‘Bereavement travel’ was inherently more trustworthy than its chatbot. It also did not explain why customers should have to double-check information found in one part of its website on another part of its website. The Tribunal ultimately determined that the claim against Air Canada constituted “negligent misrepresentation” and that the applicant was entitled to damages.  

While the damages and court fees payable by Air Canada were relatively minor (CAN$812.02), this case should serve as a warning to companies, which are seeking to utilise AI chatbots, as to their vulnerability to hallucinate and the consequent potential for legal and financial liability. 

Air Canada argues it cannot be held liable for information provided by one of its agents, servants, or representatives – including a chatbot. It does not explain why it believes that is the case. In effect, Air Canada suggests the chatbot is a separate legal entity that is responsible for its own actions. This is a remarkable submission.

https://decisions.civilresolutionbc.ca/crt/crtd/en/item/525448/index.do
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Leasehold and Freehold Reform Bill – what’s it looking like now?

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

As a reminder, the Leasehold and Freehold Reform Bill started its journey through Parliament on 27 November 2023.

On 11 December 2023, the Bill received its Second Reading in the House of Commons and was generally welcomed by MPs.  The main criticism however was that the Bill didn’t go far enough and, most alarmingly, the Bill didn’t actually contain the promised ban on leasehold houses, nor any attempt to reinvigorate commonhold.

The Bill was then considered at Committee Stage, over 12 sittings between 16 January and 1 February 2024 – during which the Committee heard oral evidence, considered written evidence and examined the Bill line by line.

Now that the Bill has moved to the House of Lords for consideration (the First Reading took place last week, on 28 February), here is a quick summary of the key enfranchisement provisions that were ordered to stand and/or introduced during the Bill’s passage through the House of Commons:

  • Removal of qualifying period required for enfranchisement/extension claims
  • Removal of restrictions on repeated enfranchisement/extension claims
  • Increase of non-residential limit to 50% for enfranchisement and RTM claims
  • Right for leaseholders to require landlord to take lease backs on enfranchisement claims
  • Implementation of uniform 990 year term for all lease extension claims
  • Removal of marriage value from valuation formula
  • Introduction of a new costs regimes for enfranchisement/extension and RTM claims
  • Transfer of jurisdiction for disputes from County Court to First-tier Tribunal
  • Introduction of new right for very long leaseholders (150+ years) to buy out ground rent (subject to cap) without having to make an enfranchisement/extension claim
  • A new exception to enfranchisement (but not extension claims) for tenants of certified community housing providers
  • A new right for tenants of National Trust properties to have a right to a lease extension, subject to exceptions and the requirement to grant the National Trust the right to buy back
  • And FINALLY! A ban on the grant of long leases on houses

It is worth noting here that we are also still awaiting a formal response from the Government on their consultation regarding the capping of ground rents in existing long residential leases.  As such, the Bill does not yet contain any proposals on this but it seems likely that these will make an appearance at some point too.

During the Second Reading in the House of Lords, all aspects of the Bill will be debated, but the date for this is yet to be scheduled.

The original Bill was 140 pages – and in its current form, it now runs to 244!  

Although we were told that the Government would introduce additional measures/amendments as the Bill made its way through Parliament, the Shadow Housing Minister, Mathew Pennycook has expressed his “intense frustration” at the number of significant amendments that have been introduced to the Bill at the eleventh hour.  As he quite rightly says, this practice “impedes hon. Members in effectively scrutinising legislation and increases the likelihood that Acts of Parliament contain errors that subsequently need to be remedied…” – a sentiment shared by many!

It impedes hon. Members in effectively scrutinising legislation and increases the likelihood that Acts of Parliament contain errors that subsequently need to be remedied...

https://researchbriefings.files.parliament.uk/documents/CBP-9971/CBP-9971.pdf
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Party Wall Act Repairs: Questions to be Asked in Proceedings

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

The Court of Appeal (“CA”) unanimously allowed appeals relating to the Party Wall etc Act 1996 (“PWA 1996”) in their judgment of Taylor v Jones and another [2024] EWCA Civ 170 on 28 February 2024. The CA highlighted the appropriate questions to be asked by the Court where building owners comply with the PWA 1996 before carrying out any work, but substantial damage to adjoining properties still occurs. 

On the facts of Taylor, experts determined that the adjoining properties had significant pre-existing problems and any slight movement may have caused substantial damage. The building owner’s work triggered the damage. The dispute related to the extent to which the building owner should pay for the cost of remedial works. 

The five questions arising in such cases are as follows:

  1. What damage had been caused by the works?
  2. How should adjoining owners be compensated? 
  3. What work was necessary to repair the relevant damage?
  4. Should any deduction be made for betterment?
  5. What was the actual cost of carrying out the relevant repairs? 

Section 7(2) of the PWA 1996 requires building owners to compensate adjoining owners for “any loss or damage which may result to any of them by reason of any work executed” in pursuance of the Act (emphasis added). Common law principles for assessing damages remain applicable. Giving the leading judgment, Nugee LJ held that this case related to question three above. The relevant damage was the damage to internal walls and slabs caused by the building owner’s work. The building owner was not liable to compensate the adjoining owners for a longstanding defect to their external wall, because it had not been caused by the building owner’s work – the building owner’s work simply brought the defect to light and made it necessary for the adjoining owners to do something about it.  

"It no doubt seems very unreasonable to Mr Taylor that he should be required to pay for that when the reason the underpinning is required is because of the dpc crack and the fact that the wall is unsupported by its foundations, something which has probably been the case since the 1970s, and which his works certainly did not cause." - Nugee LJ, Taylor v Jones and another [2024] EWCA Civ 170 [43]

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Happy hour isn’t over yet: ‘Britain’s wonkiest inn’ owners ordered to rebuild after its demolition

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

The owners of the Crooked House Pub have been ordered to rebuild it after it was demolished following a suspected arson attack. Located in England’s Black Country, the pub, known fondly for its gravity-defying wonkiness, was originally an 18th-century farmhouse before it was converted into a pub in the 1830s. Visitors from as far as China, Japan, and the United States have been attracted by its precarious appearance, caused by mining-related subsidence. 

On 5 August 2023 the property was gutted by a fire in a suspected arson attack. The owners subsequently demolished the burnt-out shell, without permission form the local authority within 48 hours of the fire. 

South Staffordshire Council has served the owners of the property with an enforcement notice that requires the building to be built back to what it was prior to the fire, within three years. The notice alleges the unlawful demolition of the pub, in breach of the relevant permitted development right.  Such rights were amended relatively recently to carve out pubs from demolition in an attempt to afford them some protection from closure and redevelopment. 

In a statement issued on 27 February 2024, the Council pointed out that they had engaged with the owners since the demolition, but that it has reached a point where formal action is necessary. Leader of the Council, Councillor Roger Lees BEM said, “a huge amount of time and resources have been put into investigating the unauthorised demolition of the Crooked House” adding “we are committed to do what we can to get the Crooked House rebuilt.” 

The news has been met with widespread support from those invested in the pub’s plight, with local campaigners expressing their surprise at the speed of the Council’s action. The swift enforcement serves as a warning for ignoring planning rules, especially when a building of such unique character is involved; just how such character is to be rebuilt is yet to be seen. 

The owners of the pub have 30 days to appeal the notice. 

The campaign leader of the Save the Crooked House Facebook group, said its members were "very, very happy with the work that the council has done so quickly."

https://www.bbc.co.uk/news/uk-england-stoke-staffordshire-68414524
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Cleaning up with Hydrogen

Vertical garden flourishing on a building facade, with lush green plants covering multiple levels, set against a backdrop of tall glass skyscrapers.

The UK’s continued bid to hit its “Net Zero” carbon emissions target received a boost this week as it was announced that plans for H2H Saltenda hydrogen and carbon capture plant – had been approved for a site in East Yorkshire.

The Humber region is the largest CO2 emitting industrial cluster in the UK producing c12.4m tonnes of CO2 every year, so this H2H project by Equinor is fundamental in helping the region to decarbonise its industries and energy system.  It is believed that it could cut emissions at the Saltend Chemicals Park by up to a third – the equivalent to taking around 500,000 cars off the road!  Work could commence by 2026 and create about 2,200 jobs which would also be great for the region.

The development of the 600 megawatt H2H Saltend low carbon hydrogen production plant will be one of the world’s first at-scale facilities to produce hydrogen from natural gas in combination with carbon capture and storage.  This would be combined with the proposed delivery of a further 1,200 megawatt of low-carbon hydrogen production which would be principally used to fuel the Keadby Hydrogen Power Station making it the world’s first large scale facility to use 100% hydrogen to generate power.

Hydrogen is a significant fuel in our future – we must remember that it is a carrier rather than an energy source in that it needs a primary source of energy to be produced (be that solar, electricity, hydro, nuclear or gas for example).  How the hydrogen is produced and any by-products have been given various colour names.

  • Green hydrogen is hydrogen that is produced by splitting water by electrolysis using a range of renewable energy sources i.e. wind and solar – the only products of this being hydrogen and oxygen.  This is deemed the cleanest option.
     
  • Blue hydrogen is hydrogen that is produced when a natural gas is split into hydrogen and CO2 but the CO2 is then captured and stored (i.e. Carbon Capture Usage and Storage) – this is the plan for Saltend where the CO2 will be captured and transported offshore for sub-sea storage. 

You also have:

  • Grey hydrogen – a split of natural gas into hydrogen and CO2 but this time the CO2 is not captured and is released into the atmosphere
  • Pink hydrogen – made via electrolysis but using nuclear energy as its power source
  • Yellow hydrogen – made by electrolysis which is achieved solely through solar power (unlike green which can use a combination of wind/solar or other renewable energy sources)

In the future, hydrogen is expected to play a key role in decarbonising transport – it is expected to be used for HGVs, aircraft, ships, buses, trains and larger vans and cars that have high utilisation or require longer ranges.  I’ve even stepped aboard a hydrogen powered bus!

In December 2023, the Government released its “Hydrogen transport and storage networks pathway” setting out the next steps in its vision for the strategic development of hydrogen transport and storage in the UK, which is one of a number of other papers produced on the development and production of our Hydrogen industry. 

Watch this space!

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Companies House fee increase

Companies House announced earlier this week that their fees would be increasing from 1 May 2024. Making clear that their fees are set on a cost recovery basis and do not provide a profit, the increase is essentially to allow them to recover the costs of their new powers which have been, and are being, introduced by the Economic Crime and Corporate Transparency Act 2023 and to bring their fees “in line with the costs of providing [their] service”.

The announcement should not come as too much of a surprise as the potential fee increase was first mentioned last year. Although the change has been criticised by some as being too much of a hike in terms of percentage increase from current rates, Companies House has stated that even following “the increase, [their] fees will remain some of the lowest in the world”.

A list of the new fees is available here

We review our fees every year to make sure they’re set at the right level.

https://www.gov.uk/government/news/companies-house-fees-increasing-from-1-may-2024
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Tenant applications for alterations: two recent cases provide guidance for landlords

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Cases on landlords’ consent to alterations are relatively rare, certainly when compared to cases concerning consent to assignment.  But 2024 has already brought us two such cases, each of which gives some useful guidance on points for landlords to bear in mind when faced with applications for alterations, as well as a warning not to be complacent when refusing consent.

In Messenex Property Investments Ltd v Lanark Square Ltd, the tenant had applied for consent to build three additional storeys onto a four storey mixed-use building in the Isle of Dogs, as well as converting the ground floor commercial use into flats.  The parties had corresponded for some three years about the scope of the proposals, and the tenant’s plans had evolved during that time.  Draft licences were in circulation but eventually the tenant ran out of patience and issued proceedings for a declaration that consent had been unreasonably withheld.  The landlord’s defence was that it was reasonable to withhold consent, and it gave four reasons: 

  1. The tenant had failed to provide structural engineers’ drawings for the additional floors to be constructed;
  2. Carrying out the works would involve a trespass over the landlord’s retained land, so the landlord could refuse consent absolutely;
  3. The tenant failed to provide unconditional undertakings in respect of the landlord’s costs; and
  4. There was a lack of clarity in the tenant’s proposals.

Only reasons one and three were considered reasonable by the judge, and therefore the landlord was reasonable overall in refusing consent (following the West India Quay case).  He held: 

  1. On the structural drawings, the judge agreed that the works were significant and that the tenant’s own planning application contained a report which threw doubt on whether the building could support additional floors, so this was a reasonable reason;
  2. The trespass was not a reasonable reason because the parties had been negotiating draft scaffolding and other licences, which would have resolved the trespass issue;
  3. The refusal to provide a further unconditional costs undertaking when requested was a reasonable reason for refusing consent; and
  4. An application for consent to alterations can develop right up until the point the proceedings are issued.  The tenant’s proposals are not set in stone at the point the application was first made; what matters is what the landlord knows about the tenant’s plans at any point during the process.  The question is: does the landlord understand what it is being asked for?  Here, the landlord knew exactly what the tenant was proposing by the time the application was made and therefore lack of clarity was not a reasonable reason. 

The law governing applications for alterations is s.19(2) of the Landlord and Tenant Act 1927.  This can be contrasted against the law governing applications to assign in s.1 Landlord and Tenant Act 1988.  Although there are broad similarities, there are some important differences.  One is that the application under s.19(2) LTA 1927 does not have to be ‘written’. This led the judge to surmise that the application process can be a fluid one, and that the reasonableness of the landlord’s decision has to be judged against the facts and circumstances, which can be viewed as late as the point the proceedings are issued. 

The case is a reminder that landlords need to be careful:  it may be unclear that an application has indeed been made if writing is not a requirement.  If the tenant informs the managing agent, during a routine inspection, that it would like to do some works and it provides some basic drawings, that may suffice. In addition, every piece of information provided by the tenant throughout the consent process must be carefully considered and factored into the decision (bearing in mind that knowledge of agents is generally attributed to the landlord).  It would be risky, for example, to refuse consent on the basis of the facts as initially presented, and to fail to consider the cumulative impact of further information, perhaps provided in dribs and drabs.  One also wonders whether the fact that the landlord had been actively negotiating a draft licence for alterations and scaffolding licence for three years (to the point of engrossments), may have put it in a trickier position, even though the emails and drafts were doubtless all carefully labelled ‘subject to licence’.  

Jacobs v Chalcot Crescent (Management) Company Ltd was a residential consent case.  The tenant had applied for consent to alterations of a duplex flat in a converted terraced house. The landlord appointed a building surveyor to advise, but after nine months of correspondence, consent had not been granted and the tenant applied to court for a declaration that consent had been unreasonably withheld.   The landlord relied on its surveyor, who opined as to fire safety matters, but admitted under cross-examination that others, e.g. a fire engineer, would be more qualified to assess this.  On appeal (primarily on a separate procedural point), the judge held that it was unreasonable to rely on the surveyor’s general knowledge and experience when the surveyor had admitted that another specialist would have been better placed.  In any event, he found that there was an obvious suitable alternative to refusing consent, which was to require certain mitigation works to be carried out.

For landlords, then, there are two main takeaways from this case:  firstly, ensure that your surveyor has the right expertise to advise you when determining the application.  Relying on inaccurate or generalist advice could be costly. Secondly, a blanket refusal may be unreasonable if there is an obvious way to alleviate your (legitimate) concern, and this can be made a condition of consent.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Housing: A problem in search of a solution

Britain’s acute housing supply issues are not new.  They have been talked about for decades and whilst successive governments have generally recognised the problem, they have failed to enact the necessary measures to make a dent in it.

The recent announcements by the Housing Secretary, Michael Gove, are no different. They may however provide some help which, until we get a government that is willing to consider wholesale planning reform, is perhaps the best we can hope for.

Alongside the Government’s announcement regarding the prioritising of brownfield development (as if no-one has thought of developing brownfield land before!) new flexibility will be added to the permitted development regime to support the conversion of commercial buildings such as offices and shops into new homes.

These changes will come into effect on 5 March and will provide that there is now no limit to the floor space that can be converted under Class MA (previously capped at 1,500 sq m) and there is no requirement for a building to have been vacant for 3 months. 

In addition, blanket Article 4 directions which councils have previously used to block permitted development rights across entire boroughs will no longer be allowed, forcing those local authorities which were previously unwilling, to have to engage with the permitted development regime.

From the perspective of both developers and those hoping for an increase in the housing supply, this added flexibility is a welcome change, particularly bearing in mind that Class MA conversions benefit from not being subject to affordable housing obligations.  With the floorspace cap gone, many more commercial buildings will now be eligible for conversion to housing via this streamlined planning process.

Will this put an end to the nationwide housing deficit?  Of course not.  But it is better than nothing and could be particularly helpful in enabling the re-purposing of secondary office space – much of which currently sits below the minimum EPC threshold and will require significant capital expenditure in order to upgrade and future-proof it.  Knight Frank report that 140 million sq ft of office space in London alone falls into this category, and with growing vacancy rates amongst tired secondary office buildings, the UK’s city centres are not short of potential candidates for conversion.

Of course, not all offices will be suitable (or viable) for conversion.  Given the nature of offices there will generally be a need to adjust windows, improve sound proofing and insulation and modify floor heights, not to mention the importance of providing windows in residential accommodation which can sometimes prove a challenge when converting deep office floor plates.

These changes won’t solve the housing crisis but, until more substantial planning reforms are forthcoming, developers will have to work with what they have.

These changes provide a major opportunity for landowners to give commercial buildings a new lease of life, and even unlock wider redevelopment potential.

https://reactnews.com/article/the-permitted-development-window-has-been-flung-open-but-for-how-long/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Examination of the Upper Tribunal’s power to modify restrictive covenants

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

When faced with a restriction on freehold and sometimes leasehold land, there are certain circumstances in which the owner of the land may seek to have a restrictive covenant modified or removed. The process of modification or removal involves making an application to the The Upper Tribunal (Lands Chamber). The applicant must satisfy one of the statutory grounds on which a restrictive covenant may be discharged or modified. 

The statutory grounds for removal or modification are the following: 

  1. That the covenant is obsolete;
  2. That the covenant impedes the reasonable use of the land; 
  3. The modification or removal would not injure those who are entitled to benefit from the restriction; or
  4. Where all parties who benefit from the covenant give their consent to its modification or discharge. 

If the Upper Tribunal is satisfied that one of these grounds are met, the Tribunal must then decide whether they will exercise their discretion to make the change that has been requested. 

This process was examined in the recent case of Blackhorse Investments (Borough) Ltd v London Borough of Southwark [2024] UKUT 33 (LC). The applicant was the leaseholder of a pub which was to be closed down, demolished and re-constructed as a mixed-use building. The applicant applied to the Tribunal to vary the leasehold covenants that required the property to be kept open and to be used as a pub, and the restrictions against alienation and alterations. The applicant also wanted to be released from their obligation to use their best endeavours to renew licences. 

The Upper Tribunal initially ordered that the covenants be modified and the property was demolished on that basis. However, the respondent disputed the Upper Tribunal’s jurisdiction on the grounds that the covenant in relation to alienation, keeping the pub open and the covenant to renew the licences were positive in nature and the Tribunal accordingly did not have jurisdiction to modify them. 

The Upper Tribunal issued a new order that modified the covenants only to the extent permitted. 

This case serves as a useful reminder that it is not always easy to establish whether a covenant is truly restrictive in nature and that a landowner cannot simply rely on the Tribunal agreeing to modify the covenants that affect their land. 

 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Trust Employee Ownership…

A modern building with sleek black columns supports a white structure overlooking a vast, calm ocean under a clear, blue sky.

I am probably biased given that we, as a firm, regularly advise businesses on M&A in which we would also include the use of employee ownership trusts, but this call to arms for the Government in City AM last week (https://www.cityam.com/with-uk-dividends-disappearing-overseas-its-time-to-resurrect-employee-ownership/) had me both cheering and frothing at the same time! 

Calling for more employee ownership for the reasons cited in the example – benefits to employees, increased productivity, resilience in recession and superior innovation – is a great thing but, in our experience, it is here already, perhaps being the most openly available best kept secret in the corporate world at the moment! 

The Government created the environment for employee ownership trusts in the Finance Act in 2014 and there has been an increase in numbers since then, from 17 employee ownership trusts in the UK in 2014 to 1030 in December 2022 (based on the latest data estimates that I can find). (And they’ve also been used by large successful businesses, recently and famously by Richer Sounds as an example).

As I tell clients, an employee ownership trust can be a really elegant solution for some businesses when the owners want to exit but can’t find a buyer (or at least a buyer they like and trust to continue the legacy and look after loyal staff), can’t agree a price they like with a buyer or just want to hand on the business to the next generation of staff who have been key to the success of the business (admittedly, also with tax advantages for the sellers (if structured in line with Government requirements) and future benefits for the employees). 

So, I cheer the raising of employee ownership as something to encourage but also would shout from the rooftops that it is already here, so owners should consider it as an option when looking at their exit planning.

Whoever ends up in Number 10 at the end of this year must not let the employee ownership opportunity go amiss.

https://www.cityam.com/with-uk-dividends-disappearing-overseas-its-time-to-resurrect-employee-ownership/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The National Security and Investment Act – which side are you on?

A modern building with sleek black columns supports a white structure overlooking a vast, calm ocean under a clear, blue sky.

The House of Commons Business and Trade Sub-Committee on National Security and Investment is of the view that the National Security and Investment Act 2021 (NSI Act) does not go far enough in the screening of foreign investment in UK companies. Last week, the sub-committee announced that the NSI Act is “not keeping pace” with the threats to the UK’s economic security. It referred to the imposition of new, tougher investment rules in both the EU and US and suggested that we should follow in such jurisdictions’ footsteps, perhaps by implementing controls over threats to media freedom (currently in place in, for example, the EU and Australia). In addition, the sub-committee pointed out that there is no actual definition of “national security” in the NSI Act; an issue that has been widely commented upon since the draft legislation was first published, implying that this is the reason for (in the sub-committee’s view) the high number of notifications made to the government under the NSI Act in 2022/23. Such high number of notifications risk the government “losing sight of the wood for the trees and missing key transactions with security implications”.

The sub-committee’s comments formed its reply to the government’s recent call for evidence seeking views on the operation and scope of the NSI Act, with a particular focus on how the regime could be made “even more business friendly”. Based on the opinion pieces and articles about the call for evidence that I’ve read so far, the majority seem to approve this sentiment, suggesting that some restricting of the mandatory notification requirements (the regime under the NSI Act which makes notification of certain transactions in certain sectors compulsory) would be applauded; for many, the requirements as currently legislated result in too many, no- risk transactions having to undergo the notification and clearance process. Perhaps a definition of “national security” would help here after all?

The government is currently reviewing the various replies to the call for evidence and we await its response but I suspect that this is a subject where you just can’t please everybody. 

a subcommittee of MPs on the business committee said the UK should tighten its screening processes in response to a toughening of investment rules in the EU and the US

https://www.ft.com/content/ad955fc0-b8a3-461d-9df4-31f727edee41?segmentId=bf7fa2fd-67ee-cdfa-8261-b2a3edbdf916
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

It ends with .ai…

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

The inadvertent allocation of domain names has led to a windfall unexpectedly for one tiny island. Where .tv (and also .it to some extent) was the first example of a domain name being used for business context it seems that .ai is going to be the next big thing (if it isn’t already the current big thing!)

 

the nation has been able to pay some debts down and eliminate residential property taxes.

https://thehustle.co/one-big-benefactor-of-the-ai-boom-the-tiny-island-of-anguilla/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

What Makes a Good Annual Report and Accounts – The FRC Publishes Findings on the Quality of the UK’s Largest 20 Private Companies’ Corporate Reporting

Back in December 2022, the Financial Reporting Council (FRC) (that is, the independent regulator in the UK responsible for regulating auditors, accountants and actuaries, and which sets the UK’s Corporate Governance Code and the UK’s Stewardship Code) announced areas of supervisory focus for its 2023/24 corporate reviews and audit quality inspections to identify any areas of poor compliance with company corporate reporting requirements and to inform future monitoring. 

At this time, the FRC highlighted that, when selecting reports and audits for review, it would be prioritising sectors which were under particular economic pressure and considered higher risk for corporate reporting and audit. 

The FRC has since turned its regulatory attention to, and conducted a thematic review of, 20 of the UK’s largest private companies’ corporate reporting. On 31 January 2024, it released its findings in a report that examines the quality of those companies’ corporate reporting (the Report).

The FRC’s review looked at the annual report and accounts of 20 UK companies with revenues ranging from £1.5 billion up to a whopping £24 billion and that employ between 1,000 and 145,000 people (and covered year-ends falling between September 2022 and December 2022). There was a particular focus on areas of most importance to users (such as the strategic report, judgements and estimates, provisions of contingencies, presentation of primary statements including cash flow statement and supporting notes, revenue and financial instruments.

Companies were chosen from various industries, including retailers, construction, materials and engineering, technology, energy and chemicals, beverages and tobacco, and automobiles and parts. The companies could be split into three broad categories: (1) parent companies of privately owned groups (that prepared consolidated accounts); (2) subsidiary companies of overseas entities (that prepared individual accounts); and (3) subsidiaries of UK-listed companies (that also prepared individual accounts). 

As the FRC points out in the Report, transparent and relevant communication of key matters in the annual report and accounts of large private companies is needed to provide users with decision-useful information – these sorts of companies are economically significant entities, often providing jobs for large numbers of people, sustaining extensive supply chains and utilising substantial debt financing and are often important drivers for growth in the economy. 

During its review, the FRC found that the quality of reporting of the UK’s largest private companies was mixed, particularly in terms of how clearly companies explained material matters that were complex or judgemental and that many of the issues it had identified could have been avoided if a sufficiently critical review of the annual report and accounts had been conducted prior to their finalisation. 

The Report sets out the FRC’s main findings, which, among others, include: 

  • The best strategic report disclosures focused on the elements of development, performance and position that are key for an understanding of the company, explaining them in a clear, concise and understandable way that was consistent with the disclosures in the financial statements. Good quality reporting does not necessarily require greater volume
  • To enable users to fully understand a business, disclosures should explain the nature of the business’s operations and how it fits into a wider group structure
  • Better examples of judgement and estimates disclosures included detail of the specific judgement involved and clearly explained the rationale for the conclusion. The significance of estimation uncertainty was much more apparent when sensitivities were quantified
  • For some material provisions, the level of detail provided on the nature of the obligation and the associated uncertainty was below the level that the FRC expected. Users benefit from clear disclosure of this information to allow them to fully understand the risks affecting the company.

The FRC’s findings further identified the need for companies to conduct a sufficiently critical review of their annual report and accounts before finalising and submitting them. This would help them to ensure that they are complying with their corporate reporting obligations. Such a review will include taking a step back to consider whether the report as a whole is clear, concise, and understandable, whether it omits immaterial information and whether additional information was necessary to understand particular transactions, events or circumstances. 

The Report as a whole might serve as an additional tool for companies as they prepare their accounts and reports and assist them to ensure high-quality, compliant corporate reporting, particularly given the use of live examples and notes on whether certain reporting items were considered by the FRC to be good examples, or otherwise fell below the required disclosure standards.  

The full report can be found here.

In addition to the Report, companies can find further FRC guidance around what makes a good annual report and accounts at: 

  • What Makes a Good Annual Report and Accounts’. Section 4 of this publication identifies the characteristics that should be considered in determining whether information is material, including in the context of the strategic report
  • Materiality’, which looks at the application of materiality in practice by companies.

Better examples of judgement and estimates disclosures included detail of the specific judgement involved and clearly explained the rationale for the conclusion. The significance of estimation uncertainty was much more apparent when sensitivities were quantified.

https://media.frc.org.uk/documents/Reporting_by_the_UKs_largest_private_companies_ijQVWVu.pdf
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The dangers of loneliness

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

According to research carried out by the University of Glasgow, those who do not see loved ones at least once a month and live alone have a significantly increased risk of dying. The study analysed 458,146 people with a mean age of 56.6 over a median of 12.6 years.

It’s clear from the findings of the study that regular social connection is a crucial factor in living longer, and this is something that ‘housing with care’ options offered by integrated retirement communities can provide for older people. With facilities such as restaurants, bars and community halls and gardens, along with optional personal and domestic care where required, integrated retirement communities are primed to combat the risk of social isolation amongst the older population.

The findings of the study suggest that advice, interventions and policy may be needed to address different aspects of social interaction and target high-risk groups. The work of the Older People’s Housing Taskforce will be crucial in increasing awareness of integrated retirement communities as a housing option available to older people, which in the context of this study will have an important role to play in counteracting the dangerous effects of loneliness.

People who were never visited by friends or family were 53% more likely to die from cardiovascular disease and had a 39% increased risk of death compared with those who were visited daily.

https://www.theguardian.com/society/2023/nov/10/people-never-visited-by-loved-ones-more-likely-to-die-earlier-study-finds
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

APs and PAPs take note – more sections of the Building Safety Act 2022 now in force

Sections 79 – 88, 90 – 98, 101, 102 and 111 of the Building Safety Act 2022 (“the Act”) were brought into force on 16 January 2024 by the Building Safety Act 2022 (Commencement No.6) Regulations 2024.

These sections focus on the building management obligations imposed by Part 4 of the Act upon Accountable Persons (“APs”) and Principal Accountable Persons (“PAPs”) in occupied Higher-Risk Buildings, as well as residents’ duties in relation to building safety in these types of buildings.

Briefly, the main AP/PAP duties brought into force by these Regulations are:

  • Sections 79 – 81 – a duty on the PAP to apply for a Building Assessment Certificate (which must include the building’s Safety Case Report) within 28 days of being directed to do so by the Building Safety Regulator (“the BSR”);
  • Section 82 – a duty to display the Building Assessment Certificate, once received, in a ‘conspicuous position’ in the particular building;
  • Sections 83 – 84 – a duty of the APs to assess building safety risks and take reasonable steps to manage those risks (including taking steps to prevent a building safety risk from materialising);
  • Section 85 – 86 – the PAP must prepare and provide to the BSR a Safety Case Report as soon as reasonably practicable after the building becomes occupied or, if later, the time when the person becomes the PAP for the building.  The Safety Case Report must contain any assessment of the building safety risks made pursuant to Section 83 and a brief description of any steps taken under Section 84.  The Safety Case Report should be kept under review and updated whenever necessary;
  • Section 87 and 88 – this section places a duty on the APs to keep and provide to the BSR prescribed information about the building.  In addition the PAP must establish and operate an effective mandatory occurrence reporting system for the building;
  • Section 90 – a duty upon any outgoing AP to ensure that prescribed information is given to the incoming AP as well as the BSR;
  • Section 91 – a duty on the PAP to produce a residents’ engagement strategy for the building to promote participation in making building safety decisions.

Section 95 is also worth noting, as it imposes obligations on the occupants and owners of dwellings in HRBs not to act in a way that creates a significant risk of a building safety risk materialising and not to interfere (i.e. damage, remove or do anything that interferes with its intended function) with a relevant safety item.

By way of enforcement, and to give these newly in force duties some bite, sections 87 and 90 impose criminal sanctions on those APs who fail to comply with their duties in these areas and APs and the BSR can now, pursuant to Sections 96 and 99, give Contravention Notices and Compliance Notices where residents/owners and/or APs are found to have contravened or are contravening their duties.

Finally, the Higher-Risk Buildings (Keeping and Provision of Information etc.) (England) Regulations 2024 (SI 2024/41) also came into force on 16 January 2024.  These Regulations specify the “golden thread” of information and documentation that APs must keep and share with those who have an interest in relation to an HRB.

If you require any further information or assistance with the above, or anything else in relation building safety, then please contact Forsters’ Building Safety Team.

 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Social infrastructure – a fundamental shift for real estate?

Modern apartment buildings stand in a row, featuring large windows and balconies. The setting includes landscaped paths, benches, and greenery under a partly cloudy sky.

What is “social infrastructure”?

The term is being used as another description for “real estate” or “property” in the context of a growing demand for ESG focused real estate assets and changing perspectives on investment timelines for real estate assets.

Why is the term being used?

The ESG nexus: It is becoming apparent to the real estate industry that investors would like to have an impact with their investment. The PWC Emerging Trends in Europe 2024 report confirms that investors are looking at the added value to assets from having an ESG focus. Therefore, despite the additional costs that might arise from an ESG strategy, having such a strategy remains important for attracting investment to an asset. 

As part of demonstrating the ESG element of a real estate asset, using the phrase “social infrastructure” allows real estate asset managers to capture in their branding of an asset both the environmental credentials (which will usually benefit the occupiers of the real estate) as well as delivering in respect of social benefits to the locality of the relevant asset (for example a carefully designed estate landscaping scheme will provide a green space for the local community and possibly a play area for local children as well as enhancing biodiversity and clean air within an asset’s estate). 

Living sector opportunities: Additionally, PWC’s report noted real estate investors are considering new opportunities away from the traditional real estate sectors. The Living sector is a good example of an area that is grappling with issues such as an affordable housing crisis, an ageing population requiring appropriate later-living housing (in the 2021 Census 18.6% of the UK were over 65 years old) and a shortage of rental properties. Investment into the Living sector will be critical to alleviating these issues and is highlighted in the “Building more homes” pillar of the BPF’s 2024 election manifesto.  Furthermore, commentators, such as Simon Hodson at JLL (on Social’s Impact Chat on 31 January 2024) have highlighted that longer term investment is needed and referring to the real estate involved (such as affordable housing) as “infrastructure” could help encourage public-private partnerships which look beyond election cycles (from the public side) and fund life cycles (from the private side). Infrastructure projects are generally understood to require a longer timeline to be delivered and to provide returns and if a similar mindset/expectation can be adopted for parts of the Living Sector this could help drive investment and solutions to the challenges outlined above. 

What could this mean for real estate lawyers?

We have for some time seen an expansion in our repertoire of documents and provisions we are advising on. Now there are often operator or management agreement documents to negotiate with sophisticated operators who might provide a wider service than just a property management role or may be linked to a renewable/low carbon energy source for an estate. Additionally, there is greater diversity in lease provisions with “green lease” provisions for environmental initiatives and more recently “blue lease” provisions to address social initiatives at a building.  These changes reflect that there is already a shift occurring for the real estate industry in having greater complexity to real estate assets and this aligns with the narrative forming around “social infrastructure”.

 

 

 

 

...real estate is increasingly seen by investors, governments and citizens as “social infrastructure”. It is an industry that is not just “creating a lease so we can collect the rent”, as one investor says, but investing in the space required to meet the most fundamental needs of society, in many cases fulfilling needs traditionally met by government...

https://www.pwc.com/gx/en/asset-management/emerging-trends-real-estate/assets/emerging-trends-in-real-estate-europe-2024.pdf
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Changes to financial promotions exemptions come into effect

A modern building with sleek black columns supports a white structure overlooking a vast, calm ocean under a clear, blue sky.

Following a UK government consultation and the publication of its response to that consultation in November of last year, changes to certain of the financial promotions regime’s exemptions came into effect yesterday (31 January 2024). 

The exemptions in question allow businesses to raise funds from certain individuals without the need to comply with the regulatory burden of the financial promotions regime. 

Any new financial promotion which seeks to rely on the exemptions will now need to abide by these amendments, regardless of whether the investors in question have been previously promoted to by the business.

What are the changes?

  • The financial thresholds to qualify as a high net worth individual have been increased. Previously, an individual had to have an income of at least £100,000 in the last financial year or net assets of at least £250,000 throughout the last financial year. These thresholds are now £170,000 and £430,000 respectively
  • The eligibility criteria for self-certified sophisticated investors have been amended. On the basis that the requirement for a self-certified sophisticated investor to have made more more than one investment in an unlisted company in the last two years is no longer suitable, this condition has been deleted; the reasoning being that it is now much easier for ordinary retail investors to invest in unlisted companies than it was in the past. 
  • The financial thresholds for a company director to qualify as a self-certified sophisticated investor have been increased. Previously, this criteria was met if the company in question had an annual turnover of at least £1 million in the last two years; now, it is £1.6 million
  • The paperwork to be given by high net worth individuals and self-certified sophisticated investors has also been amended, with the intention of improving the format and investor engagement and simplifying the wording, for example, by reducing legislative references
  • The company seeking to issue a financial promotion is required to provide more detail about themselves in the communication than was previously the case, although given the information only comprises their address, registration details and contact information, this change shouldn’t prove too onerous. 

It is important that both companies and individuals seeking to rely on the exemptions comply with the conditions in order not to fall foul of the financial promotions regime. 

If you have any questions about the changes or are considering utilising one of the exemptions (either as an investor or company), please contact a member of the Forsters’ corporate team. 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Olympic Village decision makes stark reading for developers

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

A significant recent decision concerning the Olympic Village development in Stratford has demonstrated the reach of “remediation contribution orders” made under the Building Safety Act 2022.

The decision requires the original developer and its parent company to contribute circa £18 million towards the costs of major cladding remediation works and associated costs, even though the ultimate beneficial owners of the developer have changed since the buildings were constructed. The case is notable as the application was made by a leaseholder who was not liable to contribute to the cost of the major works via the service charge, where funding for those works had been secured from the taxpayer funded “Building Safety Fund”.  That funding will now, no doubt, need to be repaid.

What is a Remediation Contribution Order?

The Remediation Contribution Order, or “RCO” is a creation of the Building Safety Act 2022 (“the Act”). An RCO can require the current landlord, former landlord (as at 14 February 2022) or developer of a building, or someone associated with them, to meet costs incurred or to be incurred in remedying relevant defects. The Act allows the First-Tier Tribunal (“FTT”) to grant an RCO in relation to a relevant building (i.e. a self-contained building or part in England that contains at least 2 dwellings and is at least 11 metres high or has at least 5 storeys) if it considers it just and equitable to do so.

The Olympic Village Application

The Olympic Village case concerned five residential buildings that were originally developed by Stratford Villa Development Partnership (“SVDP”) to provide accommodation for athletes and officials taking part in the London 2012 Olympic Games. The freehold is still owned on trust for SVDP, although the beneficial owners have changed since the buildings were first developed. Notably Get Living Plc (“Get Living”), which is known to be well financed, is now SVDP’s parent company but was not involved with the original development.

Beneath the freehold, a headlease of the buildings is in place to a management company (“EVML”), which has the responsibility to repair and maintain the structure and common parts. In this case, EVML is jointly owned by subsidiaries of Get Living as well as an affordable housing provider, Triathlon Homes LLP (“Triathlon”), who both, in turn, have underleases of various parts of the buildings. Those underleases provide for the underlessees to pay a service charge to EVML.

Following the Grenfell Tower fire, work was undertaken by EVML to identify the materials used in the construction of the building. Serious fire safety defects were discovered, relating to both the design and construction of the cladding systems used for the external facades. In response to the discoveries, a waking watch and other temporary measures were implemented.  A programme of works to remedy the defects is now ongoing. 

Although some of the costs associated with the waking watch and investigatory work were demanded via the service charge, the costs of the major works were not.  Instead, EVML secured circa £24.5 million of funding for those works from the Building Safety Fund. 

Triathlon made an application for SVDP (the original developer) and Get Living (in its capacity as SVDP’s parent company):

  • to reimburse the costs which Triathlon had already paid via the service charge as undertenant (and to pay service charges demanded from, but not yet paid by, Triathlon to EVML); and
  • to pay what would otherwise have been Triathlon’s share of the cost of the major works and professional fees to EVML.

It was acknowledged that the cost of the major works could not be recovered from Triathlon as an underlessee via the service charge (presumably due to the leaseholder protections in the Act). In view of this, one of the more interesting aspects of the case was that the application was still brought by Triathlon, in a context where public funding for the work had been secured. Triathlon explained its position by saying that it was concerned that funding for the works via the Building Safety Fund was not necessarily guaranteed, and that there may be a shortfall between the cost of the works and the funding secured.

The decision

The FTT granted the RCO, compelling SVDP and Get Living to pay EVML the total sum of around £18 million in respect of the cost of remediation works, professional fees, other remedial measures and additional costs. 

The FTT found Triathlon’s concerns regarding the availability of funding via the Building Safety Fund to be fanciful (saying that there was no good reason to believe that the remedial works would founder for lack of money), but the certainty of funding was not a reason to refuse the RCO. The Act provides a set hierarchy of liability for relevant defects, and it is not necessary for someone to be at fault in order to be liable. The FTT said that, in view of this, it would be difficult to see how it could ever be just and equitable for a party falling within that hierarchy, who is able to fund the relevant remediation works, to be able to claim those works should instead be funded by the public purse.

Much of the argument in the case concerned the question of whether it was “just and equitable” for the RCO to be made. Ultimately, it was relevant (and supported the making of the RCO) that SVDP was the original developer, and that Get Living is the entity on which it relies on for financial support. The FTT held that it was not relevant that the ownership of the developer had changed hands since the buildings were constructed.

The FTT also commented that it is possible for it to be just and equitable for an RCO to be made even where costs were incurred before the relevant parts of the Act came into force (28 June 2022). There might be a case where a person against whom an RCO is sought, in respect of costs incurred prior to 28 June 2022, could say that they had acted to their irretrievable prejudice, in the belief that they could safely expend the relevant funds as service charges validly demanded and received. In such a case there might be traction for an argument that it was not just and equitable to require that person to fund the relevant costs itself. That was not the case here. 

Implications for developers and building owners.

EVML will now recover circa £18 million from SVDP and Get Living. EVML will, no doubt, be liable to reimburse the Building Safety Fund and may look to pursue a claim against the original contractor.

Each RCO decision will turn on its own facts, as what is “just and equitable” will differ from case to case. That said, this decision was given by the President of the Lands Chamber and his Deputy, following argument by expert Counsel on both sides. As such, it provides significant insight into how the FTT will approach these applications, and the factors that are likely to be relevant. 

The decision itself will make worrying reading for some, however. That the FTT made this order even though the beneficial owners of the original developer had changed since the building was constructed will be unwelcome news to many who have purchased buildings containing defects. The decision clearly demonstrates that entities may still be liable for remediation costs, even where they did not have any involvement with the building at the time it was redeveloped or where they have secured funding from the Building Safety Fund. Anyone contemplating the share purchase of a real estate company will now be well advised to carry out due diligence on all properties previously developed or owned by that entity, as well as existing ones.  

The decision also makes clear that funding from the Building Safety Fund can not be relied upon as a permanent solution. The grant funding agreements entered into when Building Safety Fund monies are allocated require monies to be repaid where they can be recovered from a third party. This decision demonstrates that the RCO route has significant teeth and makes it more likely that the Building Safety Fund will expect these applications to be made. 

It also remains to be seen whether the Building Safety Fund will now ask for RCO applications to be pursued before monies are granted. It is possible that they may now view an RCO as a viable alternative method of securing short term funding for necessary works, given the relative speed with which these applications can be brought compared with High Court litigation.

Key Takeaways

  • The taxpayer should be the last resort for funding to remediate defective buildings. 
  • An RCO can be made against the current landlord, former landlord (as at 28 June 2022) or developer of a relevant building, even if the shareholders have changed since the building was developed.
  • An RCO can still be made in respect of works carried out prior to 28 June 2022, which were funded via the BSF. If an RCO is made in such circumstances, the BSF will need to be repaid.
  • It remains to be seen if the Building Safety Fund’s approach to granting funding will now change.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Are you ready for the new QCA Code?

On 13 November 2023, the Quoted Companies Alliance (QCA) published the third and latest version of its corporate governance code (2023 Code) aimed at ‘UK Growth companies’. The 2023 Code, published after wide consultation with stakeholders, replaces the previous 2018 corporate governance code (2018 Code). 

The QCA recommends that companies claiming to apply the QCA code in respect of accounting periods commencing on or after 1 April 2024 apply the 2023 Code, with the first disclosures expected in 2025. There will be a 12 month transition period from 1 April 2024, intended to allow companies the flexibility to adjust to the 2023 Code and build the necessary capability to apply its Principles.

The 2018 Code applies to almost 900 companies, whose shares are largely traded on AIM and the Acquis Stock Exchange (AQSE). 

Companies listed on AIM are required to include on their website ‘details of a recognised corporate governance code’ that its board of directors has decided to apply, how it complies and, where it departs from its chosen code, the reasons for doing so.

Companies listed on the Access segment of the AQSE Growth Market are required to have due regard for the principles laid down by a recognised corporate governance code in so far as appropriate to that company, and where the company departs from the recognised corporate governance code in respect to the composition of its board, the company must publish on its website an explanation as to why it believes the composition of the board is appropriate and suitable.   

Therefore, companies that currently apply the 2018 Code, and particularly those listed on stock exchanges that require adherence to a recognised corporate governance code, should begin to consider the new 2023 Code, and any potential changes required to ensure compliance with the 2023 Code (to the extent required) when it comes into effect. While many of the Principles set out in the 2018 Code remain substantively the same, they have become more prescriptive. For example, Principle 6 now provides that shareholders should be given the opportunity to vote annually on the (re-) election of all individual directors to the board.

However, the most significant change to the 2018 Code is a new Principle 9, which requires companies to “Establish a remuneration policy which is supportive of long-term value creation and the company’s purpose, strategy and culture”. 

The 2023 Code is free for QCA members and available to purchase otherwise. Further information may be found here

It is used by almost 900 companies, whose shares are traded on AIM, the Main Market, the Aquis Stock Exchange and by private companies which may opt to float in the future.

https://www.theqca.com/qca-corporate-governance-code-public/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The “Green” lease evolution continues

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

As this ULI’s Climate Change report quite rightly explains,  successful decarbonisation in the built environment requires owner-occupier alignment. The report doesn’t hold back: “Progress on the decarbonisation of real estate portfolios is being held back by a lack of understanding and collaboration between property owners and occupiers”. Unquestionably, collaboration is key to any decarbonisation pathway on a tenanted real estate asset. 

As all those familiar with green leasing will testify, the concept of collaboration is often tested in negotiation. Owners and occupiers, quite naturally, have their own aspirations but also sensitivities, usually relating to cost and operational “risk”. The nature of the “green lease” is evolving all the time. 

Today marks a significant milestone. In 2008, the BBP first launched its Green Lease Toolkit. We have come a long way since then and now have the much anticipated update – inevitably, it will form a helpful reference point – an industry benchmark on green leasing (particularly the “Green Lease Essentials”). Perhaps even going some way to address the observations in the ULI report. Time will tell but undoubtedly a really positive step on the net zero pathway!
 

A lack of cooperation between the occupiers and owners of the continent’s buildings is significantly slowing down their decarbonisation

https://reactnews.com/article/lack-of-owner-occupier-cooperation-hinders-decarbonisation-in-europe/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Building Safety Act: the regulator is late… what then?

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

Developers will by now be familiar with the implications of the “Gateways” procedure introduced by the BSA.  If nothing else, it’s now clear that construction programmes will need to account for the 12-week and 8-week review periods which the Building Safety Regulator (BSR) will have to determine a building control approval application (Gateway 2) and issue its completion certificate (Gateway 3).

An obvious question is what then happens if the BSR fails to respond within these statutory time periods?  The latest government guidance confirms that applicants can contact the Secretary of State for a non-determination application by emailing [email protected] for full instructions on how to submit their application.   The non-determination application is made under Section 30A of the Building Act 1984.  Should this application be successful, the Secretary of State must then determine (or appoint someone to determine) the developer’s original application.

Bearing in mind that some project delays arising out of the implementation of the BSA might, depending on the negotiated position, end up being “developer’s risk” under the building contract, developers should make sure that they and their advisors understand the process for having applications decided as soon as possible, in the event of a BSR-induced delay.  

 

 

The applicant must inform the Regulator of their intention to make a non-determination application to the Secretary of State. This notification must be given to the Regulator at least 2 working days before submitting the application.

https://www.gov.uk/guidance/non-determination-applications-for-higher-risk-buildings-procedures-applying-to-the-secretary-of-state?utm_content=immediately
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Biodiversity Net Gain – Launch Date Confirmed

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

The Government has now confirmed that the biodiversity net gain (“BNG”) obligations secured by the Environment Act 2021 will take effect on 12 February 2024, with the obligations following for smaller sites taking effect on 2 April 2024. 

The transitional arrangements for planning applications submitted prior to this date have also been confirmed as follows:

  • For planning permissions granted before 12 February 2024, an application pursuant to section 73 to vary that permission will be exempt from BNG.
  • The BNG obligations will not apply where the application for planning permission was made before 12 February 2024. 
  • If a planning application for a small site development is made between 12 February 2024 and 2 April 2024, with a subsequent section 73 variation granted after 2 April 2024, BNG will not be required on any subsequent section 73 variations.

Whilst finalised regulations are awaited on the de-minimis exemption (for which the BNG obligations will not apply) and the different options for delivering mitigation, this update is a definitive move towards BNG taking effect. 

We have prioritised the introduction of BNG for planning applications – which is the predominant route to securing planning permission. From 12 February, BNG will apply to new applications for planning permission, except for applications for retrospective permission, the exemptions and transitional arrangements set out below.

https://defralanduse.blog.gov.uk/2024/01/18/bng-launch-date-confirmed/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The Judgment of National Importance

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

In the Supreme Court case of Wolverhampton City Council and others (Respondents) v London Gypsies and Travellers and others [2023] the court was asked whether they have the power to grant injunctions against persons who are unknown and unidentified at the date of the grant of the injunction, and who have not yet performed, or even threatened to perform, acts the injunction prohibits. These persons are known as “newcomers” and the injunctions made against them are called “newcomer injunctions”. When the Supreme Court handed down the judgment on 29 November 2023, it was described by Wolverhampton City Council as a “judgment of national importance”. 

Background 

Between 2015 and 2020, 38 different local authorities obtained injunctions designed to prevent Gypsies and Travellers from camping on local authority land without permission.

 The injunctions were addressed to “persons unknown” because the Gypsies and Travellers could not generally be identified in advance. When the injunctions were granted, these “persons unknown” or “newcomers” had not yet committed, or threatened to commit, any breach of planning control, trespass, or other relevant unlawful activity. The power of the courts to grant these injunctions was appealed to the highest court in England and Wales. 

  Supreme Court Judgment 

The Supreme Court held that the court has power to grant newcomer injunctions because its powers to grant injunctions is unlimited (subject to statutory restrictions). These are a wholly new form of injunction, which are granted without prior notice against persons who cannot be known at the time the order is made. Therefore, they can potentially apply to anyone in the world. 

 This means that injunctions may be granted in new circumstances as and when required by the principles of justice and equity which underpin them. That said, the Supreme Court clarified that these injunctions should only be granted in certain circumstances and subject to certain safeguards.  

  1. First, there is a compelling need to protect civil rights or enforce public law that is not adequately met by any other remedies. 
  2. Second, newcomer applications are made without notice. The applications need to be advertised widely so affected persons are given a fair opportunity to make representations. The injunction needs to be displayed in a prominent location at the affected site. 
  3. Third, the applicant must comply with a strict duty which requires them to disclose to the court any matter which a newcomer might raise to oppose the making of the order. 
  4. Fourth, newcomer injunctions should be limited so they do not apply for a disproportionately long time period or to a disproportionately wide geographical area. 
  5. Finally, the court must be satisfied that it is just and convenient that a newcomer injunction is granted. 

Concluding thoughts 

This is a welcomed decision as it helps to provide clarity on injunctions in the context of Gypsies and Travellers but also confirms that a newcomer injunction can be granted in other circumstances provided the conditions and safeguards have been satisfied. It also avoids, as the Supreme Court stated, the prospect of “litigation without end”.

Therefore, it will be interesting to watch this space for further developments, see how this decision will impact protestor injunctions, and if private landowners will utilise newcomer injunctions on their private property. 

 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Artificial Intelligence & Court Judgments?

On 12 December 2023, judicial guidance was published in relation to Artificial Intelligence (AI).  The guidance may be accessed here: https://www.judiciary.uk/guidance-and-resources/artificial-intelligence-ai-judicial-guidance/.  

As well as setting out the usual health warnings relating to privacy and security, the guidance interestingly sets out where it can be a helpful tool.   That included reference to the use of generative AI as a potentially useful secondary tool in relation to research or preparatory works undertaken in order to produce judgments.  In context, the reference reads as follows: Judges are not generally obliged to describe the research or preparatory work which may have been done in order to produce a judgment. Provided these guidelines are appropriately followed, there is no reason why generative AI could not be a potentially useful secondary tool.

Whilst the guidance goes on to confirm that AI is not recommended for tasks such as legal research or analysis, it is very clear that the judicial guidance recognises there can be valuable uses of AI as above and for more administrative tasks.  

As AI develops, and the offering of specific programmes designed for use in the legal industry widens, it will be fascinating to see how the judiciary incorporate AI as a daily tool.  What is clear is that this is only the start of governing that relationship, which is likely to expand and become more regulated over the coming years as AI becomes more sophisticated.  

Whether it can ever assist as a primary tool for preparation of judgments is a difficult question, bringing into play ethical concerns as to the importance of human judgment in life and whether that deep understanding of nuanced circumstances could truly ever be replicated by machines. 

The guidance is the first step in a proposed suite of future work to support the judiciary in their interactions with AI. All work will be reviewed as technology continues to develop.

https://www.judiciary.uk/guidance-and-resources/artificial-intelligence-ai-judicial-guidance/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

A change Brewing for wages

Before considering BrewDog HQ’s recent announcement about the change to their wages strategy, there are two key terms to understand and distinguish:

National Living Wage

This is an hourly wage level set by the government each year, which applies equally across the UK. Currently set at £10.42, it is due to increase to £11.44 in April 2024. The National Living Wage is generally equal to the National Minimum Wage for people aged 23+ years in the UK (with those aged below 23 years having variable lower rates of National Minimum Wage as determined by their age). There is no obligation on employers to pay the National Living Wage to all employees; instead, the legal obligation is for employers to pay at least the applicable National Minimum Wage to all employees.

“Real” Living Wage

This is a rate determined by the Living Wage Foundation. It has regional variation, with the current hourly rates being £13.15 in London and £12 for the rest of the UK. The Living Wage Foundation describes its chosen rate as “The only UK wage rate based on living costs and arrives at the figure by analysing a “basket” of goods (which this year saw, amongst other changes, alco-pops and digital cameras thrown out and frozen berries and e-bikes put in) and other cost of living factors, such as rent prices. There is no obligation on employers to pay their employees the real living wage, but those that do so can publicise their accreditation.

What have BrewDog done?

Until 3rd January 2024, BrewDog paid their staff the Real Living Wage, but they have now taken the decision to pay their new recruits the National Living Wage instead (although there will be no reduction in wages for existing staff). Such change was made known to staff by letter, the contents of which have been made public.

The ramifications for new employees include an absence of regional variation in wage levels and an overall reduction in the rate of pay on offer. 

BrewDog close their letter to staff announcing the change by pointing to the overall benefits package that they offer. This is reflective of the general mood in the employment and HR world, with those who are newer to the workforce (looking at you, Gen-Z) placing greater value on the overall benefits package on offer and how a chosen employer can complement employees’ existing lifestyles, rather than having a job to simply pay the bills. This marks a shift of focus to the overall employment package (which, historically, has been a far more prominent concern for senior level employees) and is an important change of which employers should be aware.

BrewDog’s move might also help us to re-asses our economic barometers. Might the lower wage offering signal more business hardship (certainly that is what BrewDog point to in their letter)? Or, could it actually show a strengthening job market, with employers no longer grappling to attract the top talent? 

 

BrewDog’s example suggests that at least some companies are finding it both harder, and less necessary, to boost wages — with redundancies on the rise and labour shortages easing.

https://www.ft.com/content/cebae1d5-e54e-43d1-b77b-9f8ac998c0c1?accessToken=zwAGDqlRO8tYkdPOuuHV5U5D0dO3e5-KyZjAwQ.MEYCIQDzWdJUELQZGUf2bF8SOvjpFfBFxU_yZPzptcesGq9haQIhANnGxeBAZ3JjXLrzHfhFQB5HPV_NaTPuhXFEO2iYxJGe&sharetype=gift&token=14d86338-3e4a-427e-a1db-431bbcdeeeb5
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Developers Beware – Put the Horse before the Cart when dealing with Restrictive Covenants

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

At the end of last year the judgment in Fosse Urban Projects Ltd v Whyte & Ors [2023] UKUT 286 (LC)  served as a renewed warning to developers that you develop land at your peril if you fail to deal with any restrictive covenants first. 

The case underlines the fundamental point that whilst the Tribunal may have jurisdiction to modify or discharge a covenant, it always maintains a discretion and conduct will be a very relevant consideration in the exercise (or not) of that discretion. Making an application retrospectively puts a developer at serious risk of falling foul of the discretion and potentially facing, at worst, a demolition order.

Background

The developer, Fosse Urban Projects Limited, had obtained a planning permission to build a house on land subject to a covenant which restricted its use to “garden land” only.

The developer made an application to the Upper Tribunal to discharge the covenant on grounds (a) obsolescence, (aa) reasonable user, and (c) no harm. The application in October 2022 was fairly typical save that by the time of the hearing in September 2023 it had become entirely retrospective. This being because the developer had proceeded to build out before the application had been determined. 

The adjacent landowners (and objectors) contested the application on the basis of (variously) loss of an uninterrupted view and loss of privacy. 

The Warning

Whilst the developer succeeded in establishing that the Upper Tribunal had jurisdiction to discharge the covenant on grounds (a) and (aa), the Upper Tribunal then proceeded to consider whether or not it should exercise its discretion to do so. 

The Tribunal decided not to due (in the main) to the developer’s conduct as:

  1. The developer had (the Tribunal inferred) known of the covenant and its enforceability but had taken a cynical gamble that the neighbours would not seek to resist the application after building work began; and
  2. Whilst represented by counsel at the hearing, the developer had failed to attend to provide evidence explaining its actions, from which only adverse inferences could be drawn.

The ‘build first and apply later’ approach clearly weighed heavily in the decision. 

This leaves the developer in breach of the covenant. Whilst the Tribunal’s jurisdiction does not extend to making orders for demolition, that being a power that remains with the Court, it leaves this remedy potentially open for the objectors should they choose to pursue it. 

For practitioners this case echoes in many regards the recent Alexander Devine Children’s Trust v Housing Solutions Ltd [2020] UKSC 45 case in which the Supreme Court took a firm line on cynical breaches of restrictive covenants. 

Ultimately, the lesson remains to always put your horse before your cart. This application would have likely succeeded but for the conduct of the developer- a clear warning to all developers thinking of short cutting this process…

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

National Security and Investment Act – call for evidence

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

A little under two years after the National Security and Investment Act 2021 (the “NSIA”) came into force, the government has issued a call for evidence to consider changes to the regime. According to the government, its aim is to make the NSIA more “business friendly”, an objective which is welcomed by a corporate lawyer. 

The main areas covered by the call for evidence are:

  • the mandatory notification regime, including whether the scope of activities set out in the 17 mandatory sectors should be refined and whether any specific exemptions should be put in place, for example, in relation to internal reorganisations which can fall within the regime even though there is no ultimate change of control.
  • improving the notification and assessment process to increase transparency. Although the government sets out several changes which have already been made in this area, people involved in an NSIA notification often find the regime to be opaque. 
  • developing government guidance.

The NSIA has come under scrutiny from various commentators throughout its short life and certain elements of the regime have received criticism from stakeholders. Although the call for evidence was not unexpected, it is good to see that the government is considering whether to make some (hopefully) positive changes to these elements.

The call for evidence can be accessed here, with the deadline for responses being 15 January 2024.

In order to be truly effective, the NSI Act must also be flexible, adapting to the changing nature of our economy and evolving to consider all of those acquisitions that might be considered sensitive.

https://www.gov.uk/government/calls-for-evidence/call-for-evidence-national-security-and-investment-act
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Protections from redundancy to be extended

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

From 6 April 2024, protection from redundancy afforded to employees on maternity, adoption or shared parental leave will be extended to employees who are pregnant or returning from such leave.

Currently, employees on maternity, adoption or shared parental leave have special rights in a redundancy situation.  Under regulation 10 of the Maternity and Parental Leave Regulations 1999 parents on these types of leave must be offered first refusal of any suitable alternative employment available in a redundancy situation.  This gives such employees priority access to redeployment opportunities over other redundant employees.

Draft regulations have now been laid before Parliament designed to bring the Redundancy (Pregnancy and Family Leave) Act 2023 into operation.  The new Act will extend the period of special protection from redundancy to employees who are pregnant or returning from maternity, adoption or shared parental leave.  

New protection rights

From 6 April 2024, the period will be extended as follows:  

1. Pregnant employees

Start: from the date the employee notifies the employer they are pregnant 

End:  18 months from the child’s expected week of childbirth. The protected period can cover 18 months from the exact date of birth, if the employee gives the employer notice of this date prior to the end of maternity leave.

In circumstances where the employee miscarries before the 24th week, the special protection period will end two weeks after the end of the pregnancy.  It is worth noting that pregnancies ending after 24 weeks are classed as stillbirths and the employee would be entitled to statutory maternity leave and the protections afforded above.

2. Adoption

Start: the beginning of adoption leave

End:  18 months from placement for adoption

3. Shared parental leave 

Start:  beginning of shared parental leave

End:  the protected period will cover 18 months from birth, provided that the parent has taken a period of at least six consecutive weeks of shared parental leave. This protection will not apply if the employee has taken adoption or maternity leave (as they will be covered under those protections instead)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

It should be noted that the protection is not a ban on making employees redundant during the protection period. Employees with priority status can still be selected for redundancy, but they are afforded special rights when it comes to the allocation of alternative roles.

What happens if an employer gets it wrong?

If an employer fails to comply with the “priority” requirements, this could enable an employee to bring a claim for automatic unfair dismissal.  An automatic unfair dismissal claim does not require two years’ qualifying service (unlike an ordinary unfair dismissal claim).  Depending on the facts, employees may also have a claim for discrimination.  It is therefore key for employers to understand the new rules and how to apply them. 

From 6 April 2024, protection from redundancy afforded to employees on maternity, adoption or shared parental leave will be extended to employees who are pregnant and returning from such leave.

https://insights.forsters.co.uk/post/102iv8t/flexible-working-requests-become-a-day-1-right
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Flexible working requests become a day-1 right

The Flexible Working (Amendment) Regulations 2023  were laid before parliament on 11th December 2023, which means that, from 6th April 2024, all employees will have the right to make a statutory flexible working request from day one of their employment

Previously a right reserved for those with a minimum of 26 weeks’ continuous service, this enables employees to make a formal request to vary their contractual working arrangements – for example to work from a different location or to vary their working days or hours. When an employer receives a statutory flexible working request they are obliged to handle the request in a prescribed fashion. They must deliver their reply to the employee’s request within 12 weeks of receipt and are only permitted to reject such a request for one of eight statutory reasons. Moreover, failure by an employer to respond appropriately to a statutory flexible working request can trigger a claim by the employee in the employment tribunal, carrying with it a compensatory award. Therefore it is important that employers are aware of this change to the legislation, and of their resultant obligations.

A common misconception is that flexible working requests primarily benefit those wishing to adapt their working arrangements as they start a family. The desire to meet the family’s needs is a perfect example of why an employee might decide to exercise their rights in this regard, but it isn’t the only example; other reasons might include to enable caring obligations, or to accommodate the symptoms or treatment of a chronic medical condition. It is evident that these scenarios, and similar, can arise at any time, and often might not have the decency to hold off until an employee has reached 26 weeks’ continuous service. Broadening the scope of this to a day-1 employment right will offer more employees (millions, according to the statistics) the ability to request an update to their job requirements when unforeseen and often urgent changes in circumstances arise.

This amendment to the existing legislation comes as part of a broader package of reforms under the Employment Relations (Flexible Working) Bill (which gained Royal Assent in July 2023); all of which are aimed at enhancing the accessibility of flexible working conditions for employees and the transparency of the way by which employers approach such issues. The Government press release on the Employment Relations (Flexible Working) Bill emphasises that the motivators behind the changes include hopes of creating a more contented workforce which will, in turn, trigger an increase in productivity and subsequently bolster the economy. 

Whether or not the reforms package will achieve the desired outcomes remains to be seen, but the changes will undoubtedly be welcomed by those who are new starters in their role. 

 

These Regulations amend the Flexible Working Regulations (S.I. 2014/1398) (“2014 Regulations”) and provide that the right to make a flexible working application applies when an employee begins employment (a day 1 right).

https://www.legislation.gov.uk/uksi/2023/1328/made
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Litigation at whose cost?

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

Holland Park (Management) Limited-v- Dell (8 December 2023)

INTRODUCTION

The judgment of the Court of Appeal in this very substantial service charge dispute is likely to have a profound effect as to how, and whether, landlords (and particularly lessee-owned freehold companies) can litigate at the lessees’ expense.   

The rather extraordinary facts of this case are set out below but the conclusion of the Court of Appeal was to uphold the judgment of the Upper Tribunal that the costs of litigation to enforce covenants against an adjoining owner were irrecoverable from the lessees, Mr and Mrs Dell, as the service charge only covered services relating to the management and maintenance of the demised building and not any adjoining building. 

THE FACTS

89 Holland Park (“the Building”) comprises 5 flats and the freehold is owned by the lessees through the management company, 89 HP. Mr and Mrs Dell’s lease was entered into in 1989 and has been extended to a term of 999 years. 

 For about 10 years, HP has been engaged in substantial and very contentious litigation with the architect, Sophie Hicks, in relation to her wish to build a new house next door. Under covenants entered into in 1968, Ms Hicks needs 89 HP’s consent to her plans before she can proceed and 89HP have strenuously and successfully refused to give consent for what would be a major redevelopment that would have considerable impact on the Building and the lessees’ enjoyment of their flats. 

By January 2021, 89 HP had billed the lessees a total of £2,763,521 in relation to litigation costs but Mr and Mrs Dell had made it clear in 2014 that they did not want to spend any more on legal proceedings. They challenged liability for the balance of £430,411 sought from them for work thereafter.  

THE DECISION

Mr and Mrs Dell succeeded. The Court of Appeal unanimously found in their favour as:-

1. The leases were drafted with a clear focus on the service charge just relating to the maintenance and management of the Building and had to be interpreted in that context. 

2. The service charge related to items of a day-to-day nature which 89 HP were obligated to provide, rather than as to providing funding for unlimited costs of discretionary major litigation. Further, the leases reserved right to the landlord to deal with any adjoining land as it saw fit. 

3. Reference to the maintenance, safety, amenity and administration of the Building were not aimed at covering costs aimed at preventing any adjoining development even though there were concerns as to the structural impact of such development and its effect on the views from the Building and other amenities. 

4. The leases make provision to recover legal costs for specific contemplated events, such as lessee default, but contain no reference to enforcing or dealing with the 1968 covenants even though they pre-dated the leases and future disputes as to the development of the undeveloped adjoining land were foreseeable. 

 

THE CONSEQUENCES AND LESSONS TO BE LEARNED

So far as 89 HP is concerned, subject to any appeal to the Supreme Court, it will have to fund the shortfall but, as a management company with no real assets, it is not clear how it can do so or, even, how it will pay Mr and Mrs Dell’s legal costs? 

For all landlords, this judgment drives home how uncertain and unclear residential leases often are and that it certainly cannot be assumed that all costs are recoverable thereunder, particularly substantial and uncertain litigation costs. 

In some cases, the articles of association of management companies can compel the lessees, as shareholders, to contribute to any costs incurred and, as with collective enfranchisement claims, participation agreements between the lessees are also a way of securing their buy-in for the full course of proceedings.

But the ultimate lesson is that litigation with neighbours is expensive, uncertain, time-consuming and almost always best avoided. 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Attending the Student Accommodation Conference

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

On Tuesday 5th December, Ronan and I attended The Student Accommodation Conference at the Intercontinental Hotel. The conference had many interesting talks from investors, lenders, operational teams and universities. 

The main message that came through was the strength of the student accommodation sector, and how resilient it has been despite other markets being challenged in recent times. 

The PBSA market in particular is currently seeing changes, as more second year university students are looking to move into purpose built student accommodation rather than privately rented homes. An interesting talk from a university showed that a few years ago universities had to encourage students to go back into PBSA after their first year; now the demand has increased, and the university is running out of rooms within their PBSA as it is such a popular choice. 

For me, the most interesting take of the day was looking at the Building Safety Act and the new building regulations. The message was that we, within the sector, should be viewing the new regulations as an opportunity to get new buildings up to a suitable safety standard, rather than a restriction on what we can build. The speaker pushed for getting buildings up to a standard that not only meets the current regulations but also meets future safety standards that might come in within the next 5 or 10 years. He pushed for this as a real opportunity to improve ESG: a very important and current topic across the real estate sector in general.    

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Film Studios: Peering Through The Letterbox

A marble staircase ascends with glass railings, leading to a modern interior with large windows and a ceiling with recessed lights. An "Exit" sign hangs overhead.

I had the pleasure of being joined by Simon Calvert, studios occupier lead at CBRE, on the latest edition of the More Than Law podcast. Together we peer through the letterbox and give insights into the latest trends and likely developments in film studio real estate in the UK. 

What you can hear about:

  • the changing UK studio landscape
  • the future of the MLA
  • challenges in the market
  • the impact of the Autumn Statement 
  • sustainability, volume and who the heck Albert is
  • Owen’s moustache 

What we’re watching:

  1. The Bear, season 2, available on Disney+
  2. Only Murders in the Building, season 3, available on Disney+
  3. Ghosts, available on iPlayer

Thanks and credit to Charlie Brooker for inspiring the title of the pod.

To learn more about Forsters’ experience in supporting Studios clients, get in touch with our Studios Group.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Takeaways from the Financial Times Webinar on Enhancing the Retail Customer Experience

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Last week I listened in to the Financial Times webinar “Enhancing the Retail Customer Experience”. There were some interesting conversations about advances in technology, the cost of introducing new technologies and services and the focus for retailers going forward.

My key takeaways were:

  • Technology is evolving quickly. The most successful systems are those that are streamlined across all purchasing models (e.g. in store, online via a retailer website or through social media and online marketplaces) and are simple for customers to navigate. It is important to meet customers where they are browsing. For example, younger age groups are more likely to browse on social media and online marketplaces.
  • AI is a hot topic, with the ability to improve both efficiency and customer experience. AI isn’t going away, so retailers need to start including it in their business models.
  • Costs are increasing, including the cost of implementing new technologies. Retailers need to be clear about what their customers want and how they are going to deliver it so that they can prioritise the technologies that will work for them.
  • This year customers have been moving back towards shopping in-store. They are looking for an experience. Bricks and mortar are still a key part of retail.
  • Customers are becoming less loyal to specific brands and instead shopping around. Focus going forward should be on building and maintaining customer loyalty. Customers want a personalised experience from retailers and the more a customer trusts a brand, the more likely they are to hand over information about themselves so that, for example, deals can be tailored. It is more expensive to acquire a new customer, so retailers that can inspire loyalty from their existing customers will have an advantage.
  • It is important that retailers have adequate security to keep their customers’ details private, as data collection is becoming more vital in order to personalise customer experiences.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The latest experiments in physical retail… featuring Christmas pop ups!

Escalators transport people in a busy shopping mall. Shoppers, some blurred from motion, navigate levels surrounded by sleek glass and modern architecture, creating a bustling, dynamic atmosphere.

Retail Gazette has helpfully summarised the latest pop up stores for online retailers. It’s great to see a couple, De-Pop and Amazon, focusing on pre-loved items as the retail industry continues to work on the sustainability challenges caused by fast fashion in particular. Here’s my take on a few brands that are looking at physical retail, or have done recently. 

ASOS launched its first pop-up store over the Black Friday weekend with, we understand, more to follow. It leaned heavily on experiential elements such as DJs, masterclasses and working with Snapchat to enable customers to ‘try on’ products via  digital avatars on themselves. I recently learnt that the younger generations use Snapchat for communication more than Whatsapp (did I miss the memo here?), so this is a clear strategic move from ASOS to build up their presence on the latest social media trends. Retail Gazette has reported that ASOS experienced a 43% traffic plunge over the Black Friday period, so no doubt significant analysis is going into why that was and whether the store made up for any of that. The brand continues to battle with the likes of Temu and Shein who are dominating fast fashion (and the advertising on my phone, even on Instagram). 

Whilst not technically a pure online retailer, Next recently launched its first Made concession since purchasing the brand on Black Friday too. Made has benefited from Next’s ability to deliver products quickly and so it will be interesting to see whether Next’s investment will produce more profitable physical retail for the brand. 

Looking back, Gymshark’s first store is just over a year old. From the outside the bustling store looks like a great success, despite the impact of the hefty initial expenditure on the brand’s accounts. The store is the epitome of ‘retail as experience’, with the latest event being free massages and manicures if you purchase an item in store from their new Rest Day collection. 

With the predictions in the market being that in the next few years we will see a rise in the proportion of sales being online plateau to a natural ceiling, with omnichannel becoming more prevalent than ‘bricks vs clicks’, we can expect to see more of these pop-up or long term experiential stores. The future looks different, but we’re confident it will be bright!

Online retailers are also looking to get a piece of the action this year with some launching their first ever brick-and-mortar space during the golden quarter.

https://www.retailgazette.co.uk/blog/2023/11/online-retailers-pop-ups/?utm_term=0_-2a72a4a96f-%5bLIST_EMAIL_ID%5d

A new Government consultation – not another one…

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

It has been a week since the publication of the 2023 Autumn Statement and amongst efforts to reduce debt and boost the economy, a new planning consultation was revealed. We do not have much information but we do know that the consultation will be published in early 2024 and focus on permitted development rights. In particular, whether permitted development rights should be introduced “to enable one house to be converted into two homes” and “to end the blanket restriction on heat pumps one metre from a property boundary in England”. 

You may recall that a consultation was published earlier this year seeking views on a plethora of permitted development rights.  These included the change of use to dwellinghouses from a multitude of uses, including hotels and agricultural buildings. The consultation response is awaited. 

The expansion of permitted development rights seems to be one way in which the Government plans on easing the burden on the planning system to ensure more houses are built in the quickest time possible. 

It will be interesting to see how all this plays out, and what rights will actually come forward.  Watch this space…

Reforming the UK’s planning system is crucial to ensuring there is investment in the essential infrastructure and commercial development needed for growth.

chrome://newtab/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Court of Appeal rules on compulsory ADR

Black and white chess pieces are positioned on a chessboard, focusing on two knights facing each other amid rows of pawns, set against a blurred, neutral backdrop.

Churchill v Merthyr Tydfil County Borough Council – Court of Appeal Decision 29 November 2023

Little did Mr Churchill appreciate how he would change the law when he refused in January 2021 to refer his claim for encroachment of Japanese knotweed against his Local Authority to their Corporate Complaints Procedure.

 

Nearly 3 years later, following a 3-day hearing also involving the Law Society, the Bar Council and various other interested parties and attended by a total of 13 Leading and Junior Counsel, the Court of Appeal has decided that a court can lawfully order litigating parties to engage in a non-court-based dispute resolution process i.e. Alternative Dispute Resolution (“ADR”).  

 

The Court of Appeal declined to follow the decision in Halsey v. Milton Keynes General NHS Trust [2004] EWCA Civ 576 in which the court took the view that parties could not be forced to go to ADR against their will (as this would place an unreasonable obstruction to their right of access to the court) as it decided that these comments were simply obiter. It held the court had the power to control its own process and can make orders  to make the court system accessible, fair and efficient. It took particular note of how the court rules and costs recovery are based upon parties seeking to settle their differences  both before and after commencing proceedings in accordance with the overriding objective of dealing with cases justly and at proportionate cost. 

 

The judgment determines that the court can, in appropriate cases,  lawfully stay proceedings for ADR “provided that the order made does not impair the very essence of the claimant’s right to proceed to a judicial hearing, and is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost”.  This appears to align with the overriding objective under the CPR and highlights the court’s ability to “actively manage” cases to achieve that objective.

 

Is this particular form of management really going to encourage settlement, or simply increase costs for all parties involved? Perhaps the answer to that question lies in how the courts will decide to use such powers. An arbitrary list of the types of cases and/or situations in which a court should impose ADR would likely lead to the latter result. The Court of Appeal, however, declined to set out fixed principles as to what will be relevant when determining whether to go down this route . They did state that issues raised by The Bar Council, Mr Churchill and those in Halsey will be relevant e.g. the form of ADR being considered, whether the parties were legally advised or represented or whether ADR was likely to be effective or appropriate without such advice or representation etc., although it is made clear that other circumstances will be taken into account. The courts will also be able to order any type of ADR, which should also assist with tailoring the decision to the case and the parties involved. 

 

Overall, given that it seems as though the courts will look at every case individually, take into account all factors relevant to that case and consider all types of ADR, this decision may lead to parties incurring less time and costs going through the court process, especially lengthy trials. However, given that the courts have very limited background knowledge when it comes to cases and parties, it may still be a concern that the courts will impose ADR when it is simply not suitable for the parties in question. 

 

It does, however, seem clear now that the default position has changed. A party will generally be expected to have to participate in ADR and will have to make a good case not to do so. 

 

As always, parties should consider ADR (which could include an internal complaints procedure) early on in the dispute process and make every effort to avoid issuing proceedings. If this is done properly, then it may dissuade the courts from ordering ADR later on in the process. 

 

Ironically, the Court of Appeal held that it would not stay Mr Churchill’s claim for various reasons particular to it.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Going Shopping 2024 – takeaways from The Definitive Guide to Shopping Centres

Escalators transport people in a busy shopping mall. Shoppers, some blurred from motion, navigate levels surrounded by sleek glass and modern architecture, creating a bustling, dynamic atmosphere.

There’s some fantastic data collated here thanks to Trevor Wood Associates (free to download on their website), looking at overall attractiveness to shoppers, retailers and investors. 

It’s particularly interesting to see the differences identified between those in the Premier Division of shopping centres and those not, such as the preference for comparison led schemes rather than convenience. Here lies another nod to the view that physical retail is increasingly seen as an experience rather than purely a necessity. To back that up, the report flags that the number of leisure occupiers continues to rise, with the exact leisure offering still changing. 

And congratulations to all the managing and letting agents that made the Top 10. The Retail team here at Forsters are delighted to work with so many of you on some of the best schemes out there.   

Below the Premier Division, there has been significantly less activity than usual which, considering the last two years, is not surprising.

https://www.trevorwoodassociates.co.uk/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The Leasehold and Freehold Reform Bill is here – and it’s a whopping 140 pages!

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Just 20 days after the King’s Speech, the Leasehold and Freehold Reform Bill was introduced to Parliament on Monday (27 November).  This forms part of the Government’s long-term plan for leasehold reform.

So what does this actually mean for leasehold enfranchisement?

Whilst the King’s Speech didn’t give too much away, the background briefing note issued by Downing Street immediately afterwards confirmed that the Leasehold and Reform Bill would include a number of reforms, and sure enough, the following provisions have made it in:

  • Standard lease extension term increased to 990 years for both houses and flats.
  • 2-year ownership rule removed.
  • ‘Non-residential’ limit increased to 50% for freehold and right to manage claims.  

But, as mentioned previously, it would have been foolish to think that anything was either on or off the table before the Bill was published.  There are more than a handful of other items contained in the Bill also, that are worthy of note: 

  • The removal of restrictions on repeated claims.
  • An amendment to the position regarding the acquisition of intermediate interests/leases of common parts in collective enfranchisement claims.
  • A new right for leaseholders to require their landlord to take a ‘leaseback’ of any unit that is not let to a participating tenant (to include commercial units).
  • A new costs regime for enfranchisement and right to manage claims, where (subject to some exceptions) leaseholders will not generally pay their landlord’s costs.
  • An amendment to the jurisdiction for disputes – so, as far as possible, all disputes will be determined by the Tribunal.
  • A new right for leaseholders with long leases (more than 150 years unexpired) to buy out their ground rent without extending the term of their lease/buying the freehold.
  • An amendment to the statutory redevelopment break rights – providing freeholders with consistent rights for houses and flats, and repealing a number of statutory redevelopment ‘defences’.
  • A set method for calculating the premium payable for a lease extension/freehold interest (save for the preserved section 9(1) of the LRA 1967), which includes:
    • the removal of the requirement for marriage value and/or hope value to form part of the valuation;
    • the capping of ground rents to 0.1% of the freehold value for valuation purposes;
    • the introduction of prescribed rates (to be set by the Secretary of State in secondary legislation); and
    • the treatment of intermediate interests as having been merged into the freehold.

BUT – where is the express ban on the creation of new leasehold houses?  Although the impact of this is likely to be small since the Leasehold Reform (Ground Rent) Act 2022 came into force, this was a manifesto commitment by the Tories at the last general election. The final point in the Guide to the Leasehold and Freehold Reform Bill also includes it as one of the heads of reform – “Ban the sale of new leasehold houses so that – other than in exceptional circumstances – every new house in England and Wales will be freehold from the outset”.

We are told that the Government will introduce some measures at first reading and others as amendments, as the Bill makes its way through Parliament.   We are led to believe that these amendments will include a ground rent cap for existing leases – once the consultation on this closes on 21 December, and it has been suggested also that there will be further amendments to the BSA 2022 included within the Bill (designed to ensure that those that caused building-safety defects in enfranchised buildings are made to pay). So perhaps an express ban on new leasehold houses will feature later down the line too? 

In the Explanatory Notes, the Government acknowledges that the Bill will financially impact different groups in the leasehold sector and it confirms that they are undertaking a robust assessment of the costs and benefits of the reforms on the impacted groups.  The impact assessment will be published in due course apparently!

And, despite concern within the industry that the Bill will be met with some heavy opposition, the BBC reports that Michael Gove has said “I am absolutely confident this bill will be on the statute book by the time of a general election”.

A more thorough analysis will follow from Forsters in the coming weeks.

“I am absolutely confident this bill will be on the statute book by the time of a general election”

https://www.bbc.co.uk/news/uk-politics-67537218
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Takeaways from Revo: EVolution of retail

Vertical garden flourishing on a building facade, with lush green plants covering multiple levels, set against a backdrop of tall glass skyscrapers.

Last week I attended Revo’s EVolution of retail meeting. It was an interesting morning filled with discussions about how the retail sector has fared over the course of this year and the benefits and challenges of adding electric vehicle (“EV”) charging points to retail offerings.

My top 8 takeaways from the event are:

  • 2023 has been a turbulent year for retail, with the cost of living crisis and both climate and political events affecting the way we shop. Whilst there has been gradual improvement of consumer confidence levels, we are still sitting at pandemic levels.
  • Tolga Necar of CACI said that Net Zero is “no longer a campaign for the young”. Regardless of age group, the greatest concerns are rising costs and energy bills. This has meant that people are postponing large financial investments and cutting back on small luxuries. However, all generations are still concerned about making ethical choices when shopping (although some have more spending power to do something about it than others) and it is now baby boomers that are more likely to be taking steps to reduce their carbon footprint.
  • Awareness of “Black Friday” is now fairly high but suspicion about how genuine deals are is also high. It was reported by Simple Politics that Which? have said that only 2% of the “offers” they have seen are actually the lowest price the goods have ever been. Only 1 in 5 is expected to shop in the Black Friday deals. 
  • Whilst consumers were reducing their Christmas spending last year, 46% do not expect the cost of living crisis to effect their Christmas spending this year. It is, therefore, expected that Christmas spending will remain at similar levels to last year rather than being further reduced.
  • Most age groups expect to do more Christmas shopping in store than online this year. People are looking for an experience, which online shopping cannot offer.
  • There are currently around 50,000 public EV charging points in the UK. If 2035 targets are to be achieved, we need between 250-650,000 charging points as 31% of EV drivers do not have the ability to charge from home. In order to achieve this, it will also be important to upgrade the electricity grid to ensure that supply can meet demand.
  • Destinations with EV charging facilities are perceived to be more environmentally friendly and more socially responsible, even by those who do not drive an EV. Research suggests that EV drivers will drive further to reach a destination and spend longer at and spend more money at that destination if it has a good EV charging facility. Retail offerings will, therefore, risk losing footfall if they don’t have the right charging infrastructure in place.
  • The charging infrastructure needs to provide a good user experience. This includes good availability, ease of use, a safe and well lit environment and a charge time that matches dwell time. Faster charging is not always better. Some people will want a slow charge if they are planning their visit to take a number of hours.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Cruise controlled off the roads of San Francisco

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

Car manufacturer Cruise, a General Motors owned brand, has had its permits to deploy its self-driving cars revoked by California’s Department of Motor Vehicles after an accident in San Francisco. 

The accident involved a pedestrian on a crosswalk in San Francisco being hit by another vehicle and thrown into the path of one of Cruise’s driverless cars. According to an order of suspension issued by the department, the driverless car subsequently attempted a “pullover manoeuvre” that the DMV said had lasted seven seconds and involved dragging the pedestrian another 20ft.

In August, Cruise was granted the right to run full-scale driverless taxi services throughout San Francisco without any restrictions. A heavily opposed approval that, in hindsight, was premature. 

It is a timely reminder that despite the great steps taken by the driverless car industry, autonomous vehicles are still in their infancy, something that will no doubt be kept in mind as the UK currently lays the groundwork for its new Automated Vehicles Bill, intended to prepare Britain’s roads for autonomous driving. A key aspect of the new Bill is that car makers, not owners, will bear the responsibility for any crashes in the UK involving autonomous vehicles.  

 

Cruise’s cars were “not safe for the public’s operation”, California’s Department of Motor Vehicles said as it announced it was revoking permits for Cruise to test and deploy its vehicles on public streets.

https://www.ft.com/content/c9ee60ca-852f-4186-bfef-261560ab7b47

Deliveroo Judgment – the latest update in the rights afforded to those working in the gig economy

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

The UK Supreme Court has delivered its hotly anticipated (at least within employment law circles…) judgment in the Independent Workers Union of Great Britain (IWGB) -v- Central Arbitration Committee; that Deliveroo riders are not employees within the meaning of Article 11 ECHR and therefore cannot be represented by trade unions for collective bargaining.

The facts of this case, as is true for most matters which progress to the Supreme Court, are nuanced. In summary, the Supreme Court was looking to decide: i) whether Deliveroo riders fell within the scope  of Article 11 of the European Convention of Human Rights (ECHR); and ii) if the riders did fall within the scope of Article 11, did UK law compel Deliveroo to engage in compulsory collective bargaining with the union either in all circumstances or some?

In the culmination of the seven year saga, the Supreme Court passed a unanimous judgment that the Deliveroo riders were not within the scope of Article 11, i.e. there was not a relationship akin to employment. This decision was reached following an evaluation of the realities of the working relationship between the riders and Deliveroo. The characteristics which were assessed included: (most notably) the unfettered right of substitution (whereby Deliveroo do not need to offer any form of approval for a substitute being engaged by a given rider), the riders’ freedom to choose how regularly they accepted/ declined work and the absence of repercussions for regular non-acceptance of work.

This judgment contributes towards the ever-growing bank of caselaw examining the gig economy and how it fits within the established legal framework. In recent years there have been several cases passing through the courts which have challenged similar issues, for example Pimlico Plumbers Ltd v Smith and Uber BV v Aslam. On the one hand, it is becoming apparent that each case will turn on its specific facts (when establishing an individual’s employment status); on the other hand, this judgment has produced a significant takeaway, which is the power of persuasion given to a genuine and unfettered right of substitution when considering whether or not an individual is an employee or not.

With Deliveroo hailing this outcome as a positive turn of events and IWGB conversely labelling it as a disappointment, there are bigger questions to be posed as to the sustainability of the gig economy business models – does it offer freedom and flexibility to the workforce or does it avoiding giving rights to individuals who are potentially in already vulnerable positions?

The Supreme Court unanimously dismisses the IWGB’s appeal. It holds that the riders were not in an employment relationship for the purposes of article 11 ECHR

https://www.supremecourt.uk/cases/docs/uksc-2021-0155-press-summary.pdf
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Gaming Section 84 of the Law of Property Act

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

A case which flew a little under the radar this summer in the legal press (although not in the mainstream where it made the Daily Mail on no less than five occasions) was the case of  The Ridgeway (Oxshott) Management Ltd v McGuinness & Anor [2023] .  

The case contained some interesting discussion on the Tribunal’s jurisdictional limitations, and in doing so exposed a potential way to circumvent the powers of the Upper Tribunal and reinforce control over the use of land. 

The potted background is that the Ridgeway is an estate in Oxshott. The Ridgeway (Oxshott) Management Limited (“ROML”) are the resident’s management company who own the estate roads and verges. Mr and Mrs McGuinness are residents on the estate who obtained a planning permission to knock down their home and replace it with two houses. Cue proceedings by ROML seeking an injunction to restrain the McGuinnesses on the basis of a restriction contained in an easement limiting the use of the estate roads:

“for the sole purpose of access to and egress from the Property in connection with its use as a single private dwelling house”.

Whilst section 84 of the Law of Property Act 1925 allows a party to apply to the Upper Tribunal to modify or discharge restrictive covenants, the jurisdiction only extends to:

“any restriction arising under covenant or otherwise as to the user thereof or the building thereon”

The ‘otherwise’ does not however extend to restrictions contained in an easement, which the McGuinnesses argued was abusive as it gave the effect of a covenant but without the statutory rights afforded under section 84 to modify or discharge the same. They contended (as one of their defences) that the restriction was therefore void or unenforceable for public policy reasons.  

It is certainly correct that despite proposed reforms to extend the jurisdiction to allow the Tribunal to deal with easements, these have not yet come to pass, and judicial comment remains for the time clear that easements are not covered. For this (and other cogent reasons) the Court in this case had little truck with the Defendant’s position, as detailed in the Judgment. 

However, this does pose an interesting question; can parties use restrictions in easements to circumvent the jurisdiction of section 84? In this case the Court noted that the restriction had not been contrived to have this effect, which seemed to infer that had it been, a different approach might have been taken. It is not clear though that this (aside from those situations arising such as in in O’Byrne [2018] UKUT 395 (LC) & Hotchkin v McDonald [2004] EWCA Civ 219) in fact closes this off, it does seem that restrictions within easements remain an option to parties seeking another means of restricting the use of land and thereby to game section 84…

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Don’t mention BNG…for now…

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

A Planning Inspector’s decision has been quashed as a result of wrongly assessing an appeal against future BNG legislative obligations not yet in force. 

An Inspector upheld a council’s refusal to grant permission for a sand and gravel quarry. This refusal was challenged by the applicant in the High Court, one of the grounds being that the Inspector had erred in law in the weight to be attached to biodiversity net gain obligations. 

The High Court Judge concluded that the Inspector had reduced the weight to be attributed to the biodiversity net gain generated by the proposed development, purely because some of that gain would have been required in any event pursuant to the Environment Act 2021 (when the provisions come into force). The Court confirmed this approach is an error of law. 

The Judgment specifically references the DEFRA consultation document which indicates that the BNG provisions, when they do take effect, will not apply to planning applications submitted or planning permissions granted before the provisions come into force. 

This case recognises the position that for the time being at least, the Environment Act provisions relating to BNG are not a relevant consideration in the determination of a planning application or planning appeal. That being said, developers should look to assess the deliverability of BNG for sites intended to be brought forward once the Environment Act provisions have taken effect. 

NRS Saredon Aggregates Ltd v Secretary of State [2023] EWHC 2795 (Admin)

"If the inspector's assessment of the weight to be given to the biodiversity net gain was based on an incorrect view of the law or involved taking account of a matter which was not properly a material consideration that would have been an error of law causing him to exercise his planning judgement on an incorrect basis"

https://www.bailii.org/ew/cases/EWHC/Admin/2023/2795.html
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

OpenAI just became a little Opaque

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

While there is undoubtedly any number of books to be written, university case studies to be reviewed and no doubt a TV series to follow about what just happened at OpenAI, with the surprise departure of first Sam Altman and then Greg Brockman, it raised a few points that I immediately wanted to understand more about.

Sam Altman and Greg Brockman were founders of OpenAI and yet their positions were terminated by the OpenAI board. Not being familiar with the structure at OpenAI (and it seems to be a relatively unusual structure in that a non-profit entity owns OpenAI and has a board that is independent and separate to OpenAI) my immediate thoughts were:

  • how did the founders not have protected rights about their right to be on the board?
  • how did large investors (like Microsoft) not have any say in the decision?
  • how has this even been structured that this could be such a surprise – and has Sam Altman breached his contract as an employees and director so seriously that it can be terminated?

Usually, when acting for founders, entrepreneurs and/or investors the above would be some of the core protections and questions that you would be discussing and negotiating. The last thing a founder wants is to be removed without there having been good cause to do so and the last thing investors want is for boards to take decisions that might impact their investment. So advisers will usually spend a lot of time balancing these rights and the checks and balances as between investors and founders. This shock news – which very much seemingly turns on the specific structure of OpenAI – serves as a reminder to think about how you document rights, operation, management and control as a founder or as an investor.

It is also a reminder that thinking ahead to the future of the business and considering its final exit plan as soon as possible, as well as taking good advice about the various options and their implications, remains as important as ever. 

The takeaway may be that OpenAI was always meant to be a public charity and not to result in a large liquidity event – but I’d like to know if the founders really deeply thought about that at the start of the business and as they structured it, and whether they discounted other structures that may have given them different options. If that is the case and it was a definite choice based on advice and consideration then all worked well, regardless of what happens next for OpenAI. I hear that forthcoming episodes will be released weekly each Friday….

 

“How much of the future of OpenAI technology is going to be hamstrung because they made the mistake in the first place of placing that I.P. and that tech within the public charity in the first place,”

https://messaging-custom-newsletters.nytimes.com/template/oakv2?campaign_id=4&emc=edit_dk_20231120&instance_id=108186&nl=dealbook&productCode=DK%c2%aei_id%3d102015490&segment_id=150538&te=1&uri=nyt%3a%2f%2fnewsletter%2f230e9d77-ae8d-5f5a-b1b0-574246404d63&user_id=0c4dfee2b84be61054071e18e4f2d5df
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Why has retro-fitting stalled? Can we still meet net zero targets in the built environment?

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

With 40% of carbon emissions coming from the built environment, the construction industry acknowledges that it has a significant role to play in the race to net zero. However, as reported by edie, latest research suggests that emissions reductions have plateaued and, in the US, even reversed so that emissions are on the rise!

Most people are clear on the importance of reducing emissions, both in order to protect the environment and their wallets. So, what has caused this slump? The article refers to barriers such as insufficient private investment, workforce skills shortages and limited awareness. 

I suspect it is not lack of awareness that is preventing action, but rather lack of funds. In the UK at least, there is little support available for homeowners looking to make sustainable improvements. And sustainability measures are still fairly costly to install. With the cost of living crisis ongoing, the payback period is getting shorter, but that still requires the individual to have the capital to invest in the alterations to their property in the first place.

The skills gap is a very real problem. Construction times are extended and costs increased because the workforce simply isn’t there. We need more people trained in the latest technologies and building techniques to ensure properties are as efficient as possible. But who is going to pay for that training? Again, it appears to be left to the private sector to fund the transition and at the moment purse strings remain tight.

It seems that there is still not enough action from the Government to pave the way to our net zero goals. Is net zero by 2050 slipping through our fingertips?

While emissions reduction in the built sector has decreased across several G20 nations, including the UK, France, and Germany, progress has reversed in the US with built sector emissions now on the rise.

https://www.edie.net/report-building-emission-reductions-plateauing-across-g20-countries/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Office vs Retail vs Industrial

This CBRE Sustainability Index 2023 looks at how energy efficiency correlates with recent investment performance – in three sectors, office, retail and industrial. Perhaps the key finding is  no surprise – “better energy efficiency appears to correspond with greater resilience to market downturns”. However there are interesting nuances – take for example, the differing performances within the retail sector, looking at retail warehouses and the high street. Or the limited differentiation between efficient and inefficient industrial assets. Naturally, both attributable to other, widely known, factors underpinning strong performance. 

However there is no hiding away from the important transition to more energy efficient building stock across the real estate sectors- as a consequence of both regulatory and investment drivers. That said, unquestionably, the sectors are on a wider journey – not just in relation to energy efficiency, but wider decarbonisation, and a “net zero” goal. 

It is in this context that the cross-practice Sustainability team at Forsters launch our “Sector Race to Net Zero” campaign. As we enter 2024, an Olympic year, we explore how the different sectors are faring on the “race” to Net Zero. What are the challenges to all sectors and how can the sectors overcome these? What are the challenges unique to the sectors? What can the sectors learn from one another? And underpinning all this, just what is the “Net Zero” finishing line, or does it go beyond that? As we explore in discussion with those real estate professionals at the very head of the “race”, these are just some of the questions on the table. 

We launch the campaign, in conversation with the excellent Rob Wall, Assistant Director of Sustainability and Tax Policy at the British Property Federation. As we enter a general election year, Rob looks at the overall regulatory landscape, across the sectors- how can regulation support (and nudge) the sectors forward on this Net Zero pathway? Well worth a listen!
 

Better energy efficiency appears to correspond with greater resilience to market downturns.

https://www.cbre.co.uk/insights/figures/sustainability-index-2023
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Retail Spending Update

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Last week, there was speculation about whether the wet weather we have been experiencing has affected the retail sector. Did it stop people heading to the shops this October? You can see my thoughts on the matter here.

The Office of National Statistics has not yet published its data. But we do have some data from the British Retail Consortium which, as reported by Drapers, shows there was only a 2.5% retail sales growth compared to October last year. This does not take account of inflation and is behind the 12-month average growth of 4.1%. So, despite forecasters predicting that consumers would be hitting the shops in October to spread the cost of their Christmas shopping, this does not appear to be the case. The cost of living squeeze is still being widely felt. Perhaps people are now waiting for Black Friday deals, or continuing to cut back on their purchases.

The data shows that online spending has dropped, so despite fewer trips to the shops there does still seem to be a trend back towards in-store spending with people spending more during each trip. 

Retailer confidence, however, appears to be standing firm. As Andrew Denye pointed out in his article last week (here), we are still seeing plenty of store expansions as retailers prepare for more favourable market conditions expected to come.

Helen Dickinson OBE, chief executive of the BRC, said: "Retail sales growth slowed as high mortgage and rental costs further shook consumer confidence.

https://www.drapersonline.com/news/retail-sales-slow-in-october-as-consumers-delay-christmas-spending#:~:text=The%202.5%25%20retail%20sales%20growth,decline%20year%2Don%2Dyear
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

All change for the Housing Minister (again)

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

Rachel Maclean, the Government’s 15th housing minister since 2010, fell victim to the Prime Minister’s latest cabinet reshuffle yesterday. Maclean, who had only been in the role since February of this year, made clear in her statement published on X that she was disappointed to have been asked to step down. 

Also disappointed will be those interested in the work of the Older People’s Housing Taskforce. According to the chief executive of the British Property Federation, this lack of continuity in personnel “is a significant concern and actively undermines investment and long-term commitment across the sector”. 

Maclean is succeeded by Lee Rowley, who has already briefly served as Housing Minister under Liz Truss in 2022. With a significant workload to tackle, it remains to be seen whether this appointment will be “second time lucky” for Rowley, or if the Prime Minister’s latest cabinet reshuffle amounts to little more than rearranging deckchairs on the Titanic.

British Property Federation chief executive Melanie Leech said the “revolving door of housing ministers has turned once more”.

https://www.building.co.uk/news/lee-rowley-appointed-housing-minister-for-the-second-time/5126278.article
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

An early Christmas present…

Escalators transport people in a busy shopping mall. Shoppers, some blurred from motion, navigate levels surrounded by sleek glass and modern architecture, creating a bustling, dynamic atmosphere.

What do you need in your inbox on a damp Friday in November ?

If you’re asking yourself this question then the only answer is a link to all the Christmas adverts released so far…. of course it is !!!

Well done to the team at Retail Gazette for pulling this together.

https://www.retailgazette.co.uk/blog/2023/11/christmas-ads-2023/

Its also that time of the year when your inbox will be filling up with emails of unbeatable savings available via Black Friday events. So deep breath… and check your spam filter….  certainly it seems that more and more customers are now not so easily sold these “offers” so we can no doubt continue the “Phydital” “Bricks & Mortar” retail discussion for a while yet….

In terms of Bricks & Mortar there has been a genuine uptick in the mood in recent months with plenty in the press about store expansion plans from M&S, B&M, Uniqlo, Amazon Fresh, Miniso and others.

With commentators looking forward to 2025 in terms of interest rates becoming more positive it seems that there will be a lot of new stores opening throughout 2024 with a view to making hay in more favourable market conditions.

It’s that time of year again. Christmas ads have started appearing on TV with retail front and centre with a slew of blockbuster campaigns.

https://www.retailgazette.co.uk/blog/2023/11/christmas-ads-2023/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Changes to holiday pay, working time and TUPE?

The government has published a draft statutory instrument, the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 (Draft Regulations), which contains amendments to the law on holiday pay, TUPE and recording working time. 

The key changes include:

  1. clarifying the record-keeping requirements under the Working Time Regulations 1998 (WTR);
  2. introducing rolled-up holiday pay for irregular and part-year workers;
  3. retaining the entitlement to carry-over annual leave in certain circumstances; and
  4. defining “normal pay” for the purposes of calculating holiday pay.

Why reform now?

The Retained EU Law (Revocation and Reform) Act 2023 provides powers to amend, remove and replace retained EU law. The original intention of that Act was to revoke all retained EU law automatically at the end of 2023 unless it was expressly transferred into UK law. The Government reversed this position in May 2023 and announced that only those laws expressly identified by the Government would be revoked. In response to this, the Department of Business & Trade launched the consultation, “Retained Employment Law”, on 12 May 2023 identifying the areas of EU-derived employment law which it believed could benefit from reform. Its response to the consultation was published on 8 November 2023 and sets out the reasoning for the changes proposed in the Draft Regulations. 

The Draft Regulations were laid before Parliament on 7 November 2023 and, subject to approval by a resolution of each House of Parliament, are intended to come into force on 1 January 2024. 

Record keeping under the WTR

Under the WTR, employers are required to keep records to show compliance with the maximum 48-hour working week. Following the European Courts of Justice decision in CCOO v Deutsche Bank, there has been concern that the WTR goes so far as to require employers to record working and rest time for each worker each day.

The Draft Regulations amend the record-keeping requirements and make it clear that employers do not need to keep a record of workers’ daily working hours. 

Holiday pay and entitlement for part-year and irregular workers

Following the Supreme Court’s ruling in Harper Trust v Brazelwhereby it determined unanimously that part-year workers are entitled to 5.6 weeks’ holiday in full, without pro-rating, the Government has sought reform on calculating holiday pay and entitlement for part-year and irregular-hour workers.  

The Government has decided to introduce an accrual method to calculate holiday entitlement and pay for irregular-hour and part-year workers. Under the Draft Regulations, holiday entitlement will be calculated based on 12.07% of hours worked in a pay period and will be paid at the rate of 12.07% of pay in a pay period. This method of “rolling-up” holiday was widely used before the Harper Trust judgment and essentially reflects the hours that workers have actually worked in their current leave year.   

Additional holiday entitlement/pay changes to the WTR

The Draft Regulations restate the right, which currently arises from EU case law (which will otherwise be revoked by the Retained EU (Revocation and Reform) Act 2023) to carry over holiday at the end of a leave year in various different situations including sickness, being on family/statutory-related leave, the failure to recognise employment status and failing to afford the right to paid annual leave.

The Draft Regulations also include a definition of normal pay for the purposes of calculating normal pay under the WTR, which includes overtime and commission.   

TUPE consultation 

Under TUPE, employers are required to inform and consult appropriate representatives of employees about a relevant transfer. The only exception for this is where a business has fewer than ten employees and no existing appointed representative. 

The Government has sought to amend this to give businesses more flexibility to consult directly with employees in certain circumstances. Accordingly, under the Draft Regulations, all small businesses (those with fewer than 50 employees) will be permitted to consult directly with employees if there are no existing employee representatives in place and businesses of any size will be permitted to consult directly with employees (where no existing employee representatives are in place ) where a transfer involves fewer than ten employees.

 

 

 

The government has published a draft statutory instrument, the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 (Draft Regulations), which contains amendments to the law on holiday pay, TUPE and recording working time.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The government has wasted no time in launching its consultation on capping ground rents

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

Following the King’s Speech on Tuesday, the government has now launched its consultation on capping ground rents: Modern leasehold: restricting ground rent for existing leases.

The purpose of the consultation is to seek views on limiting the level of ground rent that leaseholders are required to pay in England and Wales, specifically in relation to:

  • the problems that existing ground rents can cause for leaseholders, and the scale of these problems;
  • which option would be the right one to deliver the aim of giving leaseholders a fairer deal;
  • whether there should be a period of delay before implementing any cap; and
  • the types of leases which may need to be exempted from any cap to ground rents.

You can respond by completing the online survey at Citizen Space.

Alternatively, you can email a response to [email protected]

The consultation will last for 6 weeks from today, 9 November 2023.

It is a historical anachronism, already eliminated for new leases, and we now wish to take action to help those with existing leases.

https://www.gov.uk/government/consultations/modern-leasehold-restricting-ground-rent-for-existing-leases/modern-leasehold-restricting-ground-rent-for-existing-leases
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Happy World Town Planning Day – or is it?

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

The Royal Town Planning Institute (RTPI) today celebrates World Town Planning Day – designed to celebrate and promote the vital role that planning plays in creating and sustaining communities that we all live and work in.  

However, a few days earlier the RTPI issued their “State of the Profession 2023”  Report which highlights some worrying trends.  Not only has the number of public sector planners shrunk by 25% between 2009 and 2020, but overall pay has drastically declined – by c34% when tracking against inflation over the same period.  Why are Councils across the country spending less and less on planning departments, when there is a clear need?

The Report itself is well worth a read (outside of my cherry picked headlines!) and raises important questions as to how we staff and resource planning departments.   Could one solution be to require graduate planners to begin their careers at local planning departments, with a commensurate reduction in any outstanding student loans for time served?  

Outside of an unsustainable salary competition with the private sector, we have to find a way of ensuring planners of all ages/backgrounds/experiences are incentivised to work with or for local planning authorities.  The work that town planners do is far too important to be ignored.

• Planners are increasingly employed in the private sector (50%). The largest employers of planners are local authorities and consultancies. The number of planners working in the public sector shrunk by a quarter between 2009 and 2020. • The remuneration of planners in real terms has been in sharp decline. If salaries had followed inflation since 2005, the median planner should be making close to £50,000 annually, as opposed to the actual value of £33,000.

https://www.rtpi.org.uk/media/16015/state-of-the-profession-2023-final.pdf
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Hotels vs Offices – where would you put your cash?

An interesting article from Hospitality Investor highlighting the general outlook towards lending against hospitality assets. Brad Greenway, co-head of debt and structured finance at JLL comments that there is actually “more liquidity for hospitality today than almost every other asset class”. It seems that despite Covid shutting down hotels, increasing energy costs and rising interest rates, the hotel sector’s recovery is strong. Lenders clearly still view the hotel sector as an attractive place to deploy capital and the asset class is attracting traditional lenders, alternative lenders and debt funds alike. 

when an asset class like offices loses attractiveness, capital has to go somewhere. It’s going to life sciences, self-storage, and data centres as well. But as these sectors are still in their infancy, it’s easier to underwrite hospitality deals, due to the maturity and transparency of the sector.

https://www.hospitalityinvestor.com/finance/hospitality-lending-what-credit-crunch
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Renters (Reform) Bill on hold indefinitely

In the King’s Speech, King Charles has reiterated the government’s proposals to afford residential tenants greater security of tenure by passing the hotly anticipated Renters (Reform) Bill. 

However, the background briefing notes state that the government “will not commence the abolition of section 21 until stronger possession grounds and a new court process is in place”. This follows a recent letter from Michael Gove to Conservative MPs which confirmed that implementation of the reforms in the Bill would not proceed until HM Courts and Tribunals Service is fully prepared for the changes. Proposed changes to the court system include digitising more court processes, improving bailiff recruitment and retention and providing early legal advice to tenants. 

There is no clarity on how these proposals will be implemented, especially when many of the county courts which deal with possession claims are currently understaffed, underfunded and working to a severe backlog. For now, it appears that the Renters (Reform) Bill has been kicked into the long grass.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The King’s Speech – did it raise more questions than it answered in terms of leasehold reform?!

The Department for Levelling Up, Housing and Communities estimates that there are around 4.98 million leasehold homes in England, making up a significant proportion of all residential housing.  Impacting on the lives of so many, leasehold ownership has therefore been the subject of much debate over the years.

The existing law allows leaseholders of residential properties to purchase the freehold and/or extend the leases of their houses or flats.  However, these rights have been developed piecemeal, and are the product of over 50 Acts of Parliament, totalling 450+ pages of legislation. Unsurprisingly therefore, the system has been criticised as being inconsistent and unnecessarily complex, often leading to protracted and expensive legal proceedings.

There was a lot of speculation as to what leasehold reform proposals might be included in the King’s Speech, and so enfranchisement practitioners waited with bated breath.

Unfortunately, it was an anti-climax! With the King saying only:

My Ministers will bring forward a Bill to reform the housing market by making it cheaper and easier for leaseholders to purchase their freehold and tackling the exploitation of millions of home owners through punitive service charges”. 

The background briefing note confirmed that a Leasehold and Reform Bill would be introduced to “put the country on the right path for the future by giving homeowners a fairer deal in the following ways”:

  • Making it cheaper and easier for existing leaseholders in houses and flats to extend their lease or buy their freehold.  It is difficult to tell whether this is a proposal in itself (with further detail perhaps to follow in the draft Bill) or whether this is simply a reminder of the government’s overriding objective i.e. with the proposals that follow being the way in which the government intends to fulfil this promise.  The latter is probably more likely, otherwise this proposal is frustratingly vague.
  • An increase to the standard lease extension term from 90 years to 990 years for both houses and flats (with ground rent reduced to £0, which is of course, already the case) – this was included in the February 2021 policy statement so was no surprise.
  • Removal of the 2-year ownership rule currently required for statutory lease extensions and freehold house purchases/lease extensions – again, this was included in the February 2021 policy statement and so is not controversial.
  • A ban on the creation of new leasehold houses.  This was a manifesto commitment by the Conservatives at the last general election so is not a surprising announcement, but the impact of this is now likely to be minimal. Since the Leasehold Reform (Ground Rent) Act 2022 came into force, the number of houses being sold on a leasehold basis is very small.
  • Increasing the 25% ‘non-residential’ limit to 50% for freehold and right to manage claims.  This was the subject of a government consultation in January 2022 but to date, there had been no government response and so it feels a little surprising that this has made it through.

These proposals all seem like easy wins, which are designed to grab the headlines!  So, one would be forgiven for thinking that, despite all the hype, the government has simply paid lip service to the promise of far-reaching reform.

That said, the last of the proposals is rather more far-reaching and that is the proposed consultation on capping all existing ground rents.  This was included in the government’s February 2021 policy statement – but there, the proposal was for ground rents to be capped at no more than 0.1% of freehold value. Given the difficult political arena and the need to find a balance between the competing interests of leaseholders and landlords, it is difficult to see this going through without a strong challenge, even with consultation. 

The argument will be over what compensation is to be offered to landlords and whether there is to be a statutory acquisition process. A number of funds, which quite possibly form part of pension funds, own large ground rent portfolios and this value cannot simply be wiped out.  

Almost as interesting as the proposals that were included in the Speech, were the proposals that weren’t! Most particularly: 

  • The proposed abolition of marriage value.  This was one of the most controversial of the proposed measures and so it is perhaps not surprising that it did not feature in the Kings Speech. Having said that, it was included in the government’s February 2021 policy statement and was also widely trailed in other recent ministerial briefings, so the omission does seem slightly odd.
  • The prescription of capitalisation and deferment rates and the introduction of a calculator to determine the enfranchisement price were also omitted. These seem to have fallen off the government’s radar.  Perhaps because the task of balancing the contradictory agendas of both leaseholders and landlords is too tricky?!
  • Finally, and as predicted, the gradual phasing out of leasehold properties and the phasing in of commonhold as an alternative form of ownership for flats was not mentioned either.   This is most likely because of the enormous cultural shift which it would require, which is not something that could be achieved overnight. 

Overall, a bit of a damp squib! Of course, the devil will be in the detail and until we see the draft Bill, it would be foolish to think that anything is either on or off the table.  There does seem to be a general trend for the enactment of primary legislation or enabling legislation though, with the detail being determined later in Regulations and so the fear is, that this may be the way the proposed Leasehold and Freehold Bill will be drafted.

Also, there will certainly be attempts by the very effective leaseholder lobby, during the passage of the Bill, to add all sorts of other things, of which the “abolition” of marriage value will undoubtedly be one.  In addition, there is already talk about a back-bencher revolt over the failure to include a ban on the sale of new leasehold flats. 

Unfortunately therefore, for the enfranchisement industry, it’s yet another case of having to watch this space…

“My Ministers will bring forward a bill to reform the housing market by making it cheaper and easier for leaseholders to purchase their freehold and tackling the exploitation of millions of home owners through punitive service charges…”

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Giving offices a new lease of life

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

The office landscape has undergone a significant transformation in recent years.  A surge in remote working, hybrid work models, and the ever-increasing popularity of flexible office spaces has all put pressure on traditional office spaces.

However, as the React News article below outlines, office values are facing another challenge.  The sharp rise in gilt returns is causing a number of funds to reconsider their commitment to real estate as a whole and offices in particular.  Is the added risk and illiquidity of real estate worth it when compared to a “risk free” rate that is sitting at around 5%?

As such, many funds are reconsidering their allocation to the sector.  Some offices will remain attractive investment opportunities but, as the article notes, many will be small, non-prime and will come with concerns over future occupier demand and ESG related obsolescence which will make them difficult to sell.

What, therefore, will happen to this excess office space?  Change of use – office-to-residential or office-to-hotel conversions for example – is not a new concept, but an increase in the number of office buildings being offloaded and a fall in values is likely to lead to a greater number of conversion opportunities.

The demand for housing, particularly in urban centres, remains high, and converting underutilised office buildings into residential properties would help addresses this demand while bringing fresh life to city centres.

Conversions are not without their challenges – residential space standards, for example, mean that not all office floors are able to accommodate a change to residential use.  However, there have been many successful examples and the rise in obsolete office buildings coming to market will no doubt accelerate that trend.  Secondary offices may be falling out of favour, but there remains plenty of opportunity.

Forecasts from Real Estate Strategies predict office values will continue to fall while other sectors will stage a recovery. Many are looking to offload before they see any more falls in value

https://reactnews.com/article/why-problems-for-unlisted-real-estate-could-spell-catastrophe-for-offices/?utm_term=0_b0728480f9-c91fce7225-%5bLIST_EMAIL_ID%5d&mc_cid=c91fce7225
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Education, education, education

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Strutt & Parker’s annual Housing Futures report, which summaries their insights into housing trends for 2023, notes that only 1% of those in the UK aged over 65 currently live in an integrated retirement community (“IRC”).

Whilst specialist housing for older people is an obvious solution to current pressures on housing and a tool which would assist in facilitating “right-sizing”, Strutt & Parker found that appetite for IRC accommodation was limited, with only 13% of over-65s saying that this would be their ideal new home.

The report explores the main reasons why older people are reluctant to consider IRCs, and identifies a lack of awareness as to what later living accommodation can offer as a significant barrier. The report suggests that the antidote to this is education. 

The range of facilities on offer, the standard and quality of construction and the focus on independent living are all identified in the report as selling points for IRCs – this message must be communicated with older people so that they are aware of the options available to them in their retirement. It is expected that education will be a key focus of the Older People’s Housing Taskforce, and it will be interesting to see the extent to which this is covered when the Taskforce’s interim findings are published.

The main reason people are reluctant to consider the retirement sector is that they aren’t aware of what’s on offer.

https://www.struttandparker.com/knowledge-and-research/housing-futures
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Could the wet weather be another blow to the retail sector?

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

The last few weeks have been rather wet, it feels like it has been raining constantly. And whilst my garden is a lot happier than it was this time last year, the same cannot be said for the retail sector. 

Despite the expectation that consumers have been starting their Christmas shopping earlier this year, it has been reported by the BBC that footfall at high streets, shopping centres and retail parks fell by 5.7% in October compared to the same period the previous year.

Consumer confidence is still low, but not as low as it was a year ago. The British Retail Consortium has speculated that the heavy rainfall has kept people at home. But this doesn’t explain the fact that the biggest slump has been at shopping centres (with a 7.3% reduction), despite the fact that shopping centres are largely under cover.

It seemed like there was a resurgence of in-store shopping this year. Does this latest data mean that consumers are moving back towards online shopping? Could this just be a short term trend due to the weather? The retail sales figures for October are yet to be published. It will be interesting to see whether retail spending has also dipped, or if people are still shopping online or spending more during fewer trips out.

many people were decided to stay at home rather than head to the shops

https://www.bbc.co.uk/news/business-67306498
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Government Annual “Lack of Progress” Report

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

As for regulation relating to energy efficiency in commercial real estate, where are we? With thanks to Rob Wall, Assistant Director of Sustainability and Tax Policy at the BPF for the heads up, we have a governmental update – on the back of Rishi’s September speech. The government has responded to the Climate Change Committee’s 2023 Annual Progress Report. Key takeaways for the industry:

  1. EPCs: “The Government is currently working on proposals for improving the reliability, accuracy and accessibility of EPCs…and intends to consult on reforms to the Energy Performance of Buildings regime this year”. Admirable intention but more talk? 
  2. EPC B by 2030, EPC C by 2027:  The government may have rowed back on proposals for domestic property, but where are we on the commercial side? When will this hit the statute books? A notable lack of update from the government. “We are working hard to review the policy design to ensure it remains fair and appropriate for landlords and tenants” and “the proposed timelines within the original consultation will require updating to allow sufficient lead in time for landlords and the supply chain”. No apparent urgency, or indeed certainty of implementation, here then. 
  3. Operational energy ratings: After a promising consultation in 2021 around energy “actual” performance certificates (i.e. a performance-based rating scheme), we have an official pause. So it feels like voluntary uptake of e.g. Nabers will simply remain – clearly no imminent regulatory intervention on actual energy use.   
  4. Owner-occupied commercial property: As for delivering energy efficiency and low-carbon heat in owner-occupied commercial buildings (including potentially minimum EPC ratings), the government plans to consult in “due course”. Not exactly all systems go. 

Is this the regulatory certainty that the industry craves? Clearly not. Arguably, the Building Safety Act is evidence of how the government can make swift legislative progress, if it is minded to do so. Contrast the continuing dithering on energy efficiency!

One notable observation from the programme at the recent BPF dinner, from Sir Keir Starmer: “My Labour government will work with you to unblock any impediments..removing hurdles to ensure the sector can go from strength to strength”. A generic statement and one can think of many notable impediments (e.g. planning system), but how about decarbonisation? One to watch with interest as we approach general election year.  

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

How could student accommodation cope with the spike in annual university applicants?

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Ben Jordan, Head of Policy at UCAS, discussed the state of the student housing market in England in a webinar for the Westminster Higher Education Forum on 20 October. One notable statistic he shared related to the significant spike in university applicants on the horizon in 2030. 

There are currently around 750,000 university applicants every year. By 2030, it is estimated that there will be up to 1 million applicants in a single cycle. The reason: greater numbers of 18-year-olds in 2030 compared to now. But given that this spike is expected to be short-lived, with a rapid decline back to current applicant levels by 2035, how will the student accommodation sector rise to the challenge in an already tough environment? 

Suggestions may include:

  • Investment and funding support to enable more homes of every type, tenure and price point to be developed
  • Designing accommodation to appeal to global students with more affordability challenges, such as those from India, Malaysia and Ghana
  • Altering students’ perceptions of acceptable distances to live away from university by building PBSA further away from campus and having different campuses on the university bus route
  • Developing more basic accommodation in less centrally located areas at a lower cost
  • Improving transport systems to enable students to live in less central locations- transport is a more significant barrier than housing when students consider living further away from campus. 

The bottom line? Demand for student accommodation is high and on the rise. There is room for all housing variations, so long as it is safe, secure and in a good location. 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Landsec and brands talk ‘Sustainable Retail’… how it’s going

Vertical garden flourishing on a building facade, with lush green plants covering multiple levels, set against a backdrop of tall glass skyscrapers.

We all know it, retail in comparison to other property sectors has a bit of a bad rep when it comes to sustainability. On 31 October, Landsec hosted a fantastic webinar with a panel of representatives from John Lewis Partners, Lush, Hollywood Bowl and All Good Things discussing the realities of what retailers are doing, and the challenges they are facing, in making the sector a greener one. 

In my experience as a solicitor operating in the retail and leisure sector, the infamous green clauses found in leases tend to be more easily agreed in the ‘light touch’ areas and heavily negotiated in others. There are plenty of positive steps being made but, despite published ESG credentials, occupiers remain cautious in signing up to concrete obligations in leases that could expose them to additional costs in the current climate.  The comments from the panel discussion gave a great insight into why this might be. To frame the discussion, Landsec’s Jennie Colville drew upon themes from the real estate company’s report “The Potential of Sustainable Retail”, which you can access from the link below and which is well worth a read. Here are my key takeaways from the discussion. 
 

Collaboration is key

This will come as no surprise; everyone agrees that more collaboration is needed. Landsec’s report covers this in more detail, especially around the need for data sharing, but what was interesting in the panel discussion was a resounding view that whilst talk about collaboration abounds, what is needed is more action. The path to sustainability looks different for different retailers, and so there needs to be a degree of flexibility on this (which is perhaps why our green clauses continue with statements of intent as opposed to fixed requirements). Smaller retailers need initiatives to be kept simple in order to take part.

In a larger centre, the Landlord is the one consistent player and has a key role in helping their retailers collaborate at a centre level. Larger retailers that have given stores a degree of autonomy as to how they invest, both in general sustainability efforts and local community initiatives, have seen great results when collaborating with landlords in their efforts. Interestingly, Landsec reports that the consumer considers localism a key part of sustainable retail – see Landsec’s report for more detail on that. 

Clearly these conversations are happening, but need to happen more. But with the Government recently reneging on plans to increase the minimum EPC rating for housing, will they increase before the Government makes it clear they are not going to do the same for commercial properties? 

The cost of sustainable retail is still a challenge

When it comes to choosing location, it was clear from across the panel that footfall and commerciality were key, and for many businesses the models and algorithms determine this for them. However, if the price and location are right then sustainability is important too. That needs to become more important if we are to reach sustainability goals. 

One of my key takeaways from the panel discussion was the repeated point that sustainability is always going to cost more, until the buying power is behind sustainable products. Once that happens, then it will be much easier for businesses to justify any perceived additional cost in choosing a sustainable option as consumer demand for sustainability is a key driver for retailers’ ESG commitments. Perhaps the buying power will shift in time as the (arguably) more climate-conscious younger generations become the key decision makers and breadwinners across society, and have the ability to put their money where their mouths are.

In the meantime, businesses need to start taking responsibility where they can. But where to start? Businesses should be looking at where they have the biggest carbon impact and spend the most money, and look at the opportunities there in order to have the biggest impact. 

Hollywood Bowl’s Mark Johnson talked about their bottom-up approach in terms of making a day-to-day difference. Local teams have waste and recycling targets so that all employees can take ownership in the business’s goal to reduce its impact on the environment. Perhaps small actions like this on the ground will also in time move the buying power.

I repeat, collaboration is key

There are some things that are just outside the control of the retailer. A key challenge for occupiers in terms of energy is the limitations of the UK grid; for some there is simply not enough power in the grid to move completely away from gas for manufacturing processes.  However,  collaborating with landlords on installing sustainable (and reusable) fit outs is within the retailers’ control and can make a difference. I have seen great examples of this throughout my work across the retail and leisure industry. Lush’s Ellen Peters talked about the importance of considering embodied carbon in the buildings and materials we already have, especially in listed properties that also hold social value. It may not always be possible, but where it can be, one should work with materials that already exist and, importantly, ensure that those recycled materials remain recyclable in the future as we use them.

Smaller retailers just simply do not have the same amount of expertise and resource to look research sustainable choices, which is where collaboration under common landlord ownership can help. Ellen Peters said that Lush “would rather share knowledge than data” and hopes to be able to do that increasingly in the future. Many major centres have merchants’ associations or forums that can create a place for sharing this knowledge. Hopefully, these avenues will continue to foster conversations across occupiers to create more sustainable retail destinations.

You can find Landsec’s report here: 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The importance of “right-sizing”

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

We are all now familiar with the findings of the 2022 Mayhew Review and the headline conclusion that an additional 50,000 new homes for older people are needed each year in order to keep up with the demands of an ageing population.

A report published by the International Longevity Centre UK (ILC)  this month considers the other side of the coin – the impact of a housing shortage caused by people remaining in their own homes during older age. The ILC report finds that, without suitable retirement living accommodation to move into, too many elderly people stay in houses which are often too big for their needs, whilst younger people struggle to find suitable places to live. According to the ILC report, nearly nine in 10 people aged 65-79 live in under-occupied housing, with over 50% of them living in homes with two or more excess bedrooms.

Taken together, these reports make clear the importance of “right-sizing” – the concept that suitable housing should be available to people throughout their lives to suit their changing requirements. The work of the Older People’s Housing Taskforce will be crucial in providing adequate and attractive“right-size” options for older people, which will in turn free up homes for younger families and those taking their first step on the housing ladder. Interim findings from the Taskforce are expected soon, so watch this space.

New analysis by ILC confirms significant numbers of older adults are stuck in homes larger than they need – with little to tempt them to move.

https://ilcuk.org.uk/shortage-of-right-size-homes-harms-health/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

We need “better building partnerships”?

Vertical garden flourishing on a building facade, with lush green plants covering multiple levels, set against a backdrop of tall glass skyscrapers.

This BBP “Industry Insight Paper” hits the nail on the head. As the industry transitions on a net zero pathway, owner-occupier engagement is key – but for all the progress to date, we need to see more. As lawyers we encounter some of the observations first-hand – natural friction around green leasing concepts and openness on data sharing. 

On a personal note, two themes stand out:

  1. “Green leases are not delivering on their potential”: Despite the progress s on contractual commitments, it does not feel like that is translating to measurable outcomes on the ground. 
  2. “A significant change in regulatory gears is necessary to deliver the scale and pace of change required”: It feels out of step with recent government announcements, but surely this is the key to progress? And if it is the case that both owners and occupiers are calling for more regulatory ambition, surely a “no brainer”?  

There was consensus in the research that greater ambition and enforcement from government is necessary to help drive the required investment and behaviour changes from owners and occupiers, to achieve a more sustainable real estate sector

https://www.betterbuildingspartnership.co.uk/owner-occupier-engagement-sustainability-unlocking-potential-collaboration
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Broker’s commission: one less thing to argue about?

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

Over the weekend five major UK insurance brokers – Willis Towers Watson, Lockton, Brown & Brown, Bridge and PIB – announced they would cap their fees for arranging buildings insurance for landlords and end the practice of sharing commissions with third parties (aka landlords) instructing them on placing buildings insurance. Amidst the backdrop of another year of rising premiums this will no doubt be welcome news to leaseholders of all kinds, given these fees would invariably be recharged to tenants. 

The practice of sharing commissions with landlords, or at least the principle of it, has been around for many years. I first encountered it as a junior lawyer negotiating insurance provisions in leases, where the landlord invariably includes a statement that it is entitled to any commission paid in connection with placing its insurance. Like many in the comments on the article I initially found it surprising that the market had generally got comfortable (or at least tenants begrudgingly accepted) this arrangement. It would be interesting to know how widespread it was in practice, particularly among the big institutional landlords; I suspect less likely than some might think. 

In any event this news will hopefully make for one less point in lease negotiations – unless of course landlords seek to retain the clause “just in case”… 

Click here for the FT article (£).

Lee Rowley, minister for building safety, welcomed the decision of the brokers "to step up and demonstrate their willingness to do more on bringing premiums down".

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Student maintenance loans almost entirely used up by rent, report warns

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

The BBC has today reported on research carried out by Unipol and the Higher Education Policy Institute which has found that in the last two years, average student rent has gone up by 14.6%, while maintenance loans have risen by only 5.2%. The reasons for the rent increases are well documented (rising costs of construction, borrowing, operations including utilities and staff pay rises etc) and this further highlights the need for the government and local authorities to work with student accommodation providers to bring forward affordable accommodation and to ensure that the student finance system is fit for purpose. 

Affordable student accommodation is one of the issues which often arises at the planning stage, and my colleague Sophie Smith has recently written about this and other planning considerations https://www.linkedin.com/feed/update/urn:li:activity:7119660573658619904/

"We are now at the point where accommodation costs are pricing students out of certain universities, which will have disastrous consequences for students from poorer backgrounds being able to access education."

https://www.bbc.co.uk/news/education-67206767
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

“I’m still a rocker drummer at heart” — the leisure that CEOs take seriously

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

Judging by this Harvard Business Review report there may still be hope for many of us (or well, perhaps me — as I continue to be in denial as to the idea that perhaps I am no longer a gig-going indie kid first and foremost!) who want to pursue a successful career and also want to retain our authentic selves and indulge our spare time with serious leisure activities.

The review considers why leaders make time for passionate leisure interests in their already impossibly busy schedules — and whether they feel it helps their job performance. 

Common themes that I think we may all be able to relate to are:

  • It provides detachment like nothing else can (as Electronic Arts CEO Andy Wilson has said: “I train a lot of Brazilian Jiu Jitsu, and you know, when someone’s trying to take your head off, you pretty much can only think about that.”)
  • It means constantly striving for your “best self” (Brian Roberts, CEO of Comcast, led his squash team to the gold medal in the Maccabiah games in his first year as CEO — although perhaps he is just an overachiever!)
  • It can provide a welcome humility lesson (“I think it’s always good to do anything that keeps you humble.”)
  • It offers a “full control” experience. (While feeling in control of one’s work is a basic psychological need, it may paradoxically be harder to achieve in the top job.
  • It creates different, deeper connections with your followers. (Dennis Muilenburg of Boeing and Arne Sorenson of Marriott engage in their favourite sports (cycling and running, respectively) with large teams of employees during their visits to company offices around the world.)
  • It strengthens your authentic leadership. (It helps leaders tell the story of “how they became who they are.”)
  • It may simply make you a better leader. (PayPal’s Dan Schulman: “I’ve learned more about leadership from martial arts than I have from my formal education.”)

So, next time you wonder if you should take some time out in your day or at the end of a hard day of work to submerge yourself in your hobby, think about the fact that you may not just be enjoying your leisure time but you may be growing as a leader too.

Does serious leisure make you a better leader?

https://hbr.org/2018/10/why-ceos-devote-so-much-time-to-their-hobbies
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The Green Belt Has Grown!

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Statistics recently published by the Department for Levelling up, Housing and Communities, reveal that England’s green belt has increased by 860 hectares.  Despite eight local authorities having released land from the green belt in the period from March 2022 to March 2023, the overall national amount has increased.   

The majority of the increase came from North Hertfordshire who added 3,350 hectares to the green belt. The only other local authority to increase their boundary was Cheshire East, by 10 hectares. 

Of the eight local authorities that took land out of the green belt, St Helens Borough Council and Blackpool Council released the highest percentages of green belt land within their boundaries, by 10% and 12% respectively. 

The political stances on the green belt differ drastically between the leading political parties. Sir Kier Starmer has stated that Labour will consider green belt release to ensure that his party’s proposals for 1.5 million new homes in five years can be delivered.  In contrast, Rishi Sunak is standing by his pledge to protect the green belt, despite reports of some Conservative MPs urging Sunak to relax this position. 

There is no doubt that the green belt will be a hot topic of conversation in the lead up to the 2024 general election so watch this space… 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Not wishful thinking after all? The wording of the proposed BSA 2022 amendment to close the enfranchisement loophole has been finessed (we think!)

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

On 16 October, MPs agreed a fairly substantial amendment to the proposed Levelling-up and Regeneration Bill – new subsections 119(3A) and 119A to the BSA 2022.

The amended wording in s119(3A) creates a new defined term, a “connected replacement lease”. This ensures that an existing lease that already qualifies will continue to be a “qualifying lease” for the purposes of the BSA 2022.  To be a connected replacement lease, various qualification criteria must be met (as set out in s119A) but crucially, the definition allows for the lease to have been granted on or after 14 February 2022.   

The idea is that these amendments will be treated as having come into force on 28 June 2022 – the same date that the leaseholder protections first came into force.

At first blush, it looks as though this should solve the issue but once digested, enfranchisement practitioners will need to see if there are any devils in there.  As some people have commented – with 14 subsections, it is perhaps an invitation to litigate!

The Lords consideration of the amendments is scheduled for 23 October 2023…

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

What type of Christmas shopper are you? – The effect of current shopping trends on retailers.

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Are you a last minute Larry? Or do you start your Christmas shopping in the January sales and spread the cost throughout the whole year?

It seems the cost of living crisis is still somewhat dictating our shopping habits. As reported by Retail Gazette, UK shoppers are starting their Christmas shopping earlier this year to get the best deals and spread the cost. I expect more people will be looking to buy pre-loved items as well, whether driven by cost or environmental concerns (or both). I’ve also noticed that a lot of items (or at least the items on my son’s wish-list) seem to be out of stock already.

But not all will be equally prepared, as the same article reveals that Saturday 23 December (sometimes known as Super Saturday) is predicted to be the busiest day of the year for the high street (it was the third busiest last year). And Black Friday hasn’t even made it into the top five (although the Saturday after has).

This creates a dilemma for retailers – when is the best time to put on deals to attract the most customers? Some made the most of early shoppers, with late summer sales. But generally, it seems that sales will be popping up throughout this last quarter rather than being concentrated on one or two weekends.

And for those who read my last post (here), I did indeed manage to get the £70 lump of plastic significantly cheaper second hand and I am very pleased with myself. Here is hoping my son doesn’t go off his current super hero obsession in the next two months (a worry I am sure my fellow early bird shoppers will understand)!

cost-of-living fears are prompting UK consumers to start Christmas shopping earlier

https://www.retailgazette.co.uk/blog/2023/10/super-saturday-busiest-peak-trading/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Coca-Cola trialling ‘capturing carbon’ to make bottle tops

My colleague Laura has written about the opportunities and challenges of carbon capture before, click here to read her article; could Coca-Cola be about to find one way of tackling those challenges?

As we enter the last quarter of 2023 and move another year closer to the net zero target of 2050 (or 2040 in Coco-Cola’s case), one of the biggest users of plastic is investing in a trial at Swansea University to produce bottle tops from carbon dioxide taken out of the atmosphere. 

If the technology works and can be produced at scale, this could be a great way to reduce emissions across the manufacturing (and therefore retail) industries. If CO2 can be captured and used at source, that also reduces the need to transport captured carbon around the country. 

Recycling the plastic already in existence will still be the main means of reducing Coca-Cola’s carbon footprint, which is of course preferable to making more. But where that’s not the solution, creative solutions like are very intriguing. 

 

"From 2030 to 2040 we need to start making the more radical bets... looking at lots of different technologies." Craig Twyford, director of Coca-Cola's venturing division for Europe and the Pacific

https://www.bbc.co.uk/news/uk-wales-67060151

Is it really “the economy, stupid”??

A modern building with sleek black columns supports a white structure overlooking a vast, calm ocean under a clear, blue sky.

Leaves on the line, the wrong type of snow, the cheque is in the post….all lines that when we hear them said we just don’t believe are the truth and dismiss out of hand as being a poor excuse for a wider problem. 

So it is with interest that I noted this article in CityAM (https://tinyurl.com/2c9845yt), highlighting the fact that recent MHP research on Investor Influence (https://insights.mhpgroup.com/investor-influence-report-is-the-macro-dead) has found that only 2% of investors believe it when companies blame macro economics for disappointing results, instead paying far more attention to factors that the board can control, and that ESG is an increasingly important factor that they consider.

Interestingly also is the message that “businesses should prioritise communication with investors” which also tallies with my experience with early stage and fast growth companies which increasingly report that their VC and PE fund backers prefer them to be open, honest and authentic about the performance of their company and to own challenges that they are facing rather than find the proverbial “the dog ate my homework” type of excuse. 

So while no-one would disagree that the economic and market conditions can impact any and every business, it seems that investors are going to look through (or have already factored in) the macro economic conditions and will really scrutinise what you can control and what you can affect in your business.

But perhaps the most common excuse is a poor economic backdrop

https://www.cityam.com/stop-blaming-weak-share-prices-on-economic-outlook-and-use-communication-to-boost-investor-confidence-in-the-city/?utm_term=0_-e0c3d18f09-%5bLIST_EMAIL_ID%5d
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Up-cycling: Is it time for the retail sector to change tack?

We are now well into Autumn. The weather is turning and, dare I say it, the mind starts to drift towards Christmas shopping. This year my son has asked for what is effectively a £70 lump of plastic. So I have been scouring Vinted, E-bay and Facebook Marketplace looking for a pre-loved version with a much more reasonable price tag. But there is always the concern with buying second hand online about what condition the product will turn up in and speaking with friends and family, this often puts people off the pre-loved market.

With a few exceptions, the current second hand market feels a bit pot-luck. You either go to a charity shop, but if you are after a specific item it is unlikely they will have it. Or you purchase from a private individual, with no guarantee about the condition or quality of the item.

The dilemma got me thinking, is there an opportunity for more retailers to expand into the realm of re-using, repairing and up-cycling to create a truly circular economy? To provide consumers with a second hand market that comes with some form of guarantee? And could this be profitable? Apparently so, as reported by Retail Gazette, Currys has been running a profitable repair business since long before sustainability became a buzz word. And with environmental concerns remaining a hot topic, it couldn’t be bad for a business’ reputation either.

“We’re on the cusp of starting a meaningful circular economy around tech.”

https://www.retailgazette.co.uk/blog/2023/10/currys-repair-shop/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

RIP: Portugal’s Non-Habitual Residents Regime

A modern building with sleek black columns supports a white structure overlooking a vast, calm ocean under a clear, blue sky.

For the internationally mobile, Portugal has been a popular relocation destination to consider. Its Non-Habitual Residents (NHR) regime (see it as akin to the UK’s regime for resident non-domiciliaries) offers tax incentives and breaks for certain foreign-sourced income. Coupled with the country’s so-called ‘Golden Visa’ enabling residence-by-investment, it wasn’t surprising Portugal was at the top of many clients’ lists when comparing jurisdictions to move to.

Monday’s announcement by the Portuguese Prime Minister that the NHR regime in its current guise will end in 2024 comes in the wake of its Golden Visa programme being abolished this year. One could draw parallels with the UK with the closure of its Tier 1 (Investor) Visa category in February 2022 and possible changes on the horizon to the remittance basis of taxation for non-domiciled UK residents in the run up to the general election next year. 

While these changes and uncertainties will give global families pause for thought in deciding where to move to, it is worth bearing in mind that these tax and residence-by-investment regimes for many are not their primary motivators. Core fundamentals such as whether the jurisdiction offers the right lifestyle for them, a strong educational system for their children, a stable rule of law and the optimal eco-system to pursue and develop business opportunities still remain the top priorities for what attracts our clients to relocate to a specific country, particularly with the UK and senior executives (discussed more here: https://www.forsters.co.uk/services/private-client/senior-executives/thinking-of-relocating-to-the-uk). 

Portugal to scrap ‘unjust’ tax breaks for foreign residents

https://www.theguardian.com/world/2023/oct/03/portugal-to-scrap-unjust-tax-breaks-for-foreign-residents
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Phillips House – the next country house hotel?

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

In a rare move, the National Trust have put Grade II* listed mansion Phillips House up for sale by way of a 125 year lease. Nestled outside of the village of Dinton near Salisbury in the Nadder Valley, the property is in need of extensive renovation. Were the right investors and developers to be found (ones who will certainly need a strong constitution for listed building consent applications!) this could offer an exciting opportunity to bring what the Georgian Society have called “one of the finest houses of the period” back into use. Surely an ideal spot for the next country house hotel?! 

Rare opportunity to purchase up to 125 years of a National Trust Lease of a Grade II* listed Neoclassical Country House, overlooking the Nadder Valley

https://www.struttandparker.com/properties/st-marys-road-6

Enfranchisement practitioners may not have to wait much longer for the BSA 2022 loophole to be closed…

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

An unintended consequence of the BSA 2022 has been that where “qualifying leases”, that benefit from substantial protections in relation to the recovery of remedial costs, are extended (and therefore granted after 14 February 2022), they lose all of the valuable protections afforded to them by the legislation.

When brought to their attention, the Government confirmed that there was an intention to legislate in order to remedy this issue, and so it is encouraging to note that there is a proposed amendment to the Levelling-up and Regeneration Bill 2003, to address this point.  Although, disappointingly, it seems as though there is some opposition to this.

The proposal is for a new section to be added: s119A, which will confirm that any qualifying lease that is varied, or subject to any surrender or re-grant, will remain a qualifying lease, with retrospective effect.

In all honesty, the brief wording looks a lot like a rush job (much like the BSA 2022 itself), so although many practitioners will no doubt be pleased that this is on the agenda in some form, they will also be hoping that it will be finessed before going any further.  That might be wishful thinking though!

We’ll just need to watch this space…

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Updated government guidance on damp and mould in rented homes

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

Following the 2020 death of a two year old caused by chronic exposure to mould in the flat that his family rented from a social housing provider, the government has published updated guidance on damp and mould standards in rented accommodation.

The government has set out the following five key legal standards in relation to damp and mould in rented homes:

  • All homes must be free from ‘category 1’ hazards. This is a hazard that causes an occupier or visitor to the property to require medical attention over a period of one year. ‘Category 1’ hazards encompass all types of mould and damp.  
  • Homes must not be in a condition that is harmful to health.
  • Homes must be fit to live in.  
  • Social housing must meet the Decent Homes Standards.
  • Privately rented homes must meet the minimum energy efficiency standards.

Landlords should be encouraged to take steps to ensure that the risk of damp and mould in properties is reduced and to be pro-active in carrying out inspections and maintenance at the property to try to resolve any issues as soon as possible. Landlords who have concerns about arranging access to the property should be comforted by the fact that they should have a right to enter properties for these purposes. However, landlords are reminded that they should ensure that these inspections are carried out in compliance with the terms of the tenancy agreement or the relevant statutory provisions.

This guidance is a useful reminder of the standards that rented accommodation must meet. Where landlords fail to meet these standards they can be subjected to penalties such as a £30,000 fine,  court action by their tenants, or receiving a compliance notice from their local council.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Landlords Beware – Prosecution Under the 1987 Act

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

It has long been the case that leasehold practitioners will advise their landlord clients that a breach of the rights of first refusal found in Part 1 of the Landlord and Tenant Act 1987 (“the 1987 Act”) is a criminal offence yet no prosecutions have been reported. This advice will need to be slightly amended following a recent prosecution under the 1987 Act.

However, the position has not changed significantly as the prosecution was withdrawn because the summonses were issued late. Practitioners will therefore remain unsure as to whether a prosecution under the 1987 Act is likely to be successful.

In accordance with the 1987 Act, when a landlord disposes of an interest in a residential building, it must serve notices on the qualifying tenants in the building to provide them with the right to first refusal in relation to that disposal. It is a summary offence (with a potentially unlimited fine) for a landlord to fail to serve the notices without a reasonable excuse under s.10A of the 1987 Act. 

In accordance with s.127(1) of the Magistrates Courts Act 1980, there is a 6 month time limit from the time when the offence was committed to apply for a summons in relation to a summary offence. 

In this recent prosecution, the landlord sold a block of flats at auction and completed the sale a month later. The local housing authority issued a summons against the landlord 6 months after the completion date. However, under s.4A of the 1987 Act, the disposal takes place on the date of the auction contract not the date of completion. Therefore, the summons were issued 7 months after the alleged offence and so outside of the 6 month time limit. The prosecution was accordingly withdrawn.

Landlords may still wish to tread more carefully when considering their obligations under the 1987 Act as it is now clear that a prosecution is not necessarily an empty threat.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

BNG start date pushed back to January 2024

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

Following my colleague Sophie Smith’s post yesterday, the Government has formally announced that the Biodiversity Net Gain (BNG) go live date is being pushed back to January 2024. The delay was expected given that the raft of necessary regulations and guidance are still awaited. The announcement confirms these will be published by the end of November and provides a list of what is to be expected. 

Rather optimistically it is suggested this “will ensure that developers and planning authorities have access to the necessary tools and information to effectively implement Biodiversity Net Gain in January 2024.” I’m not sure such a deluge of information a month before Christmas is really the Christmas present local planning authorities, developers and practitioners were after! It feels a very tight time frame to get to grips with the important technical and practical detail. It will be an additional burden on local authorities given the considerable concerns already about the shortfall in expertise and resources to deal with this new environmental requirement. 

In DEFRA’s words, BNG still feels very much like a baby elephant. The “herd” of regulations and guidance is coming to help it but it’s rather late in the day. 

Good luck baby elephant – the environment and I are routing for you! 

Under the updated timetable set out today developers in England will be required to deliver 10% “Biodiversity Net Gain” from January 2024 onwards when building new housing, industrial or commercial developments meaning by law they must deliver a net positive for the local environment, for example by creating new habitats and green spaces. Biodiversity Net Gain for small sites will be applicable from April 2024, and implementation for Nationally Significant Infrastructure Projects is planned for 2025.

https://www.gov.uk/government/news/biodiversity-net-gain-moves-step-closer-with-timetable-set-out
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Biodiversity net gain…delayed?

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Whilst not yet formally announced by the Government, it appears the anticipated biodiversity net gain obligations to form part of the planning system could be delayed until 2024

It was expected that the biodiversity net gain requirements contained within the Environment Act 2021 would come into effect for the majority of sites in November 2023, with small sites already delayed until April 2024

It would perhaps be unsurprising if the implementation date for these detailed obligations is delayed, given the secondary legislation still awaited to resolve a number of the outstanding points. 

If the implementation date is pushed back, could this provide the opportunity to ensure that all parties involved in the planning system, from applicants and developers to local planning authorities, are prepared in advance and understand the requirements? This will inevitably be crucial for the successful implementation of biodiversity net gain. 

"Biodiversity Net Gain (BNG) was meant to become a mandatory part of the planning system in England in November. But government sources told the BBC it will now not be introduced this year."

https://www.bbc.co.uk/news/science-environment-66927242
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Government rows back on EPC changes for the private residential rented sector

On 20 September 2023, whilst speaking about a range of green policies, Rishi Sunak announced that proposed energy efficient targets for households, including rental properties, would not be introduced as anticipated. 

Currently, the Minimum Energy Efficiency Standards (“MEES”) provide that all privately rented property in England and Wales must have an Energy Performance Certificate (“EPC”) rating of ‘E’ or above. 

Following a consultation to tighten up MEES in this area in 2020, a raft of changes to the existing rules was proposed, including:

  • raising the minimum EPC rating from E to C to be enforced from 1 April 2025 for new tenancies and from 1 April 2028 for existing tenancies;
  • raising the costs cap for complying with the penalties from £3,500 to £10,000 per property. It was envisaged that this would bring more than 90% of D-rated properties and almost 60% of E-rated properties to a C rating.

A study by Shawbrook Bank using its internal data found that 80% of landlords had already prepared for the 2025 EPC deadline, but this shock move means that there is now no deadline for private landlords to upgrade D or below rated properties.

"But under current plans, some property owners would’ve been forced to make expensive upgrades in just two years’ time. For a semi-detached house in Salisbury, you could be looking at a bill of £8,000. And even if you’re only renting, you’ll more than likely see some of that passed on in higher rents. That’s just wrong. So those plans will be scrapped, and while we will continue to subsidise energy efficiency - we’ll never force any household to do it." Rishi Sunak on Net Zero: 20 September 2023

https://www.gov.uk/government/speeches/pm-speech-on-net-zero-20-september-2023
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Electrifying from Sunak

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

As Robert Colvile comments here (£) for the Sunday Times, “when we talk about net zero, we are actually talking about electrification”. The net zero pathway involves a “massive” increase in electricity use – take the shift to electric cars and switch from gas boilers to heat pumps as examples – together with a “massive” increase in the amount of electricity generated by nuclear and renewables. And as Colvile adds, the path also involves a “massive” decentralisation of the National Grid – “to accommodate numerous tiny power sources and storage media (solar panels, car batteries etc) rather than a few big power stations”. 

The commercial real estate sector has a significant role to play in this “rewiring” of the energy economy – take onsite energy generation via solar or electric vehicle charging provision at the roadside as examples. Yet as many are experiencing, and as Colvile notes, limiting factors are in play – grid connections, planning permission, or, taking a practical example as cited by the head of one electric vehicle charging network, waiting for “highways teams to approve the kerb design”. Significant pain points for those in the industry that are on this net zero pathway. 

And so whilst Sunak’s recent announcement on net zero reform has garnered much attention – unquestionably, and in the author’s view wrongly, backtracking on critical areas of reform (e.g energy efficiency in domestic property), there are some snippets of positivity buried in the press release, particularly around grid connection. Take these announcements: 

  • A “fast track” through the nationally significant infrastructure project planning regime, available for major eligible transmission projects, to ensure they are prioritised, helping businesses and households connect to the grid sooner.

  • A new approach to grid connections, where energy projects that are ready first will connect first – and ultimately get online quicker. 

Can those in the real estate sector take some encouragement from this? As the press release states, “The Chancellor and Energy Security Secretary will bring forward comprehensive new reforms in due course”. Surely with an election looming and the “net zero” battleground now on the table, don’t hold your breath?


Whether it’s 2030 or 2035, if we don’t have enough electricity we’ll never get to net zero

https://www.thetimes.co.uk/article/whether-its-2030-or-2035-if-we-dont-have-enough-electricity-well-never-get-to-net-zero-kw8zvpn0r
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

“The opposite of what we need” – Property industry response to Sunak’s U-turn on net zero pledges

Prime Minister Rishi Sunak has announced a series of U-turns on a number of the UK’s net zero pledges, including the delay of phasing out new diesel and petrol fuelled cars and vans. As many will be aware, the previous target envisaged a 2030 ban on the sale of such vehicles; Sunak’s announcement pushes this date back to 2035, in line with a ‘new approach’ to Britain’s climate policy. This follows Michael Gove’s, the Secretary of State for Levelling up, comments earlier this year, insisting that the 2030 target was ‘immovable’.

The announcement has been met with frustration by the BPF, with Chief Executive Melanie Leech, describing the changes as “the opposite of what we need”, particularly for property owners who have already made long-term plans and financial commitments to ensure they play their part in meeting the UK’s climate change commitments. Car manufacturers have reacted similarly with Ford calling for “ambition, commitment and consistency” in the wake of the Government’s U-turns.

The original 2030 target for banning the sale of new petrol and diesel cars saw a rapid increase in the production of electric and hybrid vehicles, as well as a pledge by the Government to install 300,000 electric vehicle public charging points across Britain. Progress has been slow, as shown by the latest DfT figures; as of 1 July 2023 there were just 44,020 EVCP’s available in the UK, and at its current rate, the target will be achieved 10 years behind schedule. Major investment is also required to the UK’s existing grid infrastructure (including the increased implementation of battery storage) to manage increased demand as well as the increased contribution to the UK’s energy mix from renewable sources.

As at the time of writing, the Government’s EVCP target remains unchanged, as do the regulations designed to make the private sector pick up some of the shortfall, which require a minimum number of charging points on new developments/ material changes of use.

The immediate effect of Sunak’s announcement will be a lack of certainty for landlords and developers as they try to navigate the policy shift and changing timetables, against a backdrop of previous Government pledges. Frustration is to be expected from those who have already committed expense and effort complying with regulations. But while the changing interim milestones lack certainty, our landlord and developer clients continue to show an intention to ‘go green’ regardless, with the delivery of EVCPs forming part of well-established net zero strategies for their real-estate portfolios, particularly for institutional clients with existing, publicised sustainability targets. 

Rishi Sunak announces series of U-turns on net zero pledges. UK prime minister says policy shift to include delaying ban on sale of new petrol and diesel cars until 2035.

https://www.ft.com/content/02ecb92e-1e67-4db1-ad73-6c0e76bdc6ca
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Law of Property Act 1925: agent for change?

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

When it comes to tools for fighting gender inequality, you might not think to look to a piece of legislation that has been on the statute books for nearly 100 years. So I felt no small amount of geeky pride when I read that the Garrick Club may have to rethink its ‘no female members’ rule, thanks to an amended legal opinion by the distinguished Michael Beloff KC. The cause? A nifty little provision in the Law of Property Act 1925.

Beloff had previously opined that the Garrick’s constitution, which provides that “no candidate shall be eligible unless he be proposed by one member and seconded by another“, could not be interpreted to mean “she” instead of “he”. Thus, no woman can be proposed as a member.

But he has apparently been persuaded to rethink this conclusion, after his attention was drawn to an obscure provision in the LPA 1925. Although I have not had the privilege of seeing a copy of the opinion (for rather obvious reasons) I think he must be referring to section 61, which states that:

In all deeds, contracts, wills, orders and other instruments executed, made or coming into operation after the commencement of this Act, unless the context otherwise requires-

(d) The masculine includes the feminine and vice versa.

Presumably the club’s constitution and related documents constitute a contract or instrument for these purposes, such that there is now a “cogent argument” (in Beloff KC’s words) that women may be proposed as members.  He concludes that the club may face an “expensive lawsuit” if it does not change its rules.  

The opinion was apparently written in November 2022 but has only just come to light, the club’s committee having decided not to adopt it when it was delivered at the time. It remains to be seen whether it will provoke another debate on the subject and persuade a sufficient majority of the Garrick’s membership that the time has come for change.

The LPA 1925 was a game-changing piece of legislation when it was enacted, and property practitioners still refer to it daily. But I’m not sure even its own authors could have predicted the important role it still plays nearly 100 years later; including, it would seem, as an ally in the fight for equality.

"If so, there is no legal obstacle to the proposal of a woman for membership of the club by one member, seconded by another; nor, if she obtains the support required under the rules, any legal obstacle to her admission as a member of the club." Michael Beloff KC

http://forstersllp/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Renewable energy – bronze, silver or gold- how does your building rate?

“Buildings are no longer simply consumers of energy- no longer just hungry end points in the energy network. Our buildings are now integral to our shared electricity infrastructure”. These are the words of Smith Mordak, Chief Executive of UKGBC, in a foreword to UKGBC’s excellent guidance on renewable energy procurement. 

Unquestionably, the built environment does have a critical role to play in decarbonising the grid via procurement, and there are ever increasing moves in this respect. More and more building owners are exploring on-site energy generation (typically rooftop solar PV panels), but also alternative structures (e.g. off-site generation via PPAs) where that is not available. Take wind-powered Canary Wharf or Scottish solar energy supplier, and London landlord, Derwent.

For me, there are a couple of themes to note. On one hand, landlords aspire to develop, own and operate buildings with ever increasing ESG credentials – energy procurement is part of that, particularly where the owner, rather than the occupier, retains responsibility for procurement e.g common parts. Investors and lenders are, without doubt, driving that. Yet in addition, are we starting to see renewable energy provision as a differentiator for ESG conscious occupiers? If a landlord can, and is willing to, deliver renewable energy to site, surely that is a key plus for prospective occupiers (and inevitably, some occupiers will start expecting landlords to commit to renewable energy as part of service charge regimes). The UKGBC bronze, silver and gold “Rating your electricity strategy”, currently at “beta” stage, is perhaps one to watch.

I sense some building owners are at risk of being behind the curve – now, if not already, is the time to start exploring renewable options, and so the UKGBC guidance is all the more timely. Plus of course there are potential opportunities here for some landlords to diversify income streams…

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Is Collaborative practice the answer?

A modern building with sleek black columns supports a white structure overlooking a vast, calm ocean under a clear, blue sky.

The Family team at Forsters find that many prospective clients approach us asking if there is a way for us to negotiate their financial settlement, nuptial agreement or children issues directly with their former partner and their lawyers. Generally, these clients are on good (or at least cordial!) terms with their former partner and are keen to have a “cards on the table” style negotiation, where everyone can be on the same page and the “he said, she said” of solicitors’ letters back and forth can be avoided. For these clients, it is well worth opting for a Collaborative approach. 

Negotiating a settlement using Collaborative practice means that each person appoints their own collaboratively trained solicitor, and everyone meets together. Some clients (but by no means all) also opt to involve other professionals to obtain specialist input, such as an independent financial adviser, a family consultant, a child specialist, or an accountant.  Everyone signs up to an agreement that (a) commits the clients to trying to resolve the issues without going to court; and (b) confirms that they will retain new legal advisors if the Collaborative process breaks down. This means that everyone is absolutely committed to finding the best solutions by agreement, rather than through court proceedings.

The team has seen a recent rise in clients opting to use the Collaborative approach in negotiating pre-nuptial agreements. Clients report that this is because they feel that negotiating with their future spouse via solicitors could create an uncomfortable dynamic. They prefer to know that they will all be in the same room, hearing the same advice, voicing their concerns openly and reaching an agreement as a united couple.  This allows them to feel that they can enter their married lives with a sense of transparency and openness. 

If you would like to find out more about the Collaborative process, please read our factsheet in the link below. You can also contact Collaboratively trained lawyers Jo Edwards, Simon Blain, Amanda Sandys or Christine Abbotts in the Forsters Family team.

In order for the collaborative process to be successful, both parties need to be committed to working out a solution away from court and prepared to invest the time and energy into doing so, as the meetings can be labour and time-intensive.

https://www.forsters.co.uk/divorce-and-separation/collaborative-practice
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

AHC, Manchester 2023 – Key Takeaways

On 11th and 12th September, Manchester played host to the 20th Annual Hotels Conference bringing together key players from the UK hospitality industry.  It was a great opportunity to catch up with contacts, make new ones and share thoughts on the state of the hospitality market as well as expectations for the future.

Here are my key takeaways from the event:

1. The operational perspective 

Operationally many hotels are doing well.  There has been notably improved occupancy levels, particularly in London where occupancy growth had previously been lagging behind the regions. Combined with continued ADR growth, that has led to a solid uptick in RevPAR.  At the same time inflationary cost pressures are starting to abate – reducing utility costs being a prime example – meaning it has been a strong past 12 months for the sector as a whole.

2. Transaction volumes

On the flip side, despite the positive operational outlook, investment volumes remain low.  Whilst many felt the pricing gap between buyer and seller had narrowed, it remains evident and continues to affect deal activity.  As a result valuations are proving tricky given the reduced number of comparables in the market.

3. Cost of debt

Another reason for reduced deal volumes is the rising cost of debt which was of course a big topic of conversation.  Debt is available but it is more expensive and can be harder to find for larger deals and portfolios.  Prospective borrowers should not ignore the swathe of alternative lenders in the market – identifying a lender and financing structure that works for you is more important than ever. Private investors who are less reliant on debt and are interested in the hedge hotels can offer against inflation should take note.

4. Development 

Construction costs are continuing to rise (albeit less so than previously) which combined with high interest rates and the associated cost of debt has challenged viability on a number of development projects.

5. ESG

Whilst assessing ESG credentials of a new scheme remains as important as ever, for many funders it is often a case of ensuring that their minimum thresholds are met.  We do not yet appear to be in a situation where higher ESG credentials will reliably result in better pricing.  Operators are generally willing to sign-up to the social and governance requirements which owners are increasingly seeking to include in leases and management agreements, however they are often more cautious  taking on environmental covenants since this is often where additional costs start to mount up.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Not a stock image – Getty Images building tour

Yesterday, Glenn Dunn and I joined a tour of Getty Images’ new London HQ, which is the winner of the 2023 BCO London Award in the category ‘Projects up to 1,500m2’.

Designed by Bluebottle architects, the space provides a variety of different work and co-working areas to facilitate post-pandemic flexible work styles, implementing a move to hot-desking to free up space for alternative uses, such as informal meetings and socialising.

The fit out is impressive, making use of lighting and a bold colour palette to reflect Getty’s brand identity, alongside over 100 prints from their archive.

The space sits within the Duo Building, 280 Bishopsgate, which is located at the edge of the City, close to the neighbourhoods of Spittalfields and Shoreditch. Sadly, no free umbrella. 

Interestingly the impressive targeted accreditations for the building went unmentioned, indicating that ESG may now be established as a minimum offering for a best in class building. These include:

  • BREEAM: Outstanding
  • WELL: Platinum
  • WiredScore: Platinum
  • Cycling Score: Platinum

Glenn and I were impressed and are now looking forward to joining the Forsters’ Occupiers team and guests at the BCO Awards to see if Getty Images can scoop the ultimate accolade ‘Best of the Best’. See you there.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Section 73 Permissions – Case Law Update

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

Last week the High Court in the case of R (Fiske) v Test Valley Borough Council [2023] EWHC 2221 (Admin), quashed a section 73 permission granted by Test Valley Borough Council in 2022.

The original planning permission was granted in 2017 for:

Installation of a ground mounted solar park to include ancillary equipment, inverters, substation, perimeter fencing, CCTV cameras, access tracks and associated landscaping”. 

The approved plans referred to the substation, and a condition (condition 15) was included which required further details of the substation to be approved.

The owner of the solar farm applied for separate planning permission in 2021 for a substation on part of the land where the solar panels were intended to be situated. They then sought to amend the 2017 permission by way of section 73 to ensure that the substation approved in 2021 could operate in conjunction with the solar farm.

The s.73 amendments included design changes, removal of condition 15 and removal of reference, within the approved plans, to the original substation.

The claimant argued that there was a conflict between the 2017 permission and the 2022 permission as the description of development in the 2017 permission referred to the substation. As such, the grant of the latter permission was ultra vires section 73.

The High Court found that there was a conflict between the original permission and the 2022 permission. “For this reason, the 2022 permission was outside the power conferred by section 73 and was thus unlawful.”

It should be noted that it does not matter if a conflict is fundamental; a s.73 permission cannot result in any conflict with the operative part of an original permission.

 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Watch Out! Upper Tribunal orders landlord to pay for cost of waking watch

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

Radcliffe Investment Properties Ltd v Meeson [2023] UKUT 209 (LC)

In this Upper Tribunal appeal, the landlord sought to challenge the First-Tier Tribunal’s decision that it was unable to recover the cost of a waking watch from leaseholders where that cost arose out of its own failure to carry out, or update, necessary fire risk assessments.

Facts 

The property in question was a former office building, converted by the previous owner to provide 96 residential flats. Before the conversion work had been completed, and before the current landlord acquired the property, a fire risk assessment was carried out which found, among other things, that there was a risk of “moderate harm” in the event of a fire.

The landlord took no further steps to review the fire risk assessment. In May 2019, a leak onto the fire alarm control panel triggered the attendance of the Fire Service who expressed a number of concerns over the building, including multiple failings in fire compartmentation. The fire officer advised that a waking watch be implemented immediately at a total resultant cost to leaseholders of £57,894. Factually, the First Tier Tribunal had been satisfied that the waking watch costs were “attributable to the acts and omissions of the landlord… in relation to fire risk assessment“. In other words, had the landlord undertaken the fire risk assessment in a timely manner and undertaken necessary remedial works, the waking watch would not have been necessary.

Decision 

The parties both accepted that the waking watch was required, and that for the service provided, the cost was reasonable and a recoverable service under the lease. The question for the Upper Tribunal was therefore simple. Did the landlord’s failure to review or carry out a further fire risk assessment (in breach of article 9 of the Fire Safety Order) render the costs of the waking watch unreasonable and therefore irrecoverable? Upholding the First Tier Tribunal’s decision, the Upper Tribunal found that the cost was indeed irrecoverable.

Comment 

Given the renewed focus on fire safety following the introduction of the Building Safety Act 2022, it is difficult to see a landlord taking a similarly cavalier approach to fire risk assessment today. However, if needed, this case serves as a further reminder of the importance of properly considering and updating fire risk assessments, particularly on an acquisition, and the implications of failing to do so. Interestingly, this case was brought before the introduction of the Building Safety Act 2022, which was not considered in this case.

This case also raises an important question of whether a failure to comply with statutory requirements can limit service charge recovery more generally. It is perhaps rare however that the costs of works will be so clearly attributable to a statutory failing by the landlord and so the wider impact may be more limited.

The FTT was entitled to conclude that the costs of the waking watch were not payable by the leaseholders... The cost of the necessary remedial work to put right the fire safety defects was increased by the cost of the waking watch, but that increase was wholly avoidable. If the landlord had been aware of the need to put right the defects in compartmentation and the inadequate fire protection for the lift, as it would have been if it had commissioned an up-to-date fire risk assessment when it should have done, the cost of the necessary works would not have been increased by the cost of the waking watch... As a result, the disputed cost was not payable under the Lease and the section 19(1) cap did not take effect. The appeal is therefore dismissed.

https://www.bailii.org/uk/cases/UKUT/LC/2023/209.html
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Beds and Sheds: Will Technology Unlock the Potential?

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

Whilst the number of development schemes involving “beds and sheds”, i.e. the co-location of residential and industrial uses in the same development, remains relatively small in the UK, there is a clear trend towards this approach, especially within London.  

The potential advantages are clear to see.  Turley recently reported that more than two-thirds of co-location schemes deliver an increase in available industrial floorspace by, on average, 40.5%.  Co-location also has the potential to provide more housing stock, particularly in urban areas, amidst a national housing shortage.

Of course, the perennial challenge for co-location is how to address residents’ concerns of noise and air pollution associated with having logistics units on their doorsteps.  Technology clearly has a vital role to play in changing residents’ perceptions.

It is interesting to see that 98% of respondents to our recent survey for Forsters’ “Outside the Box: Supporting an Industrial Evolution” report believe that technology can help accelerate the adoption of co-location.  Delivery vehicles running on clean energy and modernised site infrastructure, such as EV charging and high-bandwidth communications, are considered to be the most likely solutions.

Our report highlights that there is still some scepticism within the logistics industry as to whether electric vehicles will be more widely adopted. As Victoria Turnbull mentions, current technology still needs to advance further before the use of electric HGVs for long-distance deliveries could become widespread. 

Nevertheless, as sales of electric vans continue to rise (ZapMap has found that there were more than 45,000 electric vans in the UK by the end of July 2023), it will be interesting to see whether the increasing use of EVs for last mile deliveries in urban areas will correlate with the increased adoption of co-location schemes or if co-location will continue to be a step too far for most residents.

"The jury’s still out on electric vehicles... current EV technology doesn’t work for HGVs and the batteries aren’t sustainable. We could still see hydrogen overtaking EVs in logistics." - Victoria Turnbull, Joint Managing Director, Opus Land

https://www.forsters.co.uk/sites/default/files/Outside%20the%20box%20report%202023.pdf
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Will multi-storey sheds ever get off the ground?

In the UK, the true concept of multi-storey sheds has yet to get off the ground. We often see tall single storey warehouses with a mezzanine floor, but we are not in keeping with some European and Asian markets where it is not uncommon to see warehouses with multiple levels. Carter Jonas reported in July 2022 that the tallest warehouse currently comprises 22 storeys, so will the UK ever follow this trend?

A survey for our recent “Outside the Box: Supporting an Industrial Evolution” paper found that 52% of respondents have seen an increase in developer appetite for the concept of multi-storey sheds in the past year and 77% believe that multi-storey sheds will play a large role in the UK logistics sector in the future.

With competition for land and the acceleration of last mile demand, combined with ever improving technology to support the transfer of goods and vehicles between levels and population growth across London and other major UK cities leading to supply chain issues, against a backdrop of planning constraints, developers may be forced to build up rather than out.

However, multi-storey sheds are not without their challenges, namely keeping all occupiers happy and managing competing interests. Capable of being divided vertically and horizontally for different uses and operations, occupiers will need certainty that they have access between storeys and should, for example, a ramp become blocked or a lift malfunction, occupiers will want to understand what their “Plan B” looks like in order to facilitate their commercial needs and minimise any disruption to their business. Consideration will also need to be given to the design from a structural and operational perspective, as well as through a sustainability and future proofing lens to ensure that these developments will be attractive to investors and stand the test of time.

For multi-storey warehouses to become a solution to some of the challenges facing the sector, there will need to be buy-in from developers, investors and occupiers, as well as other parties with a vested interest, such as local authorities and adjoining land owners. It won’t simply be a one size fits all solution, and as flagged in our report, “Developers will no doubt weigh up in each case whether the inclusion of a mezzanine adequately solves the issue of local land availability” and “how the space can be used in a manner which both enhances a tenant’s experience and preserves asset value for landlords.”

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Why rent control isn’t the solution for student accommodation affordability issues

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

As students start or return to university this month, it is both an exciting and stressful time. Especially in a cost of living crisis. Everyone involved in the development and provision of student accommodation agrees that there is a shortage of quality affordable student housing, and its approaching crisis point. The National Union of Students is therefore calling for rent controls, however is that really the answer? I don’t think so, because: 

  1. If developers/ landlords cannot match rents to rising costs then lower profitability margins are inevitable and many will leave the sector, resulting in further shortages. This may then have the opposite effect as there will be reduced supply but still increasing demand.
  2. It will be harder to secure financing for existing properties due to lower profit margins, causing more developers/ landlords to exit the sector.
  3. For those that remain, lower profitability margins may result in lower housing quality for students if landlords cannot afford to maintain their buildings.
  4. How will the rent controls be monitored and enforced? Local authorities are already budget-challenged, but the burden will surely fall to them.   
  5. Not everyone who benefits from rent control actually needs the help. Some people can afford the current rents so wouldn’t it be better to focus financial assistance on those who need it?

Whilst I agree that accommodation needs to be affordable for students, I don’t think rent control is the solution. 

the NUS wants to see more affordable accommodation created and rent controls considered to stop prices escalating

https://www.bbc.co.uk/news/newsbeat-66591376
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Is the issue of nutrient neutrality being washed downstream?

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

Following the Government’s announcement earlier this week that “over 100,000 homes held up due to defective EU laws will be unblocked,” proposed changes to the Levelling-up and Regeneration Bill have now been published. 

If adopted, the effect would be to remove the assessment of the the impact of nutrients in urban waste water from the majority of planning applications. The timetable for this change to take effect will be subject to secondary legislation, the details of which are (of course!) awaited and subject to the Bill receiving Royal Assent. 

The Government’s justification for this proposed change is that the contribution made by new homes to nutrients in our rivers is very small. Set in the context of the country’s housing shortage, the Government’s position is that nutrient neutrality “red tape” must go. Other proposals in the Bill see Westminster looking to tackle the other causes of nutrient pollutants, such as requiring water companies to upgrade waste water treatment works to the highest achievable level in areas under nutrient neutrality guidance. 

It is widely accepted that urban waste water only accounts for a small fraction of the nutrient pollutants in our waterways (farm land and the lack of investment in our water infrastructure being other key contributors). The country’s housing crisis is also undeniable. So, the rationality of the Government’s decision can be understood. With at least 74 Local Planning Authorities having been advised by Natural England that future development may need to be nutrient neutral, and areas of the country already in a development hiatus because of this issue, it is likely there will be much support for the proposed changes.

However, with the next reading of the Bill being only days away on 4 September 2023, it will be interesting to see how these last minute changes are received. It also calls into question how the issue of housing and nutrient neutrality will ultimately be dealt with, and raises a question mark over the status of schemes, such as Natural England’s Nutrient Mitigation Scheme, which has only recently got off the ground. Voices on the other side of the fence are keen to point out that there are many consented developments not coming forward due to the challenges of the current economic climate. Lifting the nutrient neutrality red tape is therefore no guarantee that new housing will come. It is merely the removal of one of the barriers to delivery which, for many, will be at unjustifiable expense to the environment.

When making the relevant decision, the competent authority must assume that nutrients in urban waste water from the potential development, whether alone or in combination with other factors, will not adversely affect the relevant site.

https://bills.parliament.uk/publications/52407/documents/3872
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Stop, thief! British Museum curator sells antiquities on Ebay

The British Museum’s curator of Greek collections, Greek sculpture and the Hellenistic period, Paul Higgs, was named in The Times and The Telegraph as the prime suspect behind the disappearance of over 1,500 artefacts from the Museum’s collection.  Higgs allegedly sold some of the stolen works on Ebay for a fraction of their value under a pseudonym.  Despite tip offs from dealers, the Museum’s leadership team failed to take action. Why does this matter? Apart from the loss of the nation’s cultural heritage, this substantially weakens the Museum’s defence against restitution claims over contested works, most famously the Parthenon Marbles. 

Prior to this story emerging, the British Museum had been at the centre of a series of restitution debates over contested artefacts, most notably the Parthenon Marbles, the Benin Bronzes and the Ethiopian Tabots. Time and again, its leadership has defended its collection against such restitution claims by arguing that the museum is capable of conserving and protecting artefacts uniquely well.

https://www.theartnewspaper.com/2023/08/22/reports-claim-close-to-2000-artefacts-were-stolen-from-british-museum-according-to-internal-investigation
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Why landlords shouldn’t play their cards close to their chests when looking to insert a break right into a lease renewal

Black and white chess pieces are positioned on a chessboard, focusing on two knights facing each other amid rows of pawns, set against a blurred, neutral backdrop.

A recent unopposed lease renewal decision has reinforced the principle that the Court will not grant a landlord a break right in a lease renewal, unless the landlord is able to evidence that its future plans for the premises (e.g. redeveloping the premises, or occupying the premises for its own business needs) are “sufficiently on the cards”.

In BMW (UK) Limited v K Group Holdings Limited (link to the decision below) the Court was asked to determine, amongst other things, whether the landlord of the premises (the BMW dealership at Aldford House on Park Lane) should have the benefit of a break right permitting it to terminate the lease on 6 months’ notice (exercisable at any time between the second and fifth anniversaries of the lease), on the basis that the landlord purportedly intended to occupy part of the premises for the purposes of its own car-related business.

In making its decision, the Court had to decide whether the landlord’s plans were “sufficiently on the cards”, “genuine and workable”, and such that they amount to “a possibility of a bona fide decision to operate a break clause if one be granted”, and to balance the landlord’s plans against the effect they would have on the tenant. However, the Court held that the landlord’s evidence supporting its intention was “so vague and unsupported by anything other than his say-so…that it does not satisfy [the] evidential test”, and that “there was an element of tactics about the proposed break clause, which was a reaction to BMW’s proposed rent being perceived as far too low”. Accordingly, the shortcomings in the landlord’s evidence did not outweigh “the dramatic effect the break clause would have on BMW”.

This decision serves as a reminder to landlords that when seeking a break in a lease renewal (or indeed, when seeking to oppose renewal on the basis of ground (f) or ground (g)), it is important to compile as much evidence as possible to support the landlord’s intention (and to get one’s ducks in a row as early as possible, when doing so).

With special thanks to Stephen Jourdan KC of Falcon Chambers for sharing this useful decision. The decision, together with Stephen’s fuller summary, can be found here.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

15% Minimum Business Tax Rate

It restores my faith in democracy to see the Swiss voting system in action – Business Taxes are quite a complicated and some might say emotive political and economic issue.  Yet, Swiss voters have very sensibly voted for the global movement to adopt a 15% minimum corporate tax rate.  Admittedly, Switzerland will still have one of the lowest corporate tax rates in the world, though higher than their previous average rate of 11%.  Even a rate of 15% does much to encourage international investment when compared to the Corporate tax rates around the rest of Europe – compare to the UK’s 25%.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

“…if it was so, it might be; and if it were so, it would be; but as it isn’t, it ain’t. That’s logic.”

Black and white chess pieces are positioned on a chessboard, focusing on two knights facing each other amid rows of pawns, set against a blurred, neutral backdrop.

It isn’t every day that I can start a reference to a recent decision (this one being THJ Systems Ltd & Anor v Sheridan ([2023] EWHC 927 (Ch)) //www.bailii.org/ew/cases/EWHC/Ch/2023/927.html) by using a famous quote from Lewis Carroll (Tweedledee for those who might not have spotted it) but it felt apt on reading the judgment. 

The title of this piece is not – to be clear – to suggest that the decision itself is somehow confused but the reference to an outcome being “absurd” made me think of that line. 

Just by way of summary, the key point that I wanted to take from the decision is that of how a member may be removed from an LLP. The starting point is that parties to an LLP should have a good members agreement drafted (and not rely on the position in the Limited Liability Partnership Act 1990 – which has its own imperfections) that should set out what circumstances a member may be removed from the LLP and how that removal will occur. In this case there were expulsion clauses drafted in to the members agreement and that the power to expel was vested in “the LLP”. The parties wishing to expel the member asserted that this provision in the members agreement should be construed as having the words “(acting for this purpose by the Members other than the Member concerned)” after the reference to “the LLP” as otherwise the construction would be that a member would have to vote for their own expulsion which would be “absurd”.

The Court in this case did decide to infer additional words in to the words of the members agreement, against the position of the defendant who claimed (perhaps not unreasonably) that the members agreement could still function and be construed without those words being added, and that the members agreement would still be effective as THJ as majority partner would have a casting vote. 

The Court however upheld the decision in  Hitchman v CBAS Services (1983) 127 SJ 441 and determined that construing the additional wording that the expulsion decision must exclude the member being expelled would be “a perfectly sensible and commercial approach interpretation which gives effect to the clauses.”

The takeaway from this is once again a reminder to have well drafted, tightly drawn agreements in the first place but also that the Courts will consider the context of an agreement as a whole when considering the construction of the agreement.

"...requiring a member to vote for his or her own expulsion would be absurd..."

https://www.bailii.org/ew/cases/EWHC/Ch/2023/927.html
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Oil be back: Supreme Court clarifies concept of continuing nuisance

A recent decision in the Supreme Court, Jalla and another v Shell International Trading and Shipping Co Ltd and another [2023] UKSC 16, provides a useful clarification of elements of the law of private nuisance and the limitation of actions.

Background

The case concerned an oil spill off the Nigerian coast which occurred in December 2011. The claimants brought a nuisance claim based on damage caused by oil which reached their property on the Nigerian Atlantic shoreline shortly after the spill. The claimants later sought to amend their claim form and statements of claim, but the defendants opposed this on the basis that the amendments were sought outside of the limitation period (that is, more than six years after the cause of action accrued, when the oil struck the claimants’ land), meaning that the amendments could only be permitted in very limited circumstances.

The key issue was therefore whether the amendments had been sought within the limitation period. That, in turn, rested on whether the oil spill damage constituted a “continuing nuisance”. Had the damage been caused by a continuing nuisance, the limitation period would have run afresh from day to day, meaning the amendments would have been sought in time.

Decision

The Court decided that the oil damage was not a continuing nuisance, and therefore the claimants were out of time to amend their claim.

In high-level terms, for a continuing nuisance to arise, there must be repeated activity by the defendant or an ongoing state of affairs for which the defendant is responsible which causes undue interference with the use and enjoyment of the claimant’s land.

Here, while the oil was still on the claimants’ land and had not been cleaned up, the oil leak which caused it was an “isolated escape” or one-off event which was rectified within six hours. In other words, there had been no repeated activity by the defendants or an ongoing state of affairs for which the defendants were responsible, and so the nuisance could not be said to be “continuing”. It did not matter (at least for limitation purposes) that the oil remained on the land for several years thereafter. Therefore the cause of action to which the leak gave rise was complete once the claimants’ land had been affected by the oil, and the limitation period ran from that date.

In short, then, the Supreme Court has preserved the status quo with respect to the law concerning nuisance and limitation of actions. For practitioners, the judgment is a valuable exposition of the tort of private nuisance, in particular the concept of continuing nuisance. While the judgment is of general application, it is likely to be of particular interest to those affected by or acting in disputes concerning interference with land arising out of catastrophic environmental incidents, such as flooding.

For a continuing nuisance to arise, there must be repeated activity by the defendant or an ongoing state of affairs for which the defendant is responsible which causes undue interference with the use and enjoyment of the claimant’s land.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

In Out, In Out – The 1954 Act and Sub-Tenancies

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Avondale Park Ltd v Miss Delaney’s Nursery Schools Ltd (“Miss Delaney’s”) is an interesting recent case, demonstrating the serious issues a head leaseholder could face when granting a sub-lease out of a 1954 Act protected head-lease.   

As a brief summary, the Court decided that the sub-lease automatically determined as a result of the Appellant’s failure to provide a deed of variation due to the specific wording of the sub-lease.  The sub-tenant had remained in occupation despite expiry of the sub-lease and continued to pay the rent so a periodic tenancy had arisen.  The Court must now decide whether they can rely on the protection of the 1954 Act or whether they should be estopped from doing so.  

It will certainly be interesting to follow this matter to trial, should the parties not be able to settle.  For now, it does serve as a stark reminder as to the importance of getting it right and the implications on obtaining possession that inadvertent protection from the 1954 Act can have. 

The sub-lease contained an express term which provided that, if the Appellant did not provide a certificate to the Respondent sub-tenant by 14th December 2014 stating that the freeholder had permitted a change of use under the head-lease, then the sub-lease “will be terminated immediately”.

https://www.landmarkchambers.co.uk/court-of-appeal-hands-down-judgment-in-avondale-park-ltd-v-miss-delaneys-nursery-schools-ltd-2023-ewca-civ-641/

Are film studios about to go Back to the Future?

I was pleased to write for EG about the upheaval in UK film studio bookings over the last 5 years. Market forces have created a huge shift in how space is occupied and, with up to 44 new studio spaces currently planned, I consider if more changes are around the corner.

You can read the full article here (£): Are film studios about to go Back to the Future?

To learn more about Forsters’ experience in supporting Studios clients, get in touch with our Studios Group.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

All quiet on the Register of Overseas Entities front?

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Many of you will be aware of the flurry of activity, articles and webinars that preceded and followed the launch of the Register of Overseas Entities (the “Register“) last summer. This continued during the autumn and early winter, which comprised the six-month transition period during which in-scope overseas entities had to register, but now that the 31 January 2023 transition period deadline has long since passed, was it just 15 minutes of fame for the Register?

Not according to recent statistics, which suggest that the Register is being frequently accessed by people seeking out information about UK property-holding overseas entities and their beneficial owners. According to a recent news story by Companies House, which manages the Register, over 27,000 overseas entities are now registered and as at 30 April 2023, the Register had been searched over 405,000 times with beneficial owner information having been accessed almost 90,000 times. Assuming these searches haven’t just been carried out by over-zealous Companies House employees seeking to test the new and speedily implemented regime, it shows that the registration requirements are still very much on peoples’ minds and that the need for registration has become part and parcel of real estate transactions. 

So, if you do have a connection with an overseas entity which is considering acquiring land in the UK, remember to arrange for registration if you haven’t already done so and seek professional advice if you’re unsure of the requirements or process, particularly if there is a complex ownership structure. The registration requirements are not always straightforward and failure to follow them correctly could cause a delay in your transaction timetable or even scupper the deal altogether. 

The register ... now has more than 27,000 registered overseas entities

https://www.gov.uk/government/news/companies-house-receives-international-recognition-for-delivering-new-overseas-property-register
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

No backdating of claim forms

What happens when the Court gets it really wrong when issuing a claim form? This question was dealt with recently in a case that made it as far as the Court of Appeal and deals with an important point of civil procedure. 

Walton v Pickerings Solicitors [2023] EWCA Civ 602, deals with the issue of Court errors and service of claim forms out of time. The Claimant (who was acting in person) attended the High Court to issue a claim form shortly before the end of the limitation period. The Court accepted the fee of £10,000 but failed to issue the claim as they had unfortunately lost the claim form. It was only when the Claimant chased the Court that they realised the error. In an attempt to rectify this, the Court office required the claimant to produce a new claim form which was finally sealed and issued almost five months after the claim had been filed.

Unfortunately, the Court sealed the new claim form on the 1 December 2020, with an issue date of 20 July. The Claimant received the papers on 7 December 2020 for service. The problem here is that the four month period for the valid service of a claim form (CPR 7.5) had expired by the time the Claimant received the sealed copy. 

Unsurprisingly this point was taken by the Defendants, who said that the claim should be struck out. The Claimant applied to extend the time for service of the claim form, however this was refused by a Deputy Master, and on appeal by the High Court. On a second appeal to the Court of Appeal, the decisions were reversed. 

The Court of Appeal ultimately held that the Court has no power at all to retrospectively date a claim form, so in this instance, the date of issue should be treated as 1 December 2020. The result being that: 

(a) The Claim was served in time; and

(b) Was not statute-barred as the limitation period runs from the date the claim form was received by the Court under Practice Direction 7A para 6.1.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Borrowed time for deeds?

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

The Industry Working Group on Electronic Execution of Documents published its Final Report earlier this year. This follows its Interim Report which was published early in 2022. One of the points raised by the Final Report was whether the concept of deeds is a thing of the past, although the Industry Working Group concluded that taking this further was outside of scope. 

Together, the reports considered eight Terms of Reference in respect of electronic execution, with the Final Report focusing on fraud and cross-border transactions, while also reiterating the main conclusions of the Interim Report.

Electronic signing platforms were considered a positive by the Industry Working Group in reducing the risk of fraud. Records of the entire execution process, including any advice given, can be easily kept and used in evidence, processes can be put in place thereby reducing the potential for defective execution (especially where legal advice has not been taken) and time limits can be set up for completion of the execution process, so that inaction = no execution, reducing the possibility of coercion and duress.

In the context of cross-border transactions, the Final Report points out that the use of electronic execution can result in additional cost, delay and uncertainty, primarily because there is no standardised international “e-signature code” but instead a myriad of different laws and formalities which apply on a jurisdiction by jurisdiction basis. The Final Report suggests that adherence to an international “norm”, such as the UNCITRAL Model Law on Electronic Signatures, would alleviate these issues. 

Along similar lines, the Final Report also considers whether the concept of deeds, or at least some of their current requirements, should be abolished in the UK. This may well make many English lawyers baulk – deeds have, after all, been around for centuries – but doing away with them would greatly simplify the execution process and many wouldn’t mourn their passing on the basis that deeds are an archaic concept, no longer required in a globalised business world. Whether this particular gauntlet will be taken up by the Law Commission, as suggested by the Industry Working Group, is one to watch, but in the meantime, place your votes on the demise of deeds now…

The ideal solution would be to abolish any rule of law that requires an act to be done by way of a deed...

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1142597/electronic-execution-documents-iwg-final-report.pdf
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Registration of Higher-Risk Buildings – An Update

It will not be news to many that higher-risk buildings in England that residents occupy or could occupy, of which there are approximately 12,500, need to be registered with the Building Safety Regulator by 30 September 2023.

Figures released by the Regulator last month, however, confirm that only 750 applications have been started since it launched its online register this April.  Criminal sanctions await those who fail to meet the deadline, and so it is imperative that those responsible for the management of higher-risk properties prepare now.

So which buildings are higher-risk?

Part 4 of the Building Safety Act 2022 sets out the basic definition at Section 65(1):

“… higher-risk building” means a building in England that—

(a) is at least 18 metres in height or has at least 7 storeys, and

(b) contains at least 2 residential units.”

The Higher-Risk Buildings (Descriptions and Supplementary Provisions) Regulations SI 275/2023 provides further detail and confirms that certain buildings are excluded by Regulation 8:

a building that comprises entirely of:

  • a care home;
  • a hospital;
  • a secure residential institution;
  • a hotel; or
  • a military barracks, a building that contains living accommodation provided by the Ministry of Defence (either alone or in combination with other accommodation), a building that contains living accommodation (either alone or in combination with other accommodation) for— (1) His Majesty’s forces; or (2) any visiting force or an international headquarters or defence organisation designated for the purposes of the International Headquarters and Defence Organisations Act 1964.

Who needs to register higher-risk buildings?

The Principal Accountable Person (PAP) will need to make sure that the building is registered. 

An Accountable Person under the Building Safety Act 2022 is an individual or organisation that owns or has a legal obligation to repair any common parts of the relevant building.  There may, therefore, be more than one Accountable Person, but each must have one PAP, and this person or entity is usually whichever owns or have a legal obligation to repair the structure or exterior of the Building. 

What does the PAP need to do to register?

  • Apply online;
  • Pay the fee of £251 per building;
  • Provide a summary of the building (such as confirming the number of floors at or above ground level, the height of the building and how many residential units it contains);
  • Provide information about the structure and fire safety information (such as the building’s use, the fire and smoke controls therein, the type of structure, roof, staircases and external walls).

As well as registering the Higher-Risk Building the PAP will have other, ongoing, responsibilities, such as making sure that the structural and fire safety risks are properly managed for the whole building and notifying the Regulator or any changes to these.

If you are uncertain about any of the above, or want to discuss other building safety points, then please contact the Forsters’ Building Safety Team.

"Registration is a crucial part of the new regime and our efforts to ensure residents of high-rise buildings feel protected and safe in their homes." Philip White, HSE Director of Building Safety

https://press.hse.gov.uk/2023/05/23/registration-of-buildings-with-building-safety-regulator-now-underway/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Shared Ownership Leases Entitled to Right to Manage

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

The Court of Appeal has decided in Avon v Canary Gateway (Block A) RTM [2023] EWCA Civ 616 that leaseholders with shared ownership leases are entitled to participate in the right to manage their buildings, even if they own less that 100% of their property.

This is an important decision for leaseholders that wish to manage their buildings and may also have further reaching implications because the definitions discussed are so similar to those that provide leaseholders with the right to collectively enfranchise under the The Leasehold Reform, Housing and Urban Development Act 1993.

The Court of Appeal’s Decision 

Under the Commonhold and Leasehold Reform Act 2002 (“the Act”), qualifying tenants are entitled to acquire the right to manage their building. The Act defines a qualifying tenant as a tenant of a “flat under a long lease”. Section 76 of the Act states:

“(2) Subject to section 77, a lease is a long lease if—

(a) it is granted for a term of years certain exceeding 21 years, whether or not it is (or may become) terminable before the end of that term by notice given by or to the tenant, by re-entry or forfeiture or otherwise,

(b) it is for a term fixed by law under a grant with a covenant or obligation for perpetual renewal (but is not a lease by sub-demise from one which is not a long lease),

(c) it takes effect under section 149(6) of the Law of Property Act 1925 (c. 20) (leases terminable after a death or marriage or the formation of a civil partnership),

(d) it was granted in pursuance of the right to buy conferred by Part 5 of the Housing Act 1985 (c. 68) or in pursuance of the right to acquire on rent to mortgage terms conferred by that Part of that Act,

(e) it is a shared ownership lease, whether granted in pursuance of that Part of that Act or otherwise, where the tenant’s total share is 100 per cent., or

(f) it was granted in pursuance of that Part of that Act as it has effect by virtue of section 17 of the Housing Act 1996 (c. 52) (the right to acquire).”

The Court of Appeal decided that a lease will be a long lease if any of the paragraphs (a) to (f) of section 76(2) applies. Therefore, where a shared ownership lease is granted for a term exceeding 21 years it will fall within the requirement at (a) and therefore compliance with (e) will not be necessary.

"Tenants with long shared ownership leases who have not staircased to 100% will still have an obvious interest in how the premises are managed, the more so since they will typically pay full service charges. That being so, Parliament might have been expected to have intended them to be able to participate in management issues" Lord Justice Newey

https://www.tanfieldchambers.co.uk/2023/05/30/avon-ground-rents-v-canary-gateway-block-a-rtm-court-of-appeal-confirms-rights-of-200000-shared-ownership-leaseholders/

Don’t forget residential SDLT on rent!

A wooden door with a brass knocker stands between two columns, flanked by windows and potted plants. Text: "PRINCES GATE 71-72" and a sign, "THE OCCUPIER OF GLASGOW HOUSE," below foliage.

Stamp Duty Land Tax (“SDLT”) is a transfer tax charged when acquiring interests in land in England and Northern Ireland. Similar taxes exist in Scotland and Wales. SDLT is changed both on the premium you pay for a property and/or the rent paid under lease. 

With significant nil rate bands in place residential SDLT is often only thought of as something one pays on the purchase price when buying a home, but there can be a few situations where SDLT is payable on rental consideration for residential transactions as well:

  • Where the purchaser is UK non-resident for SDLT purposes the 2% non-resident surcharge will apply to rent as well as to premiums (unlike the 3% additional property surcharge that only applies to premiums). This means any level of rent will be taxable (as long as it accompanies a premium over £40,000 to “activate” the non-resident surcharge). It is easy to forget to check for SDLT on the rent in these circumstances as conveyancers will be used to just looking at premium values for SDLT.
  • Where the level of rent is so high that it triggers SDLT itself. Most residential tenancies are for rents significantly below the SDLT threshold. However, very high value residential property in London can and is being let at a level that triggers the need to file an SDLT return and pay SDLT on the rental values.

Failing to fully pay SDLT, or submit a return when required, can lead to penalties and interest. Keep SDLT in mind if the transaction is one where the purchaser (or one of the purchasers) may trigger the non-resident surcharge and when dealing with high value residential property double check that rental values don’t trigger SDLT!

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The Costs Matrix Revolutions…

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

In April, to somewhat muted reception, the Ministry of Justice published a note on the extension of Fixed Recoverable Costs (“FRC”). Costs have never had a reputation for being particularly head-turning (sorry costs draftsmen and women), but the application of FRC to larger value claims through the new ‘Intermediate Track’ heralds a substantial shake up.

From 1 October 2023 claims issued for:

  1. Damages valued between £25,000.00 and £100,000.00;

  2. Requiring two or less experts per party; and

  3. Which can be disposed of in a three-day trial or less

will (subject to court discretion) be allocated to the new Intermediate Track, and FRC will apply.

The FRC for any claim will be determined by reference to what I am calling, to link to the title, a new ‘Costs Matrix. The Matrix consists of a ‘Complexity Band’ ranging from 1 – 4, with claims allocated to a band according to how complex they are. To determine the costs, the band is then cross referenced to the stage (ranked 1 – 15) in the litigation at which a claim settles or ultimately comes to trial. In addition, a sum calculated as a set % of the sum claimed (ranging from 3% – 22%) will be awarded, the size of which again depends on where it falls in the Matrix. The table can be found at Table 14 to rule 45.50.

Claims seeking non-monetary relief will not be allocated to the intermediate track unless the Court considers this to be in the interests of justice. If they do however, then the claim for non-monetary relief will be allocated a ‘claim value’ which can be added to the total monetary (if it is a mixed claim) value of a claim.

If you review the amended CPR, or even my attempt to abridge it above, you will be excused for feeling this is a complex introduction. In seeking to simplify and provide certainty on costs, the immediate certainty is that the new system doesn’t feel especially user friendly at this stage.

Likely much debate will be had when the new system comes into place about claim allocation to the various bands. When one considers that the difference in recoverable costs to trial for a Band 1 claim against a Band 2 claim is £6,600.00 against £17,000.00 (and £29,000.00 for a Band 4 claim) there is clearly enough prejudice in falling the wrong side of the banding to warrant an argument. 

For property litigation, the reach of the new track could be wide, obvious candidates to be caught are the more modest dilapidations and rent arrear claims. The real question is, will the new FRC be worse for recoverability than the current system? The answer seems to be ‘likely yes’ and certainly yes if property matters end up falling into the lower bands. In which case the question is how best to mitigate this, and some obvious points stand out:

1. Where a claim that would be caught by the new intermediate track has already crystallised but not   been acted on (possibly indeed due to current questions of proportionality) now might be the time to review it and potentially issue ahead of 1 October 2023 to make use of the current system. One point to note is to start the process soon if any pre-action protocols apply so there is no risk of being penalised on costs due to failure to comply with the same;

2. Make sure any drafting includes clear contractual provisions on costs recovery. Chaplair Limited v Kumari [2015] EWCA Civ 798 remains good law and should remain a way to side-step fixed costs; and

3. If in doubt, arbitration may present a better option than litigation…

So perhaps whilst not a ‘revolution’ more a sizeable expansion, the changes should be more firmly on the radar as there is no option here to simply take the blue pill and pretend this isn’t happening…

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Takeaways from the IHIF Berlin 2023

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

On 15 – 17 May the International Hospitality Investment Forum (IHIF) in Berlin brought together industry leaders, investors and experts from around the globe to discuss the latest trends and opportunities in the hospitality sector.

Well attended and full of interesting conversations, here are my key takeaways:

  1. Experiential spending – the post-pandemic trend for consumers to increase the proportion of their spending on experiences at the expense of material objects has helped push up ADRs to record levels across the sector and generally buoy the top line. This trend has been particularly prevalent at the luxury end of the market which has seen record ADR growth. The question remains how permanent this trend will be, particularly in the face of higher interest rates and economic uncertainty.
  2. Bid-ask spread – Whilst there remains plenty of investor appetite for the sector, there continues to be a discrepancy in price expectations between buyers and sellers which is currently holding transaction volumes back.
  3. Re-financing prospects – With inflation still prevalent and interest rates unlikely to come down any time soon, the availability (and affordability) of re-financing as existing loans mature will be a key concern over the next 12 – 18 months. This may create opportunities for sales as some hotel owners explore disposing of assets to meet refinancing obligations.
  4. Sustainability – ESG continues to rise up the agenda. With some major corporates now starting to have their choice of hotel spending impacted by a chain’s ESG credentials and the anticipated minimum energy efficiency standards (MEES) due to come into force in the UK in 2030, what does that mean for older stock and who will bear the cost of bringing those hotels up to scratch?

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Renters (Reform) Bill now published

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.
 

The Renters (Reform) Bill has now been published. There are no major surprises following the publication of the White Paper last year. The Bill proposes to fundamentally overhaul the private rented sector by abolishing fixed term tenancies and removing landlords’ abilities to obtain possession via the no fault section 21 route. Other significant changes include banning rent review clauses and implying a clause into all assured tenancies permitting a tenant to keep a pet with landlord’s consent, such consent not to be unreasonably withheld. The grounds for possession have been widened and strengthened to permit landlords to obtain possession in certain defined circumstances, and the Bill will need to go through parliament before being passed into statute, but the proposals are likely to make current or proposed landlords think twice before agreeing to let their properties. Whilst welcome news for tenants, if landlords do leave the market this could limit the number of rental properties available and push rents up. Further regulations are also due to be published, so it remains a case of “watch this space”. 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

ChatGPT – Ready or not, here AI come!

I recently attended an insightful webinar hosted by Iga Kurowska of the LegalTech Academy, with a presentation from guest speaker, Roman Koch (a lawyer based in Poland).  The presentation was focussed on emergence of ‘prompt engineering’ as a specialist skillset for lawyers in the context of the hot topic of ChatGPT. 

I would recommend anyone interested to check out the podcast recording from the session, which will be available shortly – https://www.igakurowska.com/legaltechacademy and from Spotify – but below is a summary of some of my key takeaways from the discussion:

1. Get ready…!

For many of us, AI felt like something that would be confined to sci fi movies but the latest releases of GPT3 and GPT4 by Open AI (as well as others) have gained mainstream notoriety and are here to stay, whether the public and business are ready for them or not.

2. Friend not foe

Large language models (LLMs) such as ChatGPT will undoubtedly change the way lawyers (and, indeed, virtually any industry that relies on written text) do their job. 

Lawyers can either view this as an existential threat or as an opportunity.  Lawyers ought to be well placed to extract the most out of the technology given their existing experience in using language with a keen focus on accuracy and precision – these skills in drafting detailed ‘prompts’ intended to elicit particular outputs from ChatGPT will be absolutely key.

With any LLM, the quality of output will always directly reflect the quality and accuracy of the question one asks it – you get out what you put in.

Hence, ‘prompt engineering’ is likely to become a necessary skillset for those using AI.  Indeed, law firm Mishcon de Reya are already recruiting for a ‘GPT Prompt Engineer’ to work with their legal and transformation team to see how AI might best be able to support those teams.

3. Proceed with Caution

The technology is already incredibly advanced – and is progressing at a spectacular rate – but it is not perfect and is unlikely to ever be so.  The limitations of ChatGPT as a work-tool are well known and unlikely to go away.  For instance:

  • Accuracy – AI is known to ‘hallucinate’ (i.e. presenting as fact information that it has deduced based on inferences or which it has drawn from inaccurate or unreliable sources);
  • Cross-jurisdictional issues – At present, ChatGPT can have difficulty distinguishing legal sources applicable in some specific jurisdictions/scenarios but not in others;
  • Outdated data – ChatGPT was ‘trained’ on data from 2021 and has limited knowledge of events and information after that date, which can clearly pose issues in rapidly moving sectors/industries;
  • Privacy/Confidentiality – Technology which relies on the collection and storage of millions of datapoints poses an obvious threat from a data protection perspective and, as such, ChatGPT has been banned in Italy, with Germany potentially set to follow suit;
  • Copyright – Information is presented by ChatGPT without sources and generally without regard for any IP/copyright implications of that source data.

Consequently, lawyers are absolutely right to view the technology with suspicion.  Governments and private industry alike will need to ensure that safeguards are in place to prevent misuse and, for law firms, to eliminate risks to clients’ personal and commercial interests.

Government regulation is already being discussed at length by data regulators within the EU and, just this week, the Chief Exec of OpenAI (the creator of ChatGPT) appeared at a US Senate committee hearing and agreed with Senators that the industry will need regulation.  It appears, therefore, that there is a consensus that AI should not become a runaway train.

4. The time is now!

Despite the limitations/risks of ChatGPT, the existing technology is already capable of providing tangible benefits to industries such as the legal profession.  The guest speaker showed a number of examples of tasks he uses ChatGPT for on a regular basis.  These were primarily administrative in nature, for instance:

  • Providing high level, ‘at a glance’ summaries of cases and legislation;
  • Converting/reformatting written text (for instance, particulars of claim) into tabular form for ease of review;
  • Bulk document analysis (AI has already been marketed as a solution as part of ‘e-discovery’ and disclosure  exercises for some time)
  • Producing generic first drafts of written text (e.g. LinkedIn posts, covering letters and internal communications);
  • Correcting grammar and changing the length, tone or intended recipient of written text (particularly useful for those working in a second language).

In the legal profession, embracing ChatGPT presents a world of opportunities for efficiency and client engagement. However, it also comes with inherent risks, such as bias and accuracy concerns. To navigate this landscape effectively, lawyers must cultivate prompt engineering skills, ensuring they harness the full potential of AI while maintaining ethical and reliable legal services.

[This closing paragraph was generated by ChatGPT]

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

‘Indiana Jones’ Part 36 Offers

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

The recent judgment in Mate v Mate provided a helpful recap on the principles of proprietary estoppel and unjust enrichment, and the subsequent costs judgment has likewise made for a good refresher on Part 36 offers. Certainly the facts represent (to justify the comparison in this post’s title) the legal equivalent of Indiana Jones sliding beneath a rapidly closing stone door but retrieving his hat with a moment to spare.

The potted background is that 21 days before trial, the claimant made a Part 36 offer to the second and third defendant for £650,000.00 in full and final settlement of the claim. The 21-day period required for a valid Part 36 offer was slimly met, the final day of this period being the day of judicial pre-reading. This constituted the first such incident of Indiana Jones’ style thin margins. The offer was not accepted by the respective defendants, and in the second such display of Jonesesque dramatics, the Claimant went on to beat her offer by a modest £2,000.00 at trial. So kick in the provisions of CPR Part 36 and some interesting debate about timings, serving Part 36 offers with multiple defendants, and costs where the Claimant is only partially successful.

The judgment is well worth a read, and whilst not in itself ground-breaking, key reminders (or warnings) to practitioners stand out as being:

  1. Making a final well pitched Part 36 offer even if very close to trial should always be considered if appropriate. Even though the full benefits of Part 36 which would be obtained through an earlier offer may not be realised, whether the offer is beaten by a penny or a pound, even a late offer still brings (subject always to judicial discretion) the potential to recover material additional sums under CPR 36.17(4)(d), which in this case yielded the Claimant a further £57,625.00.
  1. Under Part 36, a Claimant (as compared to the position with Defendants which involves separate rules) is permitted to serve a Part 36 on only some of the defendants without the offer being invalid, if the offer is in ‘full and final settlement’ then seeking a contribution from the other parties after acceptance of the offer is a matter for the defendants.
  1. The Part 36 offer was only sent by email on 5:22pm on a Friday and this was accepted by the Court (although there was no judicial consideration in Mate of the validity of service in this manner) as being served on the Monday. Email service of a Part 36 offer is a point that was also recently considered in the costs judgment of the case of Coldunell Ltd v Hotel Management International Ltd l [2022] EWHC 3084 (TCC) where likewise the offer was only sent by email. In Coldunell the Judge considered that on the facts of that case email service was acceptable for service, but it is worth remembering that a Part 36 offer is a document and so the starting position (and to avoid arguments on this point) is that it needs formal service as per CPR 6, so better to go full ‘belt and braces’ than to risk having to make any anxious submissions.

As with all costs matters the discretion of the Court is wide so as to achieve a just outcome, but endeavouring where possible to maximise the possible benefits available under the self-contained code of Part 36 is something any practitioner should seek to take advantage of, if not only to encourage parties to settle, then at the least to provide some solid costs arguments if required. 

An obvious final point to make (and perhaps one for an ideal world) is do try to make your offer with some time to spare, chances are you aren’t as lucky as Indiana Jones, and no one wants to be the person caught by that rolling boulder…

https://www.bailii.org/ew/cases/EWHC/Ch/2023/806.html

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Met launching provenance research squad

A modern building with sleek black columns supports a white structure overlooking a vast, calm ocean under a clear, blue sky.

Standards of assessing provenance are shifting for those institutions housing pre-eminent permanent collections.  As Maxwell Anderson (formerly director of the Dallas Museum of Art and the Whitney) puts it: “The attitude used to be, don’t acquire something you know to be stolen — that’s a very low standard.  The attitude today is, don’t acquire something unless you know it’s not stolen. It’s a 180-degree difference”. 

The Metropolitan Museum of Art in New York is taking this seriously; it intends to hire a team of four staff to scrutinise its gargantuan inventory of more than 1.5 million works.  What a task – I don’t envy them.

"...don’t acquire something unless you know it’s not stolen"

https://www.theartnewspaper.com/2023/05/10/metropolitan-museum-provenance-research-squad
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Sustainability Reporting for Private Companies

Vertical garden flourishing on a building facade, with lush green plants covering multiple levels, set against a backdrop of tall glass skyscrapers.

The Chancery Lane Project continues to be at the (legal) forefront encouraging business leaders and their advisers to use the power of climate contracting to deliver fast and fair decarbonisation. 

Many private businesses will have policies and commitments and targets to reach Net Zero (or to otherwise improve their environmental footprint), and many will want to know what more they might do.

This newly proposed clause may be the answer for those companies asking that “what else can we do” question, by suggesting clauses to be embedded in a company’s articles of association to commit the board to consider, monitor and update (with independent input) their sustainability policies.

It will be interesting to see if companies do adopt such clauses and to also monitor whether shareholders or other stakeholders start to ask boards to do so. 

https://chancerylaneproject.org/climate-clauses/sustainability-reporting-clause-for-the-constitution-of-a-private-limited-company/

Obviously embedding such a commitment in a company’s articles may also lead to the possibility of board’s being held to account (and possibly liable for breaching any such clauses) by stakeholders in future, so adopting such clauses would have to be done only where a board is fully committed – and wants to show it is fully committed – to managing its environmental impact and its sustainability reputation. Adopting such a clause would be a real clear show – as opposed to a press release or nice words on a website – that a company is taking climate change action seriously! 

...it is increasingly important for companies not only to ensure that they have corporate sustainability policies in place - but that these policies are being regularly discussed at board level and updated as necessary

http://forstersllp/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Modern Warfare (M&A edition): CMA blocks Microsoft from acquiring Activision

The UK government’s Competition and Markets Authority (CMA) has put a stop to Microsoft’s plans to acquire Activision, the publisher behind the popular game franchise “Call of Duty”. The CMA cited concerns that the acquisition would have given Microsoft too much control over the cloud gaming market, potentially leading to higher prices and less choice for consumers. It looks like Microsoft will have to respawn and find another way to level up their gaming department.

"Microsoft already enjoys a powerful position and head start over other competitors in cloud gaming and this deal would strengthen that advantage giving it the ability to undermine new and innovative competitors."

https://www.gov.uk/government/news/microsoft-activision-deal-prevented-to-protect-innovation-and-choice-in-cloud-gaming

Leasehold abolition plans dropped?

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

The Guardian has reported today that the Government’s much-reported plans to abolish the ‘feudal’ system of leasehold have been quietly dropped, and when Michael Gove unveils a range of measures next month designed to protect the interests of tenants, the end of the leasehold system will not be among them.  If true, I’d wager it will come as a surprise to precisely…. zero property lawyers.   

If the Government believes that leasehold reform will be a crucial vote winner amongst younger people, then it will need to focus on tackling the reasons why owning your own home is so unachievable to many.  Changing the value imbalance between landlords and tenants, by removing ground rents and fixing the price of lease extensions or enfranchisement, may well be a good start. But the existence of a freehold/leasehold system is not in itself the root of all evil, and demonising leasehold in this way is unhelpful.  In fact the leasehold system provides a practical way of managing properties which are physically dependent on one another.  Flats do not float in thin air; they rely on support from the flats below them.  Flats do not all have their own entrance and access arrangements; they must be shared.  Human nature being what it is, disputes will inevitably arise about the impact one person’s use of a flat has on another’s.  Someone has to have in mind the greater good of the entire building, and prevent tenants from acting wholly in their own self-interest – that person is the freeholder (who might be a disinterested investor, but who may well be a company controlled by the tenants themselves).

Despite its rhetoric against the evils of leasehold, the Government never satisfactorily answered the question of what might replace it.  Commonhold has often been touted as the solution, but commonhold itself does not stop disputes arising between tenants.  The fact that commonhold has been so rarely used in this country, despite it being on the statute books for the last 20 years, gives a pretty clear indication that property lawyers in practice have not found it to be the answer.  It would seem that Gove and his team have reached a similar conclusion.

In the meantime, lawyers like me will continue their wait to see if the Government can come up with a radically different system of ownership that everyone agrees is fair and actually works in practice…. but I for one won’t be holding my breath.

“I don’t believe leasehold is fair in any way,” he said. “It is an outdated feudal system that needs to go. And we need to move to a better system and to liberate people from it.”

https://amp-theguardian-com.cdn.ampproject.org/c/s/amp.theguardian.com/money/2023/may/10/plans-abolish-feudal-leasehold-system-england-wales
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Green leases: debt has started to talk

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

The “green lease” evolution continues. 

The Certificate of Title, which is the typical bedrock that lenders insist on in any real estate finance transaction, now includes a tentative step towards green lease requirements, notably: (1) a tenant obligation that it cannot make any alterations which adversely affect the EPC rating; and (2) a mutual obligation to share environmental performance data, subject to both landlord and tenant keeping this confidential. This is not set to reflect a lender’s minimum expectations for occupational leases. 

Whilst these provisions, or a variation of them, are relatively common already, they are now set to have more permanence in occupational leases (plus lawyers will be reporting on the presence/ absence of these provisions on any investment acquisition). Interestingly, the data sharing provision is mutual, so that landlords can expect tenants to lean on this in any negotiation around data sharing provisions (e.g. utility data in respect of the common parts of a multi let asset). Arguably, this reflects an increasing move to mutuality in green lease obligations.

Clearly, this is just the start. As minimum energy letting restrictions already apply, and given the value that landlords place in environmental performance data, it is no surprise to see these changes to the standard certificate. However, typically, new green lease provisions go much further. Market expectations are only set to move one way, and it will not be any surprise to see much more extensive certificate requirements in the near future. 

The certificate’s provisions for climate change are not more extensive, since that would not reflect most current leases on which the certificate reports. If in future it is generally considered that the certificate needs to address climate change issues in a more extensive way, the committee will consider further change as an update to the eighth edition.

https://www.egi.co.uk/legal/a-new-chapter-in-the-clls-certificate-of-title/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

A positive push by investors towards a plastic-free future

Without detracting from the not insignificant power of consumers to pressurise companies to become more eco conscious, the more compelling voices undoubtedly belong to these companies’ investors and shareholders. It is encouraging to see that this coalition of investors has recognised the costs to society of issues such as plastic pollution and, beyond that, that they are actually taking positive action in urging companies such as Tesco, PepsiCo and Amazon to phase out single-use plastics and implement re-use systems for packaging.

"Investors are now sending a clear signal to these companies that they will face ever-increasing pressure if they do not act soon to substantially reduce their plastic footprint"

https://www.ft.com/content/20461b08-76d4-4413-bebd-49b78c3f5de9

God Save The….holiday entitlement…

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

Whether you are baking for tea parties, scheduling your viewing of the coronation service, or making as many alternative plans as possible in order to avoid the topic, there is one common denominator amongst all arrangements for the impending coronation of King Charles III…..Monday 8th May is an additional bank holiday in the UK! 

Surely this is nationwide cause for celebration? Not quite for everybody. 

ACAS has highlighted that news of the additional bank holiday may have triggered a few queries from both employers and employees. For example:

  • Do employees have the right to take the day off? 
  • How will this impact on an employee’s holiday entitlement? 
  • What is the correct rate of pay for the bank holiday? 

As is so often the case with employment matters, the answers to these questions will depend on the precise facts of each case, but the best starting point will always be to head straight to the contract of employment. A well drafted contract will set out an employee’s basic holiday entitlement and whether or not this includes bank holidays and, for bonus points, would reference the employer’s holiday or absence policy which will explain how to manage any holiday requests which are in excess of the contractual holiday entitlement. 

If the employment contract sets out an entitlement to holiday which includes bank holidays, then it is likely that there will not be an expectation for the employee to work this additional day and it will automatically be deducted from the overall holiday allowance. If the holiday entitlement does not include bank holidays, and the employee would normally work on the Monday, then the employee is likely to need to book this day off as holiday in the usual way. 

Holiday entitlement, although a simple point on the face of it, often becomes a deeper talking point with employers because a nuanced tweak to the contract wording can have quite a significant effect on the practicalities of the working relationship. As for the correct rate of holiday pay, this can equally become a fairly complex question if the rate of pay is not defined in the employment contract. 

So, a blissful three-day weekend can actually (slightly tenuously) give rise to a few tricky questions. 

Whether you’re working or not, celebrating or not, I hope the bank holiday goes smoothly!

….I wonder if King Charles III will be granted a day off in lieu…?

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

It’s a no from the DNO

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

How can the government intervene to enable the logistics sector to decarbonise? As the sector convenes at Property Week’s annual Industrial & Logistics Conference and Showcase, this is a timely report (Accelerating Logistics Towards Net Zero) from Turleys that confronts this question. The report and particularly the final chapter (“Last Mile”) also coincides neatly with British Land securing planning consent for a “net zero urban logistics hub” in Paddington.

Perhaps the most startling text is that originating from the UK Warehousing Association – (1) an estimate that less than 5% of UK warehouses have any solar panels at all; (2) of the ones that do, the panels usually cover just 10-25% of the roof-space; and (3) existing warehouse roof-space alone could accommodate a doubling of solar by 2030. Yet there is one common thread that permeates the whole report – not just in the context of solar but also vehicle electrification – the challenge of grid connection. The potential is seemingly plentiful – but if “it’s a no from the DNO”, its not looking so sunny…

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Metric 4.0 – Calculating Biodiversity Net Gain

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

The Government has published Biodiversity Metric 4.0, expected to be the metric eventually adopted for the purposes of calculating biodiversity net gain (“BNG”) as required by the Environment Act 2021. It is anticipated the obligations will come into force in November 2023 for larger sites, and smaller sites will be subject to phased introduction expected to follow in April 2024. 

The metric is used to assess the biodiversity unit value of an area of land and therefore can demonstrate a net gain, or loss, consistently. A separate metric is applicable to smaller sites. 

Delivering the required 10% BNG offsite will be available if it is not possible to provide it on the development site itself. The metric inherently incentivises offsite enhancements located close to the development site, over those located further away. As a result, the further away the offsite delivery from the development site, the more biodiversity units required in order to deliver the required gains. 

Natural England has indicated it will continue to work with the Government on improving the metric, with an understanding that major updates will arise every 3-5 years. On the assumption Metric 4.0 is formally adopted, there will clearly be a period of transition whilst developers and local authorities adjust to the new requirements of the planning regime which will no doubt lead to the metric being revised. 

Working on the basis that BNG obligations and the associated planning conditions will become mandatory in November 2023, developers and land managers can prepare by calculating the biodiversity value of intended development sites in advance. 

"With its anticipated future adoption as the statutory biodiversity metric...the publication of Metric 4.0 is another step towards biodiversity net gain becoming mandatory."

https://naturalengland.blog.gov.uk/2023/03/28/measuring-biodiversity-net-gain-publication-of-biodiversity-metric-4-0/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Should all buildings be on a carbon diet?

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

“I really think more people should be paying attention to NYC’s Local Law 97”, says Brendan Wallace, Co-founder and Managing Partner of Fifth Wall, in this tweet

Perhaps the global real industry, including those in the UK, should heed that advice? The local regulation targets actual greenhouse gas emissions from NY real estate, with stringent limits/ hefty fines, and the first deadline for compliance approaching in 2024. Is regulation of this type, including its alternative means of compliance (e.g. purchase of renewable energy certificates), the next regulatory driving force that the industry needs to move to a net zero world?  

For those leasing commercial real estate in the United Kingdom, we have EPCs and MEES. Yet, whilst not wishing to labour the point, these regulatory requirements (see this podcast) relate to potential energy performance, not the culprit – actual emissions. We have to go back to Spring 2021 for the government consultation on what I described as the “next generation EPC” – the closest move to an operational based system of “regulation”, albeit initially only involving an annual reporting commitment. There has been no government progress since. With other jurisdictions moving forward, is the UK at risk of being a laggard?  

Taking a quote from this article in the New York Times on LL97, “the basic mission is to put buildings on a carbon diet”. Surely this should be the regulatory focus, and the UK should step up? 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Prudence over patriotism… have retailers bet against coronation enthusiasm?

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

With the King’s coronation on Saturday, the Guardian has provided a round up of the more unusual coronation memorabilia on offer, including “tomato kingchup” and a life-size cut out of the King.

However, walking around my local city centre last weekend, there was a distinct lack of any coronation items on sale. No tableware, no kids’ crafts, no flags etc. I spoke to staff in a number of shops and they confirmed that whilst they have had some items on sale, it is now all sold out. 

Whilst I appreciate that I have left my preparations a little late (and whilst better for the environment to reduce waste and unnecessary consumption), it feels that retailers have limited their stock in order to reduce the risk of having surplus left after the event that they can only sell at clearance prices. This is a sign that, although we have so far avoided a recession, business confidence (particularly in the retail sector) is still fairly low. 

On the other hand, we are still seeing lots of retailers taking on and expanding physical stores. An example is HMV preparing to re-open their Oxford Street flagship store later this year. So, while retailers appear to be being careful for now, there does still seem to be optimism for the near future.

some businesses and their PR teams seem to be doing anything possible to mark the day

https://www.theguardian.com/uk-news/2023/may/01/king-charles-chocolate-bust-and-tomato-kingchup-the-quirkier-coronation-merchandise

Is the film studio market cooling?

It was great to be quoted alongside other industry voices in Property Week’s article (£) on the state of the UK film studio market.

We are certainly entering a new phase, with most of the big studios having satisfied their current needs for MLAs. There are also market headwinds, not least with inflation and interest rates affecting financing, but more studio specifically the ongoing skills shortage and the big question of business rates.  

Click the link to read the full article and reach out to our Studios Group to discuss how we can help your business.

After a demand surge over the past few years, the market may be set to cool

https://www.propertyweek.com/markets/pace-slows-in-the-uk-film-and-tv-studios-story/5124835.article

Keeping on track with your investments – the importance of seeking professional advice across the sports sector

It was recently reported that Nottingham Forest FC’s Gustavo Scarpa fell foul to a targeted cryptocurrency scam in his native Brazil. The club also confirmed they had allowed him a period of leave to return home in an attempt to resolve the situation, and sadly this occurrence is becoming all too common within the professional sport sector.

In January of this year, world record 100m holder and 8-time Olympian gold medallist former athlete, Usain Bolt, reportedly also suffered at the hands of con-artists, with a staggering £10 million investment vanishing without a trace.

The trend continued two weeks ago with Craig Bellamy revealing he had been led astray by fraudsters and his financial mistake (which has ultimately ended in bankruptcy) was the result of a remarkable series of failed property investments, and a film-partnership tax deferral scheme that was targeted by HMRC.

To combat these occurrences, this article outlines why it is always prudent to seek professional legal advice when it comes to corporate investments, and explores what due diligence should be undertaken in each scenario to avoid these luring ‘honeypots’ and make fiscally responsible decisions.

By their very nature, investments into businesses (particularly the unregulated crypto asset space) can be risky, therefore it is vital to adopt a cautious approach. Combine that with a high-profile athlete and the amount of due diligence required from their perspective, it is evident that more factors are at play than for just a traditional investment.

The meticulous nature of due diligence (that should always be a pre-requisite for athletes’ advisers when assessing investment opportunities) must encompass a review and analysis of:

  • The business itself and the product and/or service offering
  • The sector
  • The market
  • Financial due diligence
  • Company due diligence
  • Legal due diligence
  • Reputational impact on involvement in the business

Footballers, similar to the likes of Scarpa and Bellamy above, might be considered uniquely placed in how they accumulate their wealth. If effective at their trade, they may be well remunerated for their services in a comparatively short amount of career time in stark contrast to the other professions. However, that earning potential is also time-limited, and this applies across professional sport as a whole, with most athletes’ careers at the top level lasting no longer than 10-15 years. Accordingly, many athletes seeking financial advice may:

  • be naïve, youthful and inexperienced;
  • have substantial quantities of disposable income at that moment in time;
  • have limited market and investment knowledge;
  • not have factored in the need to plan for the future for when their career is over; and
  • have devolved decision making to trusted advisers.

These circumstances create a scenario in which the pursuit of potentially high-risk investment strategies is made more likely. In addition, the belief may be that because an opportunity is presented to them with bold promises of outsized returns that there is limited downside risk for them in investing. With disposable income available to them, and potentially team mates also investing in similar sounding ventures, their instinct may be to invest first and consider implications later.

The film partnership scheme which led to Bellamy’s financial demise was designed to (legally) exploit heavy tax reliefs created by the government to promote investment in the UK film industry. The scheme generally involved the formation of a limited liability partnership (LLP) with each investor becoming a partner in that structure. The LLP would then acquire the rights from a film production company to utilise and distribute films for a defined period. The LLP would then lease those rights back to a film distributor under a sub-licence which required the distributor to make annual payments to the LLP for the same period. The lease agreement would consequently generate revenue for the LLP.

The glaring risk that was kept hidden from footballers (or indeed that their advisers failed to highlight) was the fact that the generous tax breaks that the scheme relied upon to offer a financial benefit were placed on an ambiguous legal standing, and at the mercy of being scrutinised and challenged by HMRC. Regrettably for the athletes involved, that exact situation transpired, and the ability to claim tax relief through film partnership schemes was devastatingly dismantled through legal challenges mounted by HMRC. Millions of pounds were lost for these athletes overnight, yet with the safety net of professional advice at the time Bellamy, amongst others, may have made different investment choices if presented with a different perspective as to the risk and effectiveness of the scheme.

Our (one might say self-interested or biased) view is that no investor is likely to ever regret obtaining professional tax, legal and financial advice and/or independent third-party scrutiny of their investment.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Are lenders to sit behind remediation costs? We keenly watch the most recent Canadian case on this.

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

The recent first decision Canadian Qualex-Landmark Towers case (QL case) will make secured lenders of real estate and construction very nervous indeed. Whilst this is not precedent in England presently, the costs of remediation were deemed in the QL case to rank above secured debt on insolvency. All eyes will be on any appeal of this ruling. The ramifications both in Canada and potentially further afield are vast. The Canadian ‘Redwater’ case had previously held that a remediation costs order took priority over secured debt but not on insolvency. It is feared that the QL case whilst only at first instance is seeking to extend the Redwater reasoning to insolvency. The potential impact of the QL case and indeed the UK government’s call for increased responsibility for environmental clean up will bring uncertainty to the secured real estate lender market all over as law makers here will be keenly following the ruling in Canada.

ENVIRONMENTAL OBLIGATIONS PRIORITISED IN INSOLVENCY PROCEEDINGS

https://beale-law.com/article/environmental-obligations-prioritised-in-insolvency-proceedings/

Bridging the gap between online and in-store shopping

Vertical garden flourishing on a building facade, with lush green plants covering multiple levels, set against a backdrop of tall glass skyscrapers.

In a world where almost everyone is connected to the internet almost all of the time, retailers are recognising the importance of streamlining their online and in-store shopping experiences. Hybrid shopping is fast becoming the “new normal” and retailers need to adapt.

Consumers want convenience. For some that means being able to see items in store before buying, for others that means ordering online and having their purchases delivered. The former will want to know that their desired item is in stock at the relevant store and the latter will want to be able to trust that the item will be suitable when it arrives.

Zalando’s new virtual fitting room, which it is currently trialling, seems a fairly big leap in the right direction. As reported by Retail Gazette, customers will be able to create an avatar of themselves by inputting their height, weight, and gender details. They can then see how clothes are likely to fit by trying them on the avatar. This means that online customers can buy with confidence that they are getting the right size. For those who like to shop in-store, if their size is out of stock they can still check the quality of an item, the material etc in store and again order with confidence that the selected size will fit. It is hoped that this will reduce the amount of items returned, benefiting customers, retailers and the environment.

Zalando is piloting a virtual fitting room, allowing customers to try on clothing by creating a 3D avatar

https://www.retailgazette.co.uk/blog/2023/04/zalando-virtual-avatar-fitting-rooms/

The Government consults on changes to short-term lets.

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

Short-term lets have become increasingly popular in recent years especially with how easy it is to find and stay in some pretty cool and quirky accommodation. Whether that be a yurt in the Yorkshire Dales or a converted castle in Wales. 

The Government has been paying attention and they want to tackle the adverse impacts that short-term lets are having on local communities. A new consultation was published on 12 April 2023 which is seeking responses to various proposed changes, including the following:

  • Introduction of a registration scheme for short-term lets only, in order to “drive adherence to standards and provide a platform to address negative community and housing market effects”;
  • Introduction of a new use class for short-term lets; and
  • The potential introduction of a new permitted development right for the change of use from a dwellinghouse to a short-term let and vice versa.

The introduction of the new permitted development rights will “provide flexibility where short term lets are not a local issue, and which allows for this flexibility to be removed where there is local concern.”

Whilst the consultation seems quite high level at the moment, there seems to be no doubt that the Government will introduce some measures in the near future. 

The consultation runs until 7 June 2023. 

To address concerns in certain areas about the increase in the numbers of short term lets and the impact this can have on the sustainability of communities and the availability and affordability of homes for local people, this consultation seeks views on proposals in respect of use classes and permitted development rights for short term lets.

https://www.gov.uk/government/consultations/introduction-of-a-use-class-for-short-term-lets-and-associated-permitted-development-rights/introduction-of-a-use-class-for-short-term-lets-and-associated-permitted-development-rights
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Beds and Sheds: The Future for Urban Logistics?

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

A report published by Turley earlier this year suggests that so-called “beds and sheds”, involving the co-location of residential and industrial uses in the same mixed-use development, is becoming a viable option for developers. Whilst the number of completed schemes still remains relatively small, there is a clear trend towards this approach, especially within London, with an increasing number of co-location schemes in the pipeline.

The report contains a number of interesting findings, including:  

  • Co-location schemes so far tend to be vertically stacked (81%) with residential above industrial spaces, however, the proportion of horizontally stacked developments (which are best suited for larger sites) is on the rise.
  • More than two-thirds of co-location schemes deliver an increase in available industrial floor space by, on average, 40.5%.
  • The number of new homes in the process of approval for co-location is increasing (currently 30,371 in London alone), helping to address perennial housing shortage issues within the capital.

Co-location clearly has the potential to unlock a greater amount of housing and industrial space, so long as issues relating to noise and pollution can be successfully addressed by developers as part of their schemes. It will be interesting to see whether the adoption of co-location accelerates further over the next few years, especially as logistics developers adopt more electric vehicles as part of their last mile delivery fleet and the supply of both industrial and residential space within London shrinks further.

"One year on from the publication of our last report – and despite the scepticism of many in the development industry – it is clear that Co-Location is here to stay, with new schemes continuing to come forward across the capital in spite of the more challenging economic climate."

https://static.turley.co.uk/media/pdf/2023-02/gds0832_-_co-location_report_2023_web.pdf
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Government consults on film-making PD rights

The Government has launched a consultation on making changes to the existing permitted development right for commercial film-making. Currently the right is subject to a number of restrictions and the calls from the industry that these are too limiting seems to have been heard.

The key proposed changes are:

  • An increase in the maximum time period for land to be used for commercial film-making from 9 months to 12 months in any 27 month period – the intention is to allow time for the construction, operation and clearance of the site for larger productions.
  • An increase in the maximum area of land which can benefit from this right from 1.5 hectares to 3 hectares.
  • An increase in the maximum height of any temporary structure provided under the right from 15 metres to 20 metres.

It is clear the aim of these proposed changes is to support the delivery of larger productions and the continued expansion of the film industry.

The consultation specifically recognises that there has been a rapid growth in production in recent years and in issuing this consultation, it appears the Government recognises the role the planning system can play in continuing to fuel the growth of the sector. But do these proposals go far enough?

The consultation will close on 25 April 2023 so act now to make your views heard.

To learn more about Forsters’ experience in supporting Studios clients with their planning needs, get in touch with our Studios Group

The industry has provided feedback that the permitted development right, although useful for some productions, is too restrictive and therefore allowing additional flexibility would further support the recent rapid growth in production.

https://www.gov.uk/government/consultations/permitted-development-rights-supporting-temporary-recreational-campsites-renewable-energy-and-film-making-consultation/permitted-development-rights-supporting-temporary-recreational-campsites-renewable-energy-and-film-making-consultation
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Single witness permitted to collectively attest for three signatories on a deed

Construction workers in high-visibility vests and helmets stand and communicate amidst metal scaffolding at a construction site, with sunlight streaming through an open structure.

The High Court (Chancery Division) has decided in Euro Securities & Finance Ltd v Barrett [2023] EWHC 51 (Ch) that a deed of guarantee executed by three directors and a single witness was valid, despite the execution block containing no words to indicate that the witness had observed the act of signing nor that the witness’ single signature indicated it had witnessed all three signatures. The High Court accepted the claimant’s case that the conditions for the deed of guarantee being properly attested were met based on the evidence and inferences drawn from the documents at face value.

The case involved a deed of guarantee which was signed by the three defendants, each with the same witness who only signed the deed once. As can be seen from the picture, the defendants each had a separate execution block but there was just one witness execution block at the bottom of the page. The defendants argued that the guarantee was not executed as a valid deed and was, therefore, a simple contract, meaning that the reduced six-year limitation period would apply to the guarantee and the claim would be out of time (unless extended under the Limitation Act 1980).

The defendants’ argument was based on the execution wording.  Each defendant had signed the guarantee with a separate execution block stating that the document was “signed and delivered as a deed by…“. The witness then signed once at the bottom of the page, using an execution block which stated “and witnessed by…“. The defendants argued that the witness’ attestation was invalid as the execution block did not state that the directors had signed in the presence of the witness, nor that the witness was witnessing all three of the directors’ signatures.

The case delved into the meaning of the requirement in section 1(3)(a)(i) of the Law of Property (Miscellaneous Provisions) Act 1989 (“the 1989 Act”) for the deed to be signed “in the presence of a witness“. The Court found that the deed of guarantee had been validly attested by the witness and had thus been executed as a deed.

The key points to take away from this case are:

  • As long as a deed is validly witnessed, a single witness’ signature can be interpreted as attesting the signature of multiple directors where the witness signs beneath all of the signatures in the deed and there is only one witness attestation clause.
  • Witness execution blocks do not need to contain specific words, and it is enough for a witness to sign under a rubric which indicates that the signature is that of a witness. Signing under the words “witnessed by” presupposes (in the absence of any contrary indication) that a witness is present when the signatories sign the deed.
  • Whether signatories sign together or separately, as long as each signatory signs under the observation of the witness who then attests, this will comply with the requirement in section 1(3)(a)(i) of the 1989 Act.
  • “Witnessing” means observing the signature rather than merely being in the same room as the signatories.

In my judgment, Ms Money signing under ‘and witnessed by’, itself under the three signatures of the three guarantors, themselves under ‘signed and delivered as a deed by’ was a valid ‘attestation’ of all three signatures, which complied with s.1(3)(a)(i) LPMPA...

https://www.bailii.org/ew/cases/EWHC/Ch/2023/51.html
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

With the 1954 Act set for renewal, is this an opportunity for a greener future?

The Law Commission announced on 28 March 2023 that it will be commencing a review of the Landlord and Tenant Act 1954. The 1954 Act gives tenants of protected commercial leases rights to stay in the premises after the original term ends.

The review aims to tackle the “complex and bureaucratic” nature of the 1954 Act which is seen as the key driver in many landlords and tenants instead choosing to contract out of the regime. It is hoped that with greater uptake will come a “beneficial leasing relationship between landlords and tenants” which will in turn reduce the number of void properties on the high street.

The 1954 Act has been thrown into the spotlight in recent years as a result of the Covid-19 Pandemic, but alongside this has been a growing focus on “green lease terms” and whether tenants or landlords can insist on the inclusion of these terms in the lease on renewal. Generally on a renewal the court is only able to depart from the terms of the existing lease where any change is fair and reasonable as between the landlord and tenant. The consequence of this is that it is difficult for parties to incorporate modern green lease clauses such as energy efficiency measures or the requirement to maintain a specific EPC rating where this would depart from the existing, and often quite outdated, wording. This point was specifically considered in last year’s case of Clipper Logistics Plc v Scottish Equitable Plc.

If the Government is serious about meeting its goals of modernising the 1954 Act and bringing it in line with net zero targets, then this is a challenge that will have to be tackled.

The Law Commission aims to publish a consultation paper by December 2023.

Decades-old laws affecting business tenants to be reviewed The Law Commission of England and Wales has today announced that it will review the key piece of legislation used by businesses who lease shops, offices and other commercial premises.

https://www.lawcom.gov.uk/decades-old-laws-affecting-business-tenants-to-be-reviewed/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Creative Cities: the power of film studios

I was excited to be asked to speak at the Future Cities Forum’s latest discussion at the BFI. The topic was Creative Cities and the panel was on the power of film studios to boost the UK economy. It was a great session, with expert voices from across the sector. I also spoke. Here’s what you missed.

Barry Jobling of Hoare Lea gave an insight into the acoustic challenges of developing film studios. He touched on how for each project it was about finding the right solution for the client – not unlike law. The constrains on each site will be different: physical, environmental, planning or just good old fashioned budgetary. 

Sound is one of the vital elements of making a film, that was obvious to the audience at the BFI’s screening room. The rich silence which followed the acoustic thud of the heavily sound proofed door, acting as an audible reminder of the importance the industry places on sound. 

Andrew Osborne, Head of Economic Growth at Ashford Borough Council, shared plans for bringing forwards Ashford Studios. Having already secured planning, the site will be mixed use and centres around the historic locomotive sheds. 

The location of Ashford, away from the west London studio core, led the conversation towards the challenges of attracting skilled crews, when there is already a sector wide under-supply. This issue was most recently highlighted in David Puttnam’s speech to BAFTA. The site’s proximity to HS1, giving easy access to the London and French employment markets, and close links to the University of Canterbury to address training needs, are strengths the studio can capitalise on to face this challenge. 

Michael Davies, founder and Director at Vitamin Advisers (previously the lead within JLL’s film studio team), challenged the orthodoxy that crews wont travel. He gave examples of existing studios outside the traditional studio heartland, which have thrived and have been fully utilised for yeas. However, he also acknowledged that there was a need for more people to work in the industry. 

The Knight Frank 2022 Film & TV Studio Market Report shows that as of 2020 only 17.7% of film production graduates were employed within the arts, design and media industries. Over 80% of those graduating with relevant skills are therefore being lost to the industry. Part of the solution must involve creating better pathways to work within the sector.

One new studio which looks like it has the tools to deliver the training required is Shinfield. Jason Lebidineuse, Director at architects Scott Brownrigg, explained that the links with Reading University had been key in bringing the development forwards. He said that having those close ties to the community has allowed the development to be flexible, which is necessary in the fast moving sector. 

A full report from the Future Cities Forum can be found at the link below and to learn more about Forsters’ experience in supporting Studios clients, get in touch with our Studios Group.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

VAR overturns HMRC: No penalty for Lineker

Last year I wrote about Gary Lineker’s toughest challenge yet. The famously never carded striker was facing a near £5 million challenge by HMRC, the Revenue having turned their IR35 off payroll working rules at him with the ruthless efficiency of a German placing the ball on the penalty spot.

Lineker, who is no stranger to controversy this year after a battle with the BBC over his political comments, was victorious once again. The match certainly wasn’t a walk(ers) over however.

Lineker contracted with the BBC and BT Sport through “Gary Lineker Media” (GLM). Unlike other celebrities HMRC have tackled GLM on the basis that it was not a personal services company but a partnership between Lineker and his ex-wife Danielle Bux. 

The Tribunal had four points to consider before deciding who would take home the 3 points (and almost £5 million):

  1. Whether IR35 applies to arrangements involving the supply of services to a client through a partnership.
  2. Whether GLM was, on the facts, a partnership.
  3. Whether there was a direct contract between the BBC/BT Sport and Lineker and Bux
  4. Whether Lineker and Bux should be estopped (prevented by estoppel) from contending there was no valid partnership.

After carefully considering the pitch side monitor, the referee, Tribunal Judge Brooks, held:

  1. IR35 can apply to partnership arrangements.
  2. GLM is a partnership.
  3. There was, as a matter of law, a direct contract between the BBC, BT Sport, Lineker and Bux.
  4. As GLM was a partnership the fourth point fell away.

The Tribunal held that when Lineker entered into contracts with the BBC and BT Sport he did so as principal – directly contracting with these entities. IR35 only applies “where services are provided not under a contract directly between the client and the worker”.

Had Ms Bux entered into the contracts on behalf of GLM then IR35 could have applied, but as contracts were signed by Mr Lineker they could not. 

HMRC are apparently unhappy with the decision, and could turn the fixture into a two legged affair, with an appeal to the Upper Tribunal a possibility. For now however, Lineker adds to the 48 goals for his country with a crisp £4.9 million of tax saved from the clutches of HMRC. 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Regeneration Game

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

I was kindly asked to contribute to Maria Shahid’s (@PropJourn on Twitter) article in the Law Society Gazette, which was published last week.  The main focus was the recent and proposed changes to planning law and the resultant impact on our town and city centres.

As ever with planning (or perhaps that is just me!), the discussion went far beyond the initial brief, covering resourcing at local authority level, recent government consultants, and our hopes for positive improvement in the future.

Thank you again to Maria for the invitation, and the other contributors to the article – I hope it is a thought provoking read and please do get in touch if you have any comments or queries.

"...what was the planning system designed to do and what it it now being ask to do?...planners are being asked to deal with viability...affordable housing...social engineering"

https://edition.pagesuite.com/html5/reader/production/default.aspx?pubname=&edid=a765171f-fd86-48a9-9bf5-86c0c7992f85
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Break point for a landlord’s redevelopment

Black and white chess pieces are positioned on a chessboard, focusing on two knights facing each other amid rows of pawns, set against a blurred, neutral backdrop.

What should a landlord do where it misses the deadline to serve a counter-notice under the Landlord and Tenant Act 1954 to oppose the grant of a new lease on redevelopment grounds (or subsequently the landlord has development aspirations)?

The answer is to seek a landlord redevelopment break in the new lease. When a break will be exercisable from will always depend on the specific facts of the case, but in the recent judgment of B & M Retail Limited v HSBC Bank Pension Trust (UK) Limited a landlord obtained an immediate redevelopment break option subject to 6 months’ prior notice.

The landlord had entered into an agreement for lease with Aldi (conditional on planning and vacant possession being obtained by February 2025) who would undertake redevelopment works on the landlord’s behalf . The landlord’s evidence persuaded the Court there was a real possibility of obtaining planning permission and carrying out redevelopment during the term of the new lease.

The judgment makes clear that the policy of the Act is not to protect a tenant’s security of tenant at the expense of redevelopment. While consideration can be given to a tenant’s circumstances the Judge made clear that “the Court will only look to upset redevelopment ambitions if there is a major factor pointing the other way”.  A landlord’s desire to redevelop can and often will trump the detriment to a tenant.

Despite a lack of suitable alternative premises for the tenant to move to in the area, the following were particularly helpful to the landlord obtaining an immediate break option:

  • The development would create jobs (possibly more than the tenant’s business did);
  • The tenant had been on notice of the landlord’s intentions for two years but didn’t adduce evidence of what steps it had taken to seek alternative premises;
  • Unfairness to the landlord. The rental value of the redeveloped property would be substantially higher than the renewal rent and without development there would be a potential loss of value to the landlord’s interest; and
  • The long-stop date in the agreement for lease placing a tight timetable on the landlord.

A tenant is not as a matter of course entitled to a reasonable period in a new lease before a break option can be utilised. It appears that in a situation involving a well-resourced tenant with a large property portfolio, a landlord with a firm proposal to redevelop will have a strong argument for an immediate break right (subject to the usual statutory minimum notice period of 6 months). Particularly if it can evidence substantial detriment from a delay.

The weight of these authorities suggests to me that the court will only upset a landlord’s redevelopment ambitions if there is a major factor which points the other way ...

https://www.falcon-chambers.com/images/uploads/documents/B_M_Retail_Ltd_v_HSBC_Bank_Pension_Trust_%28UK%29_Ltd_2023.pdf
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

An updated How to Rent Guide for 2023

The National Residential Landlords Association report that a new How to Rent Guide is due to be published this week.  This is the first update since an Easy Read version of the guide was published in 2021.  

Landlords seeking possession must have served a copy of the How to Rent Guide on their tenant at commencement of the tenancy or on renewal to be able to obtain possession pursuant to Section 21 of the Housing Act 1988.  When available, the guide will be accessible here: https://www.gov.uk/government/publications/how-to-rent

To avoid any issues in the future, agents and landlords should keep an eye out for the revised version and ensure they have the correct version for service moving forward.  

It forms part of the prescribed information landlords must issue, and if they do not, they lose the right to repossess using Section 21.

https://www.nrla.org.uk/news/new-how-to-rent-guide-released-by-government

Creditors beware – your winding up petition could leave you wound up

A recent decision has sent a stark warning to creditors seeking to collect debts by way of serving a statutory demand or presenting a winding up petition.

In Moorwand Ltd v K Wearables Ltd [2023] EWHC 410 (Ch), the Court was asked to dismiss a winding up petition on grounds that the debtor disputed the debt and had crossclaims. In making its decision, the Court had to decide whether the debt was disputed on “substantial grounds” (requiring the Court to consider whether the debtor genuinely considered that it had a crossclaim, whether the crossclaim was only raised after the creditor commenced enforcement action, and the reasons why the debtor had delayed in pursuing any crossclaim). Fortunately for the debtor, it was held that their crossclaims were genuine, and the winding up petition was dismissed accordingly.

In an increasingly volatile economic climate, this decision serves as a timely reminder to creditors that whilst there are tools available to assist with debt collection, one needs to be careful when selecting the right tool for the job. Choosing the wrong tool may not only delay or torpedo the debt collection process, but may even expose the creditor to wasted costs which outweigh the debt in question.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Omni channel retail compatibility key to retailers’ decisions on bricks and mortar

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

An interesting comment here from British Land’s Kelly Cleveland, head of strategy and investment, talking about BL’s continued investment in retail parks and why retailers prefer them. 

We have already seen that physical retail continues to have a place in modern society, as online retailers take the leap and invest in bricks and mortar, but it is interesting to hear how omni channel retail strategies are becoming increasingly interwoven with a physical retail strategy, instead of simply co-existing together. 

... retail parks have emerged as a preferred format, due to their compatibility with omni channel retail, their affordability and appeal to online resilient businesses...

https://reactnews.com/article/british-land-completes-125m-of-retail-park-deals/?utm_term=0_b0728480f9-0d3e57aae4-%5bLIST_EMAIL_ID%5d&mc_cid=0d3e57aae4

Department Stores woes..

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

With some famous old names having departed from UK shopping centres and high streets in recent years it it of note that an equally famous department store group Galeria Karstadt Kaufhof has announced this week that it wants to part with 52 stores across Germany. 

With around 4,000 employees likely to be affected by the closures, which are planned in two waves – a first part in summer 2023, a second in January 2024 this would seem to present a similar challenge for the German market that has been faced here in the UK following the demise of Debenhams, House of Fraser and others.

Back here in the UK we have news today from John Lewis Partnership that it has plunged to a loss of £234 million and admits it could not afford to pay staff their traditional annual bonus.

Off the back of a £181m profit for the year to 31 January 2022 there is clearly work to be done with total sales down 2% on the previous year.

John Lewis have blamed the “economic backdrop and inflationary pressures” for the decline but it’s clear that the challenge of remaining relevant to customers in the modern retail environment is no easy win despite the relative lack of competing department stores and the years ahead for the remaining department stores will be interesting to watch.

The remaining 77 stores will be modernized over the next three years with ranges that are more tailored to local needs

https://www.across-magazine.com/galeria-karstadt-kaufhof-to-close-nearly-half-of-all-stores-in-next-year/

Deadline passes for sign up to Developer Remediation Contract

13 March 2023 marked the six-week deadline that Michael Gove and his Department of Levelling Up, Housing and Communities had given developers to sign up to his Remediation Contract.

Mr Gove has since announced that 39 developers, including ten of the biggest housebuilders in the UK (such as Berkeley and Land Securities), have all signed contracts which turns their pledges to fix unsafe buildings that they developed or refurbished over the past 30 years into legally binding agreements. 

Signatories are required to fix all life-critical fire-safety defects in all English buildings over 11 metres they had a role in developing or refurbishing. It also requires them to reimburse the taxpayer where government funds have already paid for remediation.

A list of those developers who have signed, and confirmation of 11 others who have not yet, can be found here.

The Government will publish further information next week on how developers will be prohibited from carrying out major development or from receiving building control approval unless they sign and adhere to the contract, using powers created by the Building Safety Act 2022.

It is understood that secondary legislation will shortly establish the ‘Responsible Actors Scheme’ and set out the criteria for eligibility and the conditions of membership. Eligible developers who do not sign the contract will not be able to join the Scheme and will be subject to the prohibitions.

“I have been clear all along-those that are responsible for this crisis must pay. So, I am grateful to those developers who have done the right thing today by signing this legally binding contract. We will be monitoring their progress on remediation very closely, to ensure this work is completed urgently and safely. For those developers that have taken responsibility, today offers the chance for a reset so we can get on and build more of the safe, decent and affordable homes we so desperately need. “To those developers that have failed to sign the contract without good reason, let me be very clear-we are coming after you. If you do not sign, you will not be able to operate freely in the housing market. Your investors will see that your business model is broken-only responsible developers are welcome here.

https://www.gov.uk/government/news/developers-sign-goves-building-safety-contract?dm_i=6MQX%2cQVV7%2c1OXDWD%2c3CC54%2c1
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Turn off the lights – the bills are coming !

For those of with northern roots (that’ll be me then) the familiar shout of “shut the door” would ring out fairly regularly whether at home, at the pub or at the shops to stop the icy blast from outside and the desperate desire of heat to rush to the nearest exit.

That has now taken on a far greater significance with the rise (and rise) of energy costs and with the upcoming end to the short term subsidy later this month.

Whilst there is a strong ESG case for actions listed below it often does take hard financial measures / risks to trigger action however its good to see some  logic being combined with the use of modern technology and the use of renewable energies to lower energy costs and reduce energy consumption generally.

Here are some examples of positive action being taken by retailers :-

  • Upgrading of refrigeration units,
  • Installation of blinds onto freezers
  • Shifting away from frozen foods to “room temperature” goods
  • Installation of LED lighting
  • Reducing brightness on TV screens / monitors
  • Installation of motion detection
  • Dimming lights outside of core trading hours
  • “go dark” – lights out on window displays overnight

They may not seem entirely ground breaking and those of a certain vintage would just call this nothing more than good old fashioned common sense but the knock on effect of all of this has the opportunity to be extremely positive.

So turn off the light and shut the door – the fire’s burning !

UK retailers are speeding up their efforts to bring down soaring energy bills as the government’s energy subsidies finish at the end of this month.

https://www.retailgazette.co.uk/blog/2023/03/retailers-energy-costs/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

CPI or RPI: you pays your money and you takes your choice

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

If you were signing a lease (as tenant) and the rent is to increase annually in line with inflation, would you rather link it to CPI or RPI? 

This is what I asked in my most recent LinkedIn poll and the results are in:

– CPI: 67%

– RPI: 33%

It was neck and neck for quite some time, before CPI made a decisive victory. I can’t be certain what each of my respondents considered when voting, but here are the points which occurred to me:

Goodbye RPI

Rishi Sunak announced in 2020, when he was Chancellor, that the Government would not consent to bring RPI into line with CPI or CPIH before 2030. Of course there is (at least one) General Election due before then, but the direction of travel is clear – RPI is on its way out.

This may be seen as a reason not to use this index, but well drafted real estate documents will provide for RPI to be substituted with a suitable alternative index if RPI stops being published, so this shouldn’t be a material factor.

WIN FOR: CPI (just)

Level of Rent

While I can’t predict what inflation will be, historically RPI has consistently tracked higher than CPI. Below are the figures for the last 10 years, published by the ONS:

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
CPI 2.6% 1.5% 0.0% 0.7% 2.7% 2.5% 1.8% 0.9% 2.6% 9.1%
RPI 3.0% 2.4% 1.0% 1.8% 3.6% 3.3% 2.6% 1.5% 4.1% 11.6%
+0.4% +0.9% +1.0% +1.1% +0.9% +0.8% +0.8% +0.6% +1.5% +2.5%

If our lease was granted for a term of 10 years in 2012 (conveniently avoiding the spike in inflation in 2022) and with a starting rent of £1,000,000 exclusive, then linking to RPI rather than CPI would result in nearly £95,000 of additional rent being paid over the term. Ouch.

WIN FOR: CPI 

SDLT

Where rent is linked to CPI, this is classed as ‘variable’ for the purposes of calculating SDLT. By contrast rental increases linked solely to RPI are disregarded for SDLT purposes. This means that linking rental increases in the first 5 years to CPI have a number of draw backs:

  1. the SDLT submission must be made on a “reasonable estimate” basis. This may mean you need to take professional advice to provide an estimate that you can justify as reasonable 
  2. the SDLT you pay will inevitably be higher, as the rent will include the estimated inflationary increases – for example, the difference in SDLT on a 10 year lease with a rent of £1,000,000 exclusive, where the rent increases annually at 3% compound, will cost nearly £18,000 extra 
  3. the process for submission is much more onerous, because unlike with a standard return, it is a two (or potentially three) stage process: 
    • Return 1: as normal, but on reasonable estimate basis
    • Return 2: required to be submitted after five years to correct the estimate with the actual figures 
    • Return 3: if the index for the fifth years’ CPI is not available when submitting Return 2, you must submit Return 2 using the actual rent paid for years 1-4 and a reasonable estimate of the year 5 rent, and then a third return is required when the final years’ CPI figures are published and the year 5 rent becomes certain

Sorry Adam Hart-David, you got it wrong, tax really is taxing. But what does this mean? 

  • Additional legal costs: this really is specialist stuff and not something the inexperienced should dabble in 
  • Late payment interest: even though you could never have paid the correct amount, as it was unknowable, HMRC still want to be paid interest on any shortfall, currently at 6.5% (but don’t worry if you’ve paid too much as HMRC will pay you interest on the over-payment … at 3%)
  • The risk of forgetting / getting it wrong, with the associated penalties and reputational damage

WIN FOR: RPI 

There isn’t a right and wrong answer, but there is a lot to think about. If you need support on your next lease or complex SDLT issues, please feel free to get in touch with Forsters’ Corporate Occupier team for a chat.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Hotel financing: Is 2023 still wait and see?

It is interesting to read Aareal Bank’s take on what awaits the world of hotel financing in 2023. I agree it has been a watch and wait in 2022, but it feels like the time is right to emerge with the hotel industry really moving in the right direction at a faster pace than expected. However there is a definitive health warning for users to beware, take proper debt advice and not overstep. Its exciting to see where the next 12 months takes us… We are certainly up for the challenge. 

Hotel Financing Trends: What’s up for 2023? In 2023, the hotel industry is expected to remain robust as demonstrated by its quicker than expected recovery, but a keen eye on market trends and solid industry know-how will be key to navigating the uncertainty.

https://www.hospitalitynet.org/article/122000229.html
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The future of leisure (and shopping centres)

Andrew Denye posted this week about new openings for Starbucks and Greggs. But that’s not the only sector in which we are seeing confidence and growth. Here is an interesting article from Savills about recent trends in the leisure sector and what we can expect next.

Not only do Savills refer to the variety of leisure offerings now available, from golf and football to simulations and karaoke, but also how these leisure occupiers are having to become more creative with space as the competition for ideal property locations grows.

In our work for shopping centres, we are certainly seeing more innovative concepts for new and exciting leisure offerings in the pipeline. A few years ago we started seeing an influx of leisure operators in our shopping centres. Today I think we can say that shopping centres are really becoming mixed use settings with a focus on experience, where retail, food and leisure and even hotels and gyms are all under one roof. 

When I was younger, shopping was the day out. However, nowadays for a lot of people shopping is just a necessity (or perhaps I’m just older). This is especially so as people try to reduce their consumption in a bid to save the environment. Shopping centres have adapted to these changing social standards. They are becoming a one-stop for a full family fun day out.

A multitude of innovative new concepts and a range of high profile openings suggest the market is showing an unprecedented level of resilience in some categories, creating plenty of exciting opportunities for savvy occupiers.

https://www.savills.co.uk/blog/article/340556/commercial-property/from-football-to-karaoke--what-s-next-for-the-uk-leisure-market-.aspx

A year in the life of…the National Security & Investment Act 2021

The National Security & Investment Act 2021 (the “Act“) has now been in force for a little over a year and although the number of final orders made by the Secretary of State in its first 12 months is conservative, it is clear that the legislation has a definite “bite” to it and cannot be dismissed when considering corporate transactions. So, what have we learned since 4 January 2022?

1. Transparency. The lack of transparency both during the notification process and BEIS’ decision-making has been criticised. Failure to keep the relevant parties up-to-date has caused irritation and concern to those involved, while the final orders given have provided minimal information for BEIS’ decision, thereby preventing advisors and principals from getting a real “feel” for the types of transactions which are causing problems. 

2.  Timing. Although the legislation sets out time periods in which the government has to respond, it is important to remember that the clock stops when an information request is issued, only to start again once the information has been provided. This can result in the timetable being extended to several months; not ideal in a transactional context. 

3. Wide-ranging final orders. The final orders so far issued have been wide-ranging, including the imposition of conditions such as security controls and information barriers and, in five cases, the prohibition of the transaction, two of which had already completed. Although the possibility of prohibition was anticipated prior to the Act coming into force, its use shows that the government will not shy away from these, arguably, draconian outcomes. 

4. Limited appeal avenues. Any appeal against a final order can only be made via judicial review proceedings, i.e. the actual merits of a case cannot be reopened. This is likely to discourage parties from appealing, although it is expected that Nexperia, whose acquisition of Newport Wafer Fab was prohibited, will instigate judicial review proceedings. It will be interesting to see the outcome. 

5. Sectors. It appears from the final orders published that the transactions affected have all been within one of the 17 critical sectors which are subject to the mandatory notification regime under the Act; so far, other sectors do not appear to have been caught. However, this is not to say that they won’t be in the future.

6. Nationality. Prior to the Act coming into force, the suggestion was that principals involved in certain jurisdictions may be more likely to be affected than others, with acquirers from so-called “friendly” nations being less likely to be “called-in”. This does not appear to be the case, although four of the five prohibited transactions did apply to Chinese investors, with the other being Russian. However, the conditional decisions have affected entities in other countries, including the USA and Germany. 

The annual report to be published by the government in respect of the Act is due in the next few weeks so we may be able to glean more from that, but it’s possibly still too early to say that the first year has given advisors and principals a detailed understanding of how transactions are being affected, other than to reiterate that transactions ARE being affected and the need for notification should be considered at the start of any deal. Maybe, I’ll diarise a follow-up article in 12 months…

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Greggs & Starbucks on the rise…

We started the week with Starbucks announcing that they plan to open 100 new stores across the UK this year, and whilst it’s only Tuesday there is more good news for the High Street and wider retail environment today with the news that Greggs plans to open around 150 new bakeries in 2023 as well as :-

  • extending opening hours elsewhere 
  • refurbishing another 150 stores
  • relocating 40 stores to larger sites.

Despite inflationary pressures and an ever growing cost of living crisis, it would appear that if you pitch it right then the model will thrive. A lesson not always followed by retailers, as we have seen in recent years, with a number of spectacular collapses of what were once high street staples following some unsustainable expansion programmes.

It’s comforting, therefore, to see that despite cautions around future economic outlook, and the numerous challenges around logistics, higher energy costs and staff resourcing issues, that two strong operators with clear and distinct brands and offerings are pushing on with expansion plans.

Of interest as well, is their stated intention to open more branches in alternative locations such as airports and shopping centres. At a time when occupancy rates are under some tension, having an operator on the expansion train is encouraging news to hear.

In the meantime… I’m off to grab a Sausage, Bean & Cheese Melt !

There is always going to be a place for food-on-the-go venues and Greggs' offering is perfectly pitched in the current environment

https://www.bbc.co.uk/news/business-64874761

Sustainability trends in the hotels sector

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

How many of us, when staying in a hotel, are guilty of turning the heating up or running the shower hotter and for longer because we don’t have to pay extra for it? Or for pocketing little plastic bottles of toiletries, because we’ve already paid for them right? 

So how do hoteliers, who rely so heavily on guest habits, tackle sustainability and environmental targets? As well as the cost benefits, the net zero commitments and the pressure from customers and the Government, the University of South Wales points out that “the industry also relies on the same natural environment – unspoilt landscapes, sandy beaches, turquoise waters, glaciers, waterfalls, coral reefs and fresh air; all of which serve as great tourist attractions. Therefore, there is an inherent danger that we might harm the very basis on which hospitality is built.”

The anticipated 2023 sustainability trends for the hotel sector are much like any other commercial property:

  • Continued reliance on tech – we are already familiar with smart devices in hotels to minimise energy waste. Often hotels require your key card to be inserted in order for the lights to turn on so that they can not be left on when you are out of the room. Similar tech may be introduced to control heating and cooling. This could be teamed with solar panels and/or air-source heat pumps to keep energy usage as low and as clean as possible. Whilst not necessarily driven by sustainability, it seems that a leading trend for 2023 is going to be personalisation of everything from marketing to in-room experience, largely managed by advances in technology and artificial intelligence.
  • Prioritise reuse – whilst in offices the priority may be reusable mugs, for many years hoteliers have encouraged guests to reuse their towels for their entire stay. Many hotels are also now refilling containers that stay in the room with toiletries, instead of giving each guest their own little single use bottles. This could go as far as reusing grey water (e.g. for flushing toilets).
  • Think local – not only does using local suppliers support local businesses, it also reduces the carbon cost of transporting items from further afield. A lot of guests are looking for local, authentic experiences so this could be a selling point.
  • The “S” in ESG – it is hard to quantify the social impact of a building. However, creating spaces that lend themselves to wellbeing is a step in the right direction. An example would be to include planting and decor that helps reduce stress. Or offering function rooms at reduced rates to local community groups.
  • Retrofitting – improving insulation can help to keep a building warm in the winter and cool in the summer. This could help to stop guests cranking up the heat or air conditioning or turning the shower temperature to near scalding. Incorporating solar panels and/or heat pumps could also reduce carbon emissions.

Whilst the hotel industry has its own unique challenges when it comes to the race to net zero, there are lots of steps that can be taken to become more sustainable. It it expected that we will see a lot of innovation and smart tech in the near future to help with the journey.

there is an inherent danger that the we might harm the very basis on which hospitality is built.

https://www.southwales.ac.uk/courses/ba-hons-hotel-and-hospitality-management/2484/why-sustainability-is-key-for-the-future-of-the-hospitality-industry/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Rent Repayment Orders – superior landlords are off the hook for offences committed by immediate landlords

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

Last week the Supreme Court handed down a decision in Rakusen v Jepsen and others [2023] UKSC 9.

This appeal was in relation to Rent Repayment Orders (“RROs”) and the failure by a residential landlord to obtain the appropriate licence for their property. Where the First-tier Tribunal (“FTT”) is satisfied that a residential landlord has committed a housing-related offence, the FTT has jurisdiction to order a landlord to repay a specified amount of rent to the tenant. This power is conferred by Chapter 4 of Part 2 of the Housing and Planning Act 2016. 

The FTT held that an RRO can only be made against the party to whom the rent is directly paid. Superior landlords can breathe a sigh of relief as they cannot be sanctioned by an RRO for an offence committed by an immediate landlord. 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

2023 is the year of the hotel industry!

2023 seems to be the year of the hotel opening!! There are some major new hotels opening in London not least the Broadwick Soho, 1 Hotel Mayfair, Raffles at the Old War Office and the new Mandarin Oriental Mayfair. This is exciting for the industry of course after a few tricky years but it’s not just London that benefits, there are planned openings all over the country as well. Investor confidence is well and truly back. Lets celebrate.

New UK hotels 2023: The openings set to shake up the market

https://www.boutiquehotelier.com/new-uk-hotels-2023-the-openings-to-watch/#new-london-hotels-2023

Construction Costs – A Return to a Stable Market?

Construction workers in high-visibility vests and helmets stand and communicate amidst metal scaffolding at a construction site, with sunlight streaming through an open structure.

The latest industrial market update report from Kam Project Consultants contains a number of observations to give heart to those in the industrial and logistics development sector.

Following a year where the industry has had to deal with labour shortages, escalating energy costs and persistent inflation it is good to see that there are signs that the market began to stabilise in 2022 and has continued to do so in 2023.

  • Rapidly increasing material costs are starting to tail off, with the cost of some materials, such as steel, beginning to fall.
  • Lead in times for key materials, such as cladding and steel, are now shortening.
  • Contractors, sub-contractors and suppliers are now willing to hold their tender prices for longer periods.
  • Tender pricing for 2023 is expected to become more competitive.

While the above is clearly welcome news, some troubles persist, such as labour costs continuing to increase and demand from occupiers falling from previous years, albeit remaining robust. 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Things Can Only Get Brit-ter

The Bank of England has started a consultation on launching its own digital pound.

Despite many comments about “Britcoin” a digital pound would not be a form of cryptocurrency; although much of the discussion around wallets and access will be familiar to those who use crypto-assets, there would be no distributed ledger and the bank would maintain a core ledger of transactions. The digital pound would have lots of similarities with stablecoins in the sense that it is a digital asset that is fixed to the value of a real world object (in this case the value of the pound) (although of course in Sapiens, Yuval Noah Harari posits that all currency is a myth and that is what distinguishes human beings from other animals as far as we are aware is our ability to create, believe and share mythology).

The digital pound would give consumers access to central bank money – something they only currently have through physical currency; with bank deposits and debit cards being “private money” effectively a claim against a commercial bank.

The BoE’s consultation suggests that the digital pound could take many years to roll out, and whilst this is not a crypto-token, as the UK embraces more digitalised forms of finance that the crypto-space has opened up, those that deal with crypto perhaps can hope for more guidance from HMRC as to the tax treatment of crypto-assets.

Currently HMRC have provided a guidance note on crypto-assets for business, but one that deals primarily with exchange tokens.

To date, no substantial guidance on utility or security tokens has been produced. This can provide some difficulties, for example when employers and tax practitioners are reviewing crypto-tokens awarded in the course of employment, there is no clear guidance as to whether a security token is a security for the “employment related securities” rules. HMRC have confirmed that exchange tokens are readily convertible assets if trading arrangements exist (or are likely to exist) such that the token can be converted to monetary value. The lack of clarity therefore provides uncertainty to employers and employees as to the correct tax position.

As financial and technological innovation continue into the future, it is vital that tax payers are provided with certainty when dealing with their tax affairs. In an increasingly technologically nimble world a regulatory and taxation framework that is slow and unresponsive will increasingly lead to restriction in innovation and consumer choice and result in concerning uncertainty for those looking to utilise new developments.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Takeaways from PlaceTech – ESG: The Retrofit Playbook

Vertical garden flourishing on a building facade, with lush green plants covering multiple levels, set against a backdrop of tall glass skyscrapers.

Last week I spent an interesting morning at the retrofitting workshop hosted by PlaceTech. Here are my key takeaways:

Retrofit first

Currently only 3% of existing buildings are re-used. However, many buildings earmarked for demolition are capable of being retrofitted to a high standard capable of competing with new builds. Tastes are changing and not everyone is looking for that white and grey box that seems to have been fashionable for far too long. Retrofitting allows you to retain some of the original character of an older building and a sense of history.

And the talk isn’t just about re-using existing foundations and structure. It goes right down to the ceiling and carpet tiles. It is a case of cataloguing what is there and working out the best ongoing use for those items. The target is to reuse 70% of existing buildings, however, Linda Thiel of White Arkitekter believes we should be targeting more like 95%. 

We also need to be thinking to the future when carrying out current retrofits and new builds. We need to be using materials that will stand the test of time and cataloguing those materials so that they too can be reused when the time comes.

There is a tipping point, however, where a new build will give more benefits in saving operational carbon than the embodied carbon that can be saved by retrofitting. It highlights that every building needs to be considered on its own merits.

Cost savings

It is not as straightforward as saying either retrofit or new build is more cost effective. Currently, rents receivable are generally higher from a new build. Different tenants still have different priorities. Whilst the market has moved towards a requirement for higher standards in terms of energy efficiency, it is difficult to say whether this goes so far as a consideration of embodied carbon. The aim is, therefore, to retrofit to a standard that can compete with new builds and close that rental gap.

When retrofitting, the material costs are cheaper because a lot of the materials are already on site. And build times are often reduced by around 6 months, again resulting in a cost saving. However, retrofitting is often more complicated than building from scratch and requires specialist skills. It is impossible to know exactly what you are working with until you start peeling back the layers of the existing building. You therefore need to build greater margins into your pricing in case unexpected issues arise. 

The general consensus was that, either way, creating buildings that cost less for people to run and also cost the environment less is the right thing to do.

Who pays? (And other tensions between owners and occupiers)

It is much easier to upgrade an empty building and then claw back the cost on rental value. However, it is not always possible to wait for that opportunity. In the case of works to tenanted buildings, it is important to engage with the occupiers throughout the whole process. 

A tenant’s attitude to works will often depend on how long they have left on their lease and what the payback period is for the works. Payback periods are getting shorter, which makes these conversations easier. Costs largely still lie with the landlord and need to be seen as an investment to attract the best tenants. However, there has been much more engagement from tenants in recent years, especially since energy prices have soared. It seems the incentive is still largely financial rather than environmental, but it may be enough to start seeing tenants become more willing to chip in for environmental improvements.

Another issue is the handover. A landlord can find themselves spending time and money making environmental improvements, just for those improvements to be wiped out by a tenant fit out or inefficient use of the space. The key here is (a) engaging with tenants as early as possible to make sure the build suits their intended fit out and (b) having tighter control over fit out plans and the end result. In addition, smart meters can help landlords collect data on usage and then work with tenants to make sure buildings are being used in the most efficient way.

Lastly, green clauses in leases. These have become much easier to include, although tenants do still try to water them down. They are generally landlord driven (it is rare for a tenant to try adding their own environmental requirements) but they are also largely seen as a safety net. Landlords would much prefer to work with tenants and keep conversations flowing throughout the life of a lease, rather than pointing to a clause in the lease to force action.

Skills gap

As mentioned above, retrofitting is more complicated than building from scratch and a specialist workforce is required. However, there is a serious skills gap in this area. We need more investment in training if we are going to prioritise retrofitting from now on.

Evolving tech

It was highlighted recently that a New York skyscraper (One Vanderbil), which opened in 2020, is already considered out of date as tech and approaches to environmental issues continually evolve (you can read about this here).

The presenters at the PlaceTech meet believe that the answer to this lies in simplicity. Making sure the bones of a building are of a high standard and that the space is flexible so that it can be adapted to different needs. It is the smart aspect of a building that evolves most rapidly, so  you need to be able to upgrade the building’s tech in an efficient way. This means limiting aspects that only a small number of contractors can work on or, for example, special cabling. Instead, you need to prioritise a central system where small parts can easily be upgraded as and when required. 

Planning

There is a general consensus that the current planning system favours new builds. That is because it is impossible to know exactly what a retrofit will ultimately look like from the outset. With all the will in the world, when cataloguing the materials for reuse it will not be possible to ascertain exactly what can be reused (and how) until those materials are stripped back/out. As such, there are calls for a more trust based approach, that the end product will fit the intended theme, rather than looking exactly like the plans.

EPCs

It has long been recognised that EPCs have serious limitations. They measure the environmental impact of the building spec, with no consideration of how the building is actually used. However, the panel believe that EPCs remain an important metric for reporting and that they won’t be going away any time soon.

It was also recognised that this can create an issue for retro-fitting. The example given was that stripping a gas heating system from a building and replacing it with electric will increase the EPC rating. However, if there is nothing wrong with the gas system, the embodied carbon spent by replacing it could exceed the operational carbon from running it. So it becomes a balance between doing the right thing and being able to report the environmental attributes of the building.

Collaboration is key

There was a call from the panel and the audience for greater collaboration in the industry. It was recognised that there are lots of people out there making the same mistakes. The industry needs to be transparent and share experiences so that they can learn from each other’s mistakes and improve as a whole.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Towards Net Zero: What tax tweaks do the BPF recommend to help the property sector hit its environmental goals?

A wooden door with a brass knocker stands between two columns, flanked by windows and potted plants. Text: "PRINCES GATE 71-72" and a sign, "THE OCCUPIER OF GLASGOW HOUSE," below foliage.

With an ambitious target for net zero by 2050 the Government has set a challenge for the UK to take steps to reduce their carbon output.

A new report by the British Property Federation acknowledges that buildings account for around a quarter of the UK’s greenhouse gas emissions, and so the sector as a whole will play a key role in helping hit that net zero target.

With property being a UK wide sector, and something that is utilised by almost every business and industry, the report acknowledges that to achieve success common areas and themes must be targeted.

Tax has always been an area that provides significant incentives. As such, the BPF have highlighted potential tax changes that could help reach outcomes in the property sector to push to the net zero target.

The first tax based recommendation is to zero rate for VAT all residential repairs and maintenance, or at the very least zero rate energy efficiency items such as double glazing, insulation, etc. The BPF suggest going further and making all repairs and maintenance zero rated.

This would mean that costs are lower for homeowners, whilst providing the services does not affect the VAT recoverability of suppliers. This win win would make repairs and maintenance more attractive, meaning less wasted carbon emissions, with homes more rapidly brought up to full repair, and by zero rating energy efficient items and services homeowners would be encouraged to invest in their properties to lower their heating bills and emissions with the latest environmentally friendly technology.

The second tax based recommendation is a reform of the capital allowances and business rates systems. Capital allowances are a writing down allowance whereby an investor can write off a proportion of their spend every year. The BPF’s suggestion is to move to a repayable tax credit system as per R&D whereby a set percentage of expenditure on green items would be a straight tax credit. This would encourage businesses to focus expenditure on environmentally friendly additions to their property. The BPF are keen to highlight that business rates can act as a disincentive, as green investment can increase a property’s value – leading to an immediate increase in business rates. The BPF’s suggestion would tie business rates to energy efficiency, leading to reduced business rates for more efficient buildings, further increasing incentives to improve properties.

The BPF also suggest allowing REITs (Real Estate Investment Trusts) to invest in offsite renewables in order to increase the pool of funding for renewable energy generation infrastructure.

The report in full has many sensible suggestions which would help the property sector transition towards a more environmentally friendly future. As we get closer to the Government’s 2050 target it is vital that suggestions from industry experts in all sectors are put forward to tackle the complex task of reducing emissions and reaching our environmental goals.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Mandatory biodiversity net gain delayed for ‘small sites’

The Environmental Improvement Plan published earlier this year reiterated the government’s intention for the mandatory biodiversity net gain requirements secured by the Environment Act 2021 to take effect in November 2023.

However, DEFRA has now confirmed that smaller sites will be subject to a ‘phased introduction’ with April 2024 being the revised target date. For the purpose of this revised timeframe, small sites are defined as follows:

  • Residential: provide less than ten homes on a site smaller than one hectare, or where the number of dwellings provided is not known, less than 0.5 hectares.
  • Non-residential: less than 1,000 square metres of proposed floor space or sites that are smaller than one hectare.

This change in approach for small sites aligns with the government’s response to the public consultation on the new mandatory regime, acknowledging that many of the responses indicated concerns around the burden on local authorities and associated delays to the progression of planning applications. 

For all other sites November 2023 remains the target date. For development sites with planning applications in the pipeline, it will be necessary to consider the biodiversity net gain requirements now to avoid delays post-application submission. 

To lessen initial burdens and allow a longer period for developers and local planning authorities to adapt and prepare for the high volume for minor applications, we will extend the transition period for small sites until April 2024.

https://www.gov.uk/government/consultations/consultation-on-biodiversity-net-gain-regulations-and-implementation/outcome/government-response-and-summary-of-responses
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Are you taking the Mickey (Mouse)?

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

It seems that not a day can go by without another employer coming out and making a statement about their remote working practices. Whether it’s the funky tech start-up letting staff work wherever and whenever they want, Alan Sugar with his strong views on our “lazy” workforce or, now, Disney in the US with a mandate to get office staff in 4 days a week, it’s clear that there is still a debate to be had.

However, with COVID now (thankfully) long behind us, and an increasing voice advocating the need for and benefits of face-to-face working, are we going to see more employers take a firmer stance like Disney? Personally, I am seeing many clients shift from ‘encouraging’ to ‘insisting that’ staff come in more and more.

Will 2023 be the (Buzz Light) Year in which the debate is settled….

Corporate employees at Walt Disney Co. are pushing back against a mandate to return to offices four days a week starting in March

Reduction in business rates keeping retailer morale high

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

As reported by Drapers, the anticipated reduction in business rates in April is driving up demand for prime locations such as Oxford Street, Regent Street and Bond Street in London.

Away from the capital, despite financial uncertainty, we continue to see demand for physical retail stores. There is a strong market of new players to the physical retail arena, but also established brands increasing their footprint and re-focusing their stores to prioritise customer experience. 

It seems the high street and shopping centres are far from dead.

government claims retailers in England will see their business rates bills fall by a fifth in April

https://www.drapersonline.com/news/business-rate-reduction-a-major-boost-for-londons-west-end?tkn=1

Amazon restating interest in physical stores – is hybrid the only way to go?

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Retail Gazette has reported that Amazon boss, Andy Jassy, still intends to expand Amazon’s physical presence in bricks and mortar stores despite setbacks resulting from the Covid pandemic.

This is just another example of the anticipated return to in-store shopping. As consumers turn their focus to sustainability (both in terms of caring for the environment and their wallets), people want to see products before they purchase. Are products good quality? Will they last? Are they really a bargain? These questions are not easily answered when shopping online. 

This means there is an opportunity for physical retailers, especially those that can harness technology to smooth the experience between online and in-store to create a truly hybrid experience. Successful retailers might use their stores to showcase their brand, highlight what they stand for (for example, do they prioritise high quality, long lasting items or cheap and cheerful – both will have their place) and build brand loyalty. Once consumers know what to expect from a brand, they may then be more inclined to purchase from a broader online offering.

On the flip side, consumers might look online to find a brand selling a particular item. They may still want to see that item in person before purchasing. It’s no good knowing that there was stock left 3 days ago. Live updates on stock levels could make the difference for a sale. 

Amazon boss Andy Jassy has squashed rumours that the online giant’s grocery store business has been put on hold, claiming the ecommerce giant is ready to “go big” on bricks-and-mortar stores.

https://www.retailgazette.co.uk/blog/2023/02/amazon-boss-stores/

An Update for Leasehold Reform?

Modern balconies protrude from a brick residential building, casting shadows. The structure features vertical metal railings and large glass windows, under a clear blue sky.

Michael Gove has said in an interview with the Times that he plans to scrap the leasehold system by the end of this parliament.

Leasehold reform has been mooted for some time now. Following the Law Commission’s reports published in 2020, many practitioners have been waiting to see if and when the proposed reforms will come in. Gove’s recent announcement suggests this is back on the agenda but we still have very little information as to what is planned and when it will happen. 

It appears that the Government may believe that Commonhold is the answer to all the issues with leasehold ownership; read my update on the proposals in relation to Commonhold here: https://www.forsters.co.uk/news/blog/commonhold-law-commissions-final-report. I am not convinced that this is the answer to all of the questions currently being asked. Gove appears to be particularly concerned about management and service charges levied in leasehold blocks but buildings will still need to be managed if owned under Commonhold and charges will still need to be levied for such management.

We will be waiting to see if any further formal announcements are made in relation to the proposed reforms so watch this space! 

"I don't believe leasehold is fair in any way. It is an outdated feudal system that needs to go" Michael Gove

https://www.thetimes.co.uk/article/michael-gove-vows-to-scrap-feudal-leasehold-system-this-year-920srddc6

Where is the Older People’s Housing Taskforce?

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

After the Government’s announcement almost a year ago in the Levelling Up White Paper that it would establish a cross-departmental taskforce, we are still waiting for an update from the Department of Levelling Up, Housing and Communities on the Older People’s Housing Taskforce.

A report published by the All-Party Parliamentary Group on Housing and Care for Older People this month sets out various recommendations for the Taskforce to consider once it is established, including the ways in which a major expansion of shared ownership for older people can be achieved.

The Taskforce, described by ARCO as ‘a game changer for levelling-up for older people’, will be crucial in facilitating a wider choice of housing options for older people and the adequate provision of “housing with care” for an ageing population. 

A delay in the introduction of the older people’s housing taskforce will have a knock-on effect of the provision of later living accommodation in the UK and acts as a barrier to making the Levelling Up White Paper agenda a reality.

The task force is a game changer for levelling-up for older people

https://www.arcouk.org/press-release/older-people%E2%80%99s-housing-at-heart-of-levelling-up-as-cross-government-task-force
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

“Are we there yet?” – latest Labour stats challenge the pace of Government’s EVCP roll-out

Vertical garden flourishing on a building facade, with lush green plants covering multiple levels, set against a backdrop of tall glass skyscrapers.

As many will be aware, 2030 will see a ban introduced on the sale of new petrol and diesel fuelled cars and vans.  In preparation for this shift, the production and sale of electric and hybrid vehicles has been rapidly increasing in recent years, but is the supply of charging points for those vehicles keeping up?

The shadow Transport Secretary Louise Haigh has suggested that based on the current data, the Government will miss their target of installing 300,000 charging points by 2030 by some 20 years.  

The latest DfT data shows that there are 37,055 live charging devices in the UK, which serve more than 1.3m plug-in electric vehicles and the gap between the two appears to be increasing, as consumers respond to geopolitical/fuel security issues and climate change concerns by making the switch to EVs.  For example, The Times (£) have reported that while in 2020 there was one charge point for every 16 EVs, now there is one for every 30 (far behind equivalent figures in Germany and France).   

While a number of grants (to the tune of £1.6bn) remain available (e.g. for landlords and tenants/flat owners) last year the Government withdrew the ‘Electric Vehicle Homecharge Scheme’ which previously benefited homeowners with off-street parking (a key subset of potential EV buyers).  

The Government have called for the private sector to pick up some of this burden and last year introduced Regulations which require a minimum number of charging points on new developments/material changes of use however the Government’s target remains a challenging one.  

Historically, one of the main barriers to consumers taking the leap to EVs was “range anxiety”, i.e. fears of being caught out on long journeys by a lack of available charging points.  EV sales over the last couple of years have suggested that consumers are prepared to take the leap despite these fears, however, unless the supply of charging points accelerates there is a real risk of damaging that consumer confidence in the run up to the 2030 deadline. 

For further commentary, please visit Forsters LLP’s dedicated Sustainability Hub where you will find expert insights on how sustainability considerations are shaping our advice to clients in the Private Client, Real Estate, Tax, Banking and Corporate sectors.

“New EVs are flying off the factory floor, but we desperately need charge-point installations to keep pace with an ever-growing demand."

https://www.thetimes.co.uk/article/electric-vehicle-charge-point-target-is-20-years-behind-schedule-jv7xjb7k7

Tough Trading – whose interests should directors put first?

This is a very difficult time for companies of all sizes – economic and political uncertainty, rising costs and pandemic hangovers have made for tough trading conditions, and, as this BBC article shows, there has been a sharp rise in companies on the verge of collapse.

However, there is always cause for optimism, and many companies come back strongly from hard times – but how should directors take decisions when the financial future is uncertain?

Company directors will be well aware of their statutory duties – especially what most would consider the primary duty found in section 172 Companies Act 2006, to promote the success of the company in the interests of its members.  However, it is not as well known that this duty is subject to common law rules relating to the interests of creditors when the company is in financial trouble.  The common understanding of the position was that, if a company was insolvent, the interests of creditors took over completely from the interests of the shareholders, so the directors had to act accordingly and pay no mind to the shareholders’ interests.

The Supreme Court recently considered this point in the case of BTI 2014 LLC v Sequana SA & Others, and (as a very brief summary of a long judgment) held that where a company is insolvent or bordering on insolvency (but not necessarily inevitably facing insolvent liquidation or administration) the directors did have a duty to consider the interests of the company’s creditors, but this was on a sliding scale, so the directors need to engage in a balancing exercise between shareholder and creditor interests – the worse the financial difficulties become, the more weight should be given to the creditors’ interests – until insolvent liquidation or administration becomes inevitable, and the creditors’ interests entirely displace the shareholders’ interests.  The court also made clear that this duty continues to be owed to the company, not to any particular shareholder or creditor.

This is preferable to the binary position requiring directors to act in only shareholder or only creditor interests based on a technical definition of insolvency. For instance, just because a company may be technically insolvent on its balance sheet is no reason to entirely forego consideration of the shareholders’ interests if the directors consider that there is a good chance of recovery. The court also specifically pointed to start-ups that are often insolvent on the balance sheet test during product development, but if the directors can trade out of that position they can succeed in generating huge value for shareholders and repay creditors, the best result for everyone.

Directors of struggling companies will therefore have to consider at all points how far the balance has tipped towards one side or the other, and whether their decisions take proper account of that balance.

The risk of personal liability for directors resulting from insolvent trading are significant, so it would be wise for directors of companies that are experiencing difficulties to take financial and legal advice, to ensure they are considering all the necessary factors and to protect themselves from claims.

There is always cause for optimism, and many companies come back strongly from hard times - but how should directors take decisions when the financial future is uncertain?

https://www.bbc.co.uk/news/business-64303338
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

(Sp)Here, There and (nuisance) Everywhere?

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

Excuse the facetious title (any excuse to incorporate a Beatles number), but this is a significant development, not only for my area of London but also highlighting the, at times, uncomfortable relationship that planning and consenting regimes have with the concept of nuisance.

That is a topic too long to debate in this post, but the papers linked below do highlight both the need to engage with the planning system, and the range of options that local planning authorities have to mitigate the impacts of development. 

Interestingly in this case, the developer requested that a separate s106 agreement be assigned to the advertisement controls that LLDC wished to impose, with a separate agreement for the more standard “development” controls.  We can speculate on the motives for that particular request, but it is always worth remembering that planning obligations can (and should) be as flexible as the development requires, and not just the standard approach that everyone seems to adhere to.

I doubt that this is end of the debate around this particular development, especially given the extensive and intrusive mitigation measures offered by the developer.  I will be following closely to see how this long and winding road pans out for all concerned.

It was envisaged that there would be a single section 106 agreement that would secure the mitigation required for both the planning permission and the advertisement consent. However, the applicant has requested that the obligations that relate to the use of the digital display and the associated five-year review be moved into a separate section 106 agreement that would relate to the advertisement consent only. Officers are satisfied that this is an acceptable approach..."

https://www.london.gov.uk/moderngovlldc/documents/s68136/05a%20Report%20of%20MSG%20Advertisement%20Consent%20-24-01-2023.pdf
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Bridge over troubled…concrete?

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

The casual and general exercise of permitted development rights is always fraught with danger.  Many people do not appreciate that each right has specific qualifications and conditions imposed on the exercise of those rights – and getting the interpretation of those factors wrong has serious implications. This risk is heightened when heritage assets are involved.

Fundamentally, as outlined in this article in the Guardian (and highlighted by the Private Eye before Christmas), it means that you cannot rely on the asserted right, resulting in unlawful development. This necessitates an application for retrospective planning permission (as is the case with National Highways here) to remedy the position, and retain the development sought.  Please always check with a professional before undertaking such work – the fees may initially seem a waste, but the consequences of non compliance are far more costly.

This may sound strange, but what is encouraging here is the willingness of local authorities to assert their enforcement powers when it comes to unlawful development, particularly against a government entity.  This sort of approach *should* breed confidence in the planning system, which (as much as it can be a pain in certain circumstances) can only be a good thing.

I am certainly not advocating for thousands of enforcement officers prowling the streets for breaches of planning control, but a confident, capable and assertive planning authority is key to the delivery of development and infrastructure.  I am sure many developers would agree – though I am sure many would also say that it has been some time since they came across such an authority…

And so, as if often the case in planning, we come back to our good old friend: resourcing.  Perhaps in the era of pork-barrel politics, we can pin that request on to the LURB?

Service charges – Pay now, argue later

Black and white chess pieces are positioned on a chessboard, focusing on two knights facing each other amid rows of pawns, set against a blurred, neutral backdrop.

Sara & Hossein Asset Holdings Ltd v Blacks Outdoor Retail Ltd

The Supreme Court has provided clarification on a common service charge mechanism in commercial leases, determining whether a landlord’s end of year service charge certificate is conclusive and the end of the matter or not. 

The decision results in a “pay now, argue later” provision.  The certificate and service charge is not immune from challenge but the tenant is required to pay any balancing service charge within the timescales set out in the lease and, if it considers the service charge was incorrect, subsequently bring a claim for a repayment.

In what is a common set up for a commercial lease, the landlord would provide services and at the end of the year produce a certificate of the costs incurred (the tenant paying any shortfall if payments on account during the year were insufficient to meet the service charge). The lease provided that, except for manifest or mathematical error or fraud, the certificate was conclusive.

The literal meaning of the words in the clause indicated that the certificate was binding (except for manifest or mathematical error or fraud) and that the tenant had no right to challenge it. But the Court had to weigh up other important provisions of the lease, particularly the tenant’s ability to inspect documents evidencing the landlords spend on items which made up the service charge after the certificate was produced and the service charge dispute resolution mechanism built into the lease.  

The Supreme Court’s interpretation of the lease is that (save for manifest or mathematical error or fraud) the landlord’s certificate is conclusive of what balancing payment the tenant is to pay within the timeframe specified in the lease. However, the tenant is not precluded from subsequently challenging the certificate (it isn’t limited to challenges based on manifest or mathematical error or fraud).

The specific wording of the lease will always determine the position. However such wording is commonly found in commercial leases and provides clarity for many landlords that payment must be made without a long delay or dispute – but it is not game, set and match on the issue.

https://caselaw.nationalarchives.gov.uk/uksc/2023/2  

It is a form of “pay now, argue later” provision, a contractual arrangement which is commonly found.

https://caselaw.nationalarchives.gov.uk/uksc/2023/2
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

UK battery storage woes, but is there an alternative on the horizon?

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

The recent news that Britishvolt, the firm that had been planning to build a giant factory in Northumberland to manufacture electric car batteries, has collapsed into administration is a blow to the UK’s sustainability goals. The UK government plans to ban all new petrol and diesel cars by 2035. However, in order to achieve that goal, there needs to be a huge ramp up in the production of electric vehicles and that includes batteries. As reported by the BBC, there is currently only one Chinese-owned battery plant in the UK and we will need several to support the government’s ambition to replace petrol/diesel cars with electric in the next decade.

But batteries will be required for more than just vehicles. As we move away from gas towards renewably sourced electricity, battery storage will play a key role in how we power our homes and businesses in the near future. We will need to source the funding, materials and space not only to generate the electricity, but also to store it and to manufacture the technology required for such generation and storage and to off-set the effect on the environment of such manufacturing. Bearing in mind that the lithium required for battery storage is already a limited resource, the barriers to meeting climate goals at times feel insurmountable.

So is there an alternative? I have discussed research into various storage solutions in the past. In April last year, I posted about research into iron-air batteries (you can read that post here) and it seems that research in this area has moved on significantly. As reported by Popular Mechanics, Form Energy are building a new iron air battery facility in West Virginia. 

Lithium-ion batteries have limited storage capacity and can only expend energy over a short period of time. In addition, the mining of lithium has its own environmental problems, which you can read about here. Iron-air batteries are (as the name suggests) made out of iron and air. The Popular Mechanics article states that iron is the fourth most abundant element on Earth. And here comes the science (also taken from the Popular Mechanics article): “Using a principle called “reverse rusting,” the cells “breathe” in air, which transforms the iron into iron oxide (aka rust) and produces energy. To charge it back up, a current reverses the oxidation and turns the cells back into iron.” 

The iron-air batteries have far greater storage capacity than lithium-ion batteries (Popular Mechanics suggests 100 hours to lithium-ion’s four). In addition, they are cheaper to produce and run and last longer. The downside – they are big and take a long time to re-charge. So they will not be replacing lithium-ion for car or phone batteries, but they may be a good option for backing up the grid.

what might work for your laptop isn’t the best storage idea for power grids where energy output is measured in megawatts

https://www.popularmechanics.com/science/energy/a42532492/iron-air-battery-energy-storage/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Holmes under the Hammer

This week saw the conclusion of arguments put forward in Eamonn Holmes’ Upper Tribunal appeal over his deemed employment status for HMRC’s IR35 “off payroll working rules”.

Back in 2020 Holmes was determined to be a deemed employee with regards to the contract between his personal service company Red, White and Green Limited and ITV, by the First Tier Tribunal.

Since that decision a steady stream of other TV presenters and celebrities targeted by HMRC have reached an array of different tribunal decisions, with very similar sets of facts often reaching different outcomes. 

Holmes will be hopeful that the Upper Tribunal’s interpretation of the off payroll working rules, which were to be scrapped by then Chancellor Kwasi Kwarteng, an announcement which was overturned by his successor Jeremy Hunt, is one that is favourable to him with around £250,000 of income tax and national insurance due (alongside penalties and interest) if he is held to be an employee.

IR35 continues to be one of the more complex and uncertain areas of taxation for contractors working for end clients through personal service companies, with constantly evolving case law on the key areas of control, substitutability and mutuality of obligation. 

“What matters is the right to control, not how and if it was expressed in the process.”

https://www.independent.co.uk/news/uk/crime/eamonn-holmes-itv-hmrc-red-marnie-simpson-b2264746.html
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Bitter pill for landlord on lease renewal – rent free period included in new rent

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Commercial landlords and tenants should take note of the recent decision in (1) Old Street Retail Trustee (Jersey) 1 Ltd and (2) Old Street Retail Trustee (Jersey) 2 Limited v GB Healthcare Limited, a recent County Court lease renewal case that addresses inter alia the assessment of rent pursuant to s. 34 of the Landlord and Tenant Act 1954.

The proceedings concerned premises at 199 Old Street occupied by a pharmacy. The parties were agreed as to most of the terms and the parties’ surveyors had agreed the level of interim rent. The main question, and perhaps the most interesting aspect of the decision, concerned the determination of the rent payable under the new lease.

The position under s. 34 of the 1954 Act is that the new rent is payable from day one of the lease. The question that invariably flows from this is whether the new rent ought to be reduced to account for the absence of a rent-free period, which would normally be granted in the open market for the tenant’s fit out and/or to provide an incentive. This is an area of debate on which there is no binding authority. 

The court decided that a deduction from the new rent should be made to reflect a notional six-month rent-free period. This was justified on the basis of a purposive construction of s. 34(1)(a), whose aim was said to be “to ensure that the rent payable reflects the real market value of the subject property in a hypothetical transaction where the landlord is willing and the tenant is not a sitting tenant, and has no connection to the property.” Having regard to actual market practice, that led to the new rent being calculated at £144 psf, which included a deduction for the economic impact of COVID-19 and, as is often the case, happened to be roughly in the middle of the surveyors’ respective valuations. 

While the decision is not binding, having been made at first instance, it aligns with five other decisions made at County Court level, and therefore perhaps can be taken as illustrative of a tendential line of judicial thought, of which parties wishing to conclude renewals by agreement ought to be mindful. That being the case, the decision of the court as to the construction of s. 34 differs from that of the most recent County Court judgment addressing this question so, until the point is dealt with by a higher court, the manner in which it will be determined in renewal proceedings will continue to attract uncertainty.

The full judgment can be read here.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Changing the Channel

A marble staircase ascends with glass railings, leading to a modern interior with large windows and a ceiling with recessed lights. An "Exit" sign hangs overhead.

I was pleased last week to write for React News on the latest changes to the ownership plans for Channel 4. In addition, the move to allow the corporation to no longer only operate as a publisher-broadcaster has the capacity to shake up the sector and potentially drive change as part of the government’s levelling up agenda. 

You can read the full article here (£): Now the sale of Channel 4 is off, what does that mean for its property strategy? 

To learn more about Forsters’ experience in supporting Studios clients, get in touch with our Studios Group.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Icy reaction….

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

While there are many business trends that sweep the globe and become popular – think walking meetings in recent times – and leaders spend a lot of time thinking about how you can engage teams without it always defaulting to drinking (which can be excluding to many people, and has its own issues arising at a work event), I have to say that there are some that I just don’t think will cross into professional services (at least in the UK) any time soon. 

While many might want to channel their inner Wim Hof in the privacy of their own homes, and professional athletes may debrief with their coaches while they take the plunge after a hard work out – i’m going to predict that for 2023, team meetings and business meetings in ice baths as a business networking event will not be a trend that will catch on in the UK! 

So, while this trend I think is a no-go and a no-no, i do think it is incumbent on leaders (from FTSE to start ups) to think about the widest engagement opportunities for their teams as a real USP for recruitment and retention. A good culture, that is welcoming and engaging is what we should all aspire to – just with perhaps less ice than this article envisages! 

For a certain cross section of professionals, the ice bath is the next frontier.

https://www.insidehook.com/daily_brief/health-and-fitness/ice-bath-business-meetings

Normal service will resume…?

NHS services, daily commutesdelayed Christmas cards and international travel are but a few of the things which spring to mind, and which I’m sure many of us have experienced impacts on, as a result of strike action in 2022 and most likely into 2023 as well. Having the privilege of living in a society which benefits from a wealth of public services, the government’s proposals for amending the legislation protecting strike action has pitted several values and priorities against each other; significantly, the ability to negotiate fair and equal treatment via trade unions in contrast to the demand for a high level of public services.

The Prime Minister has proposed that “minimum service levels” be maintained within public services, and if they are not maintained as a result of strike action the relevant employer will be able to take action (including legal action) against the striking employees and the applicable trade union. The proposal brushes over the detail of what “minimum service levels” will be, but the focus lies on the ability for strike action to be limited and for those striking to be penalised, which marks a significant change in the protection of the rights of striking individuals.

There is a lot of lively chatter surrounding this proposal because it engages employers and employees at all levels: on the one hand, employees with union membership are likely to feel a sense of vulnerability, while on the other, employers and members of the public who have experienced upheaval from recent strike action are more likely to welcome the proposal as it encourages open negotiation outside of strike action and the stability of businesses and services. 

Whether or not the proposal will come into force is yet to be seen, but its mere proposal emphasises the attitude of Sunak’s leadership to prioritise the national economy.

The government will always protect the ability to strike, but it must be balanced with the public’s right to life and livelihoods.

https://www.gov.uk/government/news/government-invites-unions-to-return-to-the-table-and-call-off-strikes?utm_content=daily
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Landlord Unable to Recover Insurance Costs

The Upper Tribunal has decided in English Rose Estates Ltd v Menon & Ors (2022) UKUT 347 (LC) that a landlord was not able to recover insurance costs from the residential long leaseholders because the lease drafting did not allow it to do so. The landlord was not able to rely on estoppel to argue that the historical payment of the insurance costs by the leaseholders amounted to an acceptance of the recovery and the Upper Tribunal did not agree with the landlord’s argument that the lease contained an obvious mistake and should be rectified.

Interestingly, the case started with the leaseholders acting without legal representation and on the basis that they considered the insurance was unreasonable in amount. It was not until they instructed Counsel for the First-Tier Tribunal hearing that they raised the argument that the insurance was not recoverable at all in accordance with the lease.

The landlord’s appeal included an argument that it was procedurally unfair for the First-Tier Tribunal to have allowed the leaseholders to raise the argument that the insurance was not recoverable at such a late stage. The Upper Tribunal also rejected this argument and found that it was right for the Tribunal to prioritise flexibility and the avoidance of delay over a more exhaustive approach, provided that it could do so fairly and with proper consideration.

As stated by Martin Rodger KC in his decision, this “is not a particularly satisfactory outcome for either side. The [landlord] is left unable to recover the cost of insurance which it has covenanted to obtain every year for the remainder of the term.” The case continues the line of Court and Tribunal decisions that have determined that if the lease terms are clear, they will bind the parties even if that outcome is surprising.

It will be interesting to see if the parties are able to agree a resolution to this clear lacuna, as encouraged to do so by Martin Rodger KC, or whether the landlord will be able to make a successful application under section 35 of the Landlord and Tenant Act 1987 to amend the insurance provisions of the leases.

"[This] is not a particularly satisfactory outcome for either side." Martin Rodger KC

https://www.bailii.org/uk/cases/UKUT/LC/2022/347.html
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Film Studios Demand Creating Massive UK Opportunity

A marble staircase ascends with glass railings, leading to a modern interior with large windows and a ceiling with recessed lights. An "Exit" sign hangs overhead.

CoStar have published an article I have written about how the growing film studios sector is a massive opportunity for levelling up across the UK. A copy of the article can be found on the CoStar (£) website: Lights, Camera, Action! Film Studios Demand Creating Massive UK Opportunity.

To learn more about Forsters’ experience in supporting Studios clients, get in touch with our Studios Group.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Cadogan v Alberti – a LONG awaited determination

Modern balconies protrude from a brick residential building, casting shadows. The structure features vertical metal railings and large glass windows, under a clear blue sky.

It really is quite mind blowing some times how long it can take for a single point to be determined in an enfranchisement case.  All the while, the matter is completely on hold…

Cadogan v Alberti concerns a statutory claim made pursuant to the Leasehold Reform Act 1967 and more specifically, the disregard of value added by improvements.  

The Supreme Court has recently refused permission to appeal – this claim having been initiated on 13 May 2019!!!

If the parties cannot settle on the price payable for the freehold now, this will have to be determined by the Upper Tribunal.  Watch this space!

The notice claiming the freehold was served on 13 May 2019, and it has taken over 3½ years just to get a final determination of the legal basis on which the price is to be arrived at.

https://www.falcon-chambers.com/news/supreme-court-refuses-pta-in-disregard-of-improvements-case
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Major breakthrough for fusion energy technology

Vertical garden flourishing on a building facade, with lush green plants covering multiple levels, set against a backdrop of tall glass skyscrapers.

I recently met with Dr Alex Pearce the modelling lead in the UKAEA Power Plant Technology Group. He talked us through the science behind fusion energy (fusing particles together to generate energy instead of pulling them apart (which is how nuclear energy is generated), its potential to power our homes and businesses in the future, its benefits over nuclear energy and also the current pitfalls with this developing technology. You can listen to the resulting podcast here. 

Alex explained that a major limitation had been that the process of fusing particles together is so energy intensive that no one had managed to produce more energy than it took to create the reaction. However, as reported by BBC news, this week US scientists have had a breakthrough in this field, having produced more energy from a fusion experiment than was put in.

Whilst the technology is still a long way from powering our grid (Dr Pearce describes it as “a technology for the second half of this century”), this is an exciting development towards a potential new source of cleaner energy.

On Tuesday researchers confirmed they have overcome a major barrier - producing more energy from a fusion experiment than was put in.

https://www.bbc.co.uk/news/science-environment-63950962
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The high bar to indemnity costs

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

The high profile case of noise nuisance against a developer in Fitzroy Square has seen yet another judgment published on whether Tejani should be required to pay costs on the indemnity basis.  The successful party in the claim presented nine grounds to persuade the Court he should, but ultimately the Court found that indemnity costs should only be awarded where the claim has been taken beyond the normThe short judgement is a reminder of the high bar that must be reached to be awarded costs on an indemnity basis and the circumstances in which the bar will not be reached.

Judge Veronique Buehrlen KC dismissed Tejani’s claim as “weak” and ordered him to pay the legal costs of the case, estimated at more than £1 million.

https://www.thetimes.co.uk/article/tycoon-facing-1m-court-bill-as-luxury-london-flat-complaint-fails-d53vv3cfs

Beware of the office zombies

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

A year ago, we talked about “stranded assets” i.e. those at the mercy of shifting working patterns, but particularly changing environmental standards. We now have new terminology: “zombie” assets, a term that as Peter Bill points out in his recent Property Week column, Americans have coined to described those offices that are: “half-empty, financially dead blocks, unviable to upgrade”. According to Bill, these now comprise 40% of New York office stock. Unsurprisingly, the anticipated impact on valuations is stark. 

Yet, as we described a year ago, surely any hint of distress gives rise to potential opportunity, at least for those that can fund the capex to bring a building up-to green standards, whether regulatory, or dictated by investors and incoming occupiers. 

And of course, as the sector plots a way towards net zero, we simply cannot ignore existing stock. Quoting a panellist at a recent BPF webinar: “you have to go through various shades of brown to get to various shades of green”. This stock is precisely where “green” investment needs to find a home. Not everything can be bright new shiny energy efficient etc new builds.

There are thousands of zombie blocks with no obvious future. Obsolete space that will likely act as a drag anchor on grade-A space for years to come.

https://www.propertyweek.com/insight/zombie-offices-are-a-scary-prospect/5123173.article
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

A bigger green legislative stick?

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

This is more great output from EG on ESG – a panel discussion recording and accompanying article from editor, Sam McClary. Two things jump out:

1. The “regulatory stick” 

I have never heard more robust talk from government about increasing legislative requirements. We have EPCs, we have minimum energy efficiency standards (MEES), and we have the prospect of increasing thresholds in relation to that (EPC B by 2030). Bim Afolami indicates that there must be, and there is set to be, more to come – the “soon-to-be-released” Net Zero Review from Chris Skidmore will make interesting reading. As he says, government recognises that you cannot leave this to “good people looking to do the right thing”. Laws are needed to “force change”. 

Then again, talk is all good, but what about actual legislative action? We are still waiting for legislative movement on the back of government consultations in March 2021 (see previous blog here). The legislative machine does not move quickly. 

2. The need for the occupier to play ball

There is no doubt that current legislation focuses on the landlord. Yet so much depends on those that utilise the space. Energy efficient space and neat “green” leases are great – but ultimately it all comes down to what happens on the ground, and consumption data is a critical component in monitoring that. It is now rare to find a new lease without “data sharing” provisions, but that is not to say they are agreed without resistance, and anecdotally, landlords face many a struggle in trying to extract data from existing tenants. There is plenty of talk about collaboration, and that surely must be right, but is a legislative kick also required? 

Everybody is recognising in government that we can’t just leave this to good people trying to do the right thing across a huge part of the value chain

https://www.egi.co.uk/news/is-data-sharing-key-to-achieving-net-zero/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Highway to the Supreme Court

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

The Supreme Court has ruled that local authorities cannot impose planning conditions which require land to be dedicated as public highway. The condition at issue in this case, imposed by Swindon Borough Council, is as follows:

“The proposed access roads, including turning spaces and all other areas that serve a necessary highway purpose, shall be constructed in such a manner as to ensure that each unit is served by fully functional highway, the hard surfaces of which are constructed to at least basecourse level prior to occupation and bringing into use.”

It was not disputed that the local authority could have achieved the dedication of the access roads as public highway pursuant to a s106 agreement – a well established method for achieving this outcome. The point of dispute in this case was whether a planning condition could be used to achieve this same end result. 

This case serves a useful reminder of the ‘fundamental conceptual difference’ between a unilaterally imposed planning condition and a planning obligation secured via a s106 agreement and the limitations on what a planning condition can require. The judgment makes clear that it is not lawful for a local authority to impose a planning condition requiring public rights to be granted over a development site. The unanimous judgment further had regard to the established policy position that a planning condition should not be imposed which requires the giving up of land, in this case to be public highway. 

The condition as set out above was held to be a valid condition but one which does not require land to be dedicated as highway. The Court held that condition 39 does not purport to achieve this, the local authority would be ultra vires in requiring dedication of land via a planning condition. 

In light of this decision, regard should be had to equivalent conditions both on existing planning permissions and for developments coming forward which include the provision of new site access. Where the intention is for land to be dedicated as public highway, it is important to ensure this is secured as a planning obligation with associated highways agreements in place as required. 

DB Symmetry Ltd and another (Respondents) v Swindon Borough Council (Appellant)

Is it lawful for a planning authority, in granting planning permission for a development, to impose a planning condition that the developer will dedicate land within the development site to be a public highway?

https://www.supremecourt.uk/cases/uksc-2020-0202.html
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

M&A in 2023

I’m becoming more bullish about M&A activity in 2023. Controversial, I know. This commentary from WTW is on the nail (https://www.wtwco.com/en-GB/News/2022/12/global-m-and-a-outlook-2023-smaller-deals-and-slower-pace). Smaller deals, more opportunity for distressed M&A, technology continuing its upward trajectory aligned with relatively low valuations (at least by recent standards), near-shoring and focus on ESG. All these trends point to a good level of continuing international M&A activity if you are focussed, nimble and eager. Bring it on.

An unprecedented number of disruptive forces have created headwinds for dealmakers, but they are also generating opportunities

https://www.wtwco.com/en-GB/News/2022/12/global-m-and-a-outlook-2023-smaller-deals-and-slower-pace
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Supreme Court Considering Service Charge Machinery

Yesterday the Supreme Court heard the case of Aviva Investors Ground Rent GP Ltd and another v Williams and others, an important case in relation to the mechanism of determining a leaseholder’s share of service charges under their lease.

It is not uncommon for a long residential lease to allow the landlord, or the landlord’s surveyor, to change the proportion of the service charge payable by the leaseholder.  This type of provision has been the subject of a number of previous decisions, which have determined that any clause in a lease which seeks to exclude the Tribunal’s jurisdiction, under section 27A of the Landlord and Tenant Act 1985 to determine the amount and manner of service charges which are payable, will be void.

In the Aviva case, the leaseholders had to pay a fixed percentage “or such part as the Landlord may otherwise reasonably determine”.  The Upper Tribunal determined that this entire part of the lease was void and therefore the parties were restricted to the fixed percentages contained in the leases.  The Court of Appeal disagreed and determined that the Tribunal would retain the ability to determine an alternate reasonable percentage.  The Court of Appeal also decided that it was possible for either a leaseholder or the landlord to refer such a matter to the Tribunal for determination.

The Supreme Court is now considering the position and it will be interesting to see whether they agree with the Court of Appeal’s determination as this will provide helpful clarity to both leaseholders and landlords alike.

"In my judgment the lease should be read as if it had provided for the fixed percentage “or such part as … may otherwise reasonably determine.” If further slight linguistic adjustment is needed to make grammatical sense, so be it. On that reading, there is a vacuum to be filled, and it is filled by the FTT. Accordingly, the function of making that determination is... transferred from the landlord to the FTT." Lord Justice Lewison

https://www.supremecourt.uk/cases/uksc-2021-0059.html

Relief all round

Black and white chess pieces are positioned on a chessboard, focusing on two knights facing each other amid rows of pawns, set against a blurred, neutral backdrop.

A restaurant operator has obtained relief from forfeiture in the High Court in respect of its option for a new lease.  As a result of the relief, the option was reinstated.

Hush Brasseries Limited (“Hush”) operated its restaurant from a Mayfair property under a lease. It also had an option agreement enabling it to require the landlord to grant a new lease, although the landlord could terminate the option if forfeiture events under the lease arose. Arrears of rent which accrued during the pandemic constituted a forfeiture event and the landlord terminated the option agreement, leaving the lease in place. Hush applied for relief from forfeiture, a remedy in a property context usually designed for tenants under leases.

There were two obstacles Hush needed to clear before the Court would consider whether to grant relief on the option:

1. That Hush had a proprietary interest in the property – This was satisfied: the Court clarified any proprietary interest in land would satisfy this point. It did not matter that Hush was not in a position to exercise the option at the time it was terminated.

2. That the termination provisions in the option secured performance of the lease covenants -This was satisfied: the option and lease went hand-in-hand and the termination provisions of the option had the same qualities as a forfeiture provision to a lease (which clearly do secure performance of lease covenants).

The Court therefore had discretion whether to grant relief. Relief will be given when it would be unconscionable for the terminating party to rely on its contractual rights. The Court considered this was the case. Key to that was the fact that the arrears had accrued during pandemic restrictions on trade and Hush had cleared the arrears (through payment and a settlement agreement) while the landlord retained the benefit of rent under the lease without being burdened by the option.

Relief from forfeiture is now an option for those with proprietary or possessory rights which have been terminated. The availability of relief from forfeiture has been extended to option agreements and possessory licences. Landlords cannot assume that separate agreements will prevent relief being sought by a tenant/occupier.

Those facing termination of rights should take prompt action to assess if relief is available. 

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

The Vineyard Falconer

A modern building with sleek black columns supports a white structure overlooking a vast, calm ocean under a clear, blue sky.

Not since I read about the fact that “Spotify Playlist Curator” was a job that people earnt a living doing have I felt as envious of a job (as opposed to the legal path and career that I have followed).

As the wine market continues to grow and the challenge to keep margins healthy it seems that growers are turning to new ways to reduce losing crops and therefore profits. This wonderful feature on Alina Blankenship and her business (http://www.skyguardianfalconry.com/) highlights the new ways that vineyards may be protected (and arguably more sustainably than netting or alarms). 

While we at Forsters are “all in” in our commitment to our clients in the vineyard and winery sector, I am sorry to say that we can’t offer up falconry as part of our services (yet!) but we do offer every other legal specialism needed if you own or want to own a vineyard or winery. And if I really try hard, I can imagine that us selecting the right lawyers on a team can equate to selecting the right bird for the vineyard and situation on the ground, as regardless of whether you are a falconer or a lawyer you need to have specific talent and expertise to get the job done properly for your client.

https://www.forsters.co.uk/vineyards-and-wineries

“I’m a strategist, I’m a quarterback, I’m a trainer and I’m a coach,” she says. “Day and night, I have birds with me. You have to be all in if you commit to being a falconer.”

https://punchdrink.com/articles/vineyard-falconry-wine/

Playing the Squid (Founder) Game

Many people will be familiar with Malcolm Gladwell’s “10,000 hours rule” (the idea being that you can’t become expert at something without 10,000 hours of training – although this idea has been challenged in recent years as well) and it was interesting to see that this founder cited that theory in his article about how he has improved his skill set as a founder. 

The interesting part particularly (other than also being slightly geeky on computer games – and I dare not say how many hours I may have spent playing Football Manager/Championship Manager) is the idea that you can actually pick up skills in different spheres and be truly transferable. This entrepreneur has a really insightful take on the skills he learnt, although not immediately obvious when you read about the time he has spent on a “mere” computer game.

I think the call to arms here – as a founder, or indeed any sort of boss who is looking to recruit (so challenge to myself!) – is to think more deeply and more widely about the skills that someone has, particularly in this world where we should all be challenging ourselves to be more inclusive and to give opportunities to people with different experiences who can really add something to a team. 

In the hunt for talent (which is often cited as CEOs’ main worry along with retention of talent) it is probably incumbent on all of us to think about what people can actually do, and what they have really experienced and learnt, in finding the talent our respective businesses need to succeed.

People say that you need to spend 10,000 hours on something to really learn it. But the hours I’ve spent on WoW have taught me much more than just how to take down N’Zoth the Corruptor.

https://sifted.eu/articles/gamer-founders-world-of-warcraft/

Deliveroo does physical retail

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

Would you have guessed that a business founded to focus on home delivery services would be taking on a retail store? Well, Deliveroo have taken the plunge and opened their first bricks-and-mortar store, partnering with Morrisons to provide in-store collection and local delivery services to the residents, workers and visitors of New Oxford Street in London. The store will service Deliveroo’s grocery delivery business, Deliveroo Hop, but also includes “McDonald’s style” order screens to purchase products directly in-store alongside the ability to click and collect.

We’re all familiar with the last minute dash around the local convenience store to grab the one ingredient missing for dinner on the way home. Wouldn’t it be nice to know that what you need is definitely going to be there waiting for you?

The challenge of filling empty retail units across the UK is certainly not going away anytime soon, and new creative thinking is exactly what is needed. Perhaps a new take on convenience stores is part of the answer. 

Best of luck Deliveroo!

“This new innovative way of shopping brings the convenience of online shopping as well as dropping into store to choose from a wide range of fresh produce. A great enhancement to revitalising our high streets.”

https://www.chargedretail.co.uk/2022/10/03/deliveroo-launches-first-bricks-and-mortar-store-in-partnership-with-morrisons/

A tax cut!

During the mini-budget announced today, the government announced permanent cuts to SDLT. The headline changes are an increase in the SDLT threshold where 0% is due from £125,000 to £250,000, an increase in the SDLT threshold where 0% is due for first-time buyers from £300,000 to £425,000 and an increase in the value of the property on which first time buyers relief can be claimed from £500,000 to £625,000.

As property lawyers we are always very nervous when we start hearing about changes to SDLT and the impact it may have on our clients. In the past few years as a result of changes to SDLT, we have had the unenviable task of informing clients that their property transactions are going to cost more than they thought or as we saw with the “SDLT holiday” during the pandemic, that there is a saving to be made but only if they manage to get their transaction done within a specified period of time. In both scenarios, it increased the stress levels of all concerned to an already stressful time in most peoples lives, which is moving homes. Today however, the SDLT change has resulted in us being able to send good news at last to clients. Not only a cost saving but a permanent one (subject to any future changes of course) so that there is no need to worry about missing any deadlines or panicking that the perfect home isn’t going to come along in time. 

As it is a permanent change the hope is that not only will it encourage and stimulate the property market but rather than it triggering a short lived, sharp injection of movement, there will be a gradual and steady increase over a prolonged period. When there are so many concerns and worries for property owners- inflation, cost of fuel and potentially unaffordable interest rates on mortgages, this change will be welcomed by all looking to buy new homes.

Reducing emissions should be for the short and long term

Vertical garden flourishing on a building facade, with lush green plants covering multiple levels, set against a backdrop of tall glass skyscrapers.

As the weather has taken a colder turn over the weekend, my thoughts (along with, I am sure, many other parents across the country) have turned to how on earth I am going to get the mountains of laundry that my children produce dry over the winter without using the tumble dryer. My thoughts are also with those who will face much more difficult challenges as the cost of living crisis continues.

It is not just the general public checking through their wardrobes to make sure the whole family have enough jumpers, blankets and fluffy socks to keep them warm. Despite the (very welcome – without going into the politics) help promised by the government to keep bills down, both the general public and businesses are still going to see the highest energy bills they have ever had this winter. 

To try to combat these increasing costs, the owner of Louis Vuitton (LVMH) has announced that it will be lowering the thermostats in its stores by 1C, turning off lights in stores at night and asking staff to consider their working habits – taking the stairs instead of the lift, turning off computers when not in use and minimising the use of printers. Their aim is to reduce their energy consumption by 10%. Whilst the main consideration seems to be lowering bills, these measures will also help the environment by lowering emissions.

I suspect we will see many businesses, whether retail, offices, logistics or otherwise following suit over the next few months. I just hope that if/when (depending on how optimistic you are feeling) energy tariffs return to a more reasonable level, some of these changes will stick as we learn that we can (without suggesting anyone should go cold or hungry) live without such high levels of consumption. 

Louis Vuitton owner LVMH is set to reduce its energy bill this winter by lowering the thermostat in stores as staff are told to take the stairs instead of the lift.

https://www.retailgazette.co.uk/blog/2022/09/louis-vuitton-to-reduce-energy-bill-by-urging-staff-to-take-stairs-and-lower-store-thermostats/?tceid=632979e3f636e90ed070328b

The UK Property Market: doom and gloom or continued boom?

A modern building with sleek black columns supports a white structure overlooking a vast, calm ocean under a clear, blue sky.

In the government’s mini-budget set to be announced tomorrow, New Prime Minister Liz Truss is rumoured to announce radical plans to cut stamp duty in an attempt to bolster economic growth, encourage movement and thus aid first-time buyers struggling to get on to the property ladder. 

More recent SDLT cuts (for example during the pandemic) have had the effect of supporting a stalling market and boosting sales at a difficult economic time. It remains to be seen whether this will have the effect of kick starting a slowing property market given the wider economic factors currently in play. Inflation is growing at the fastest level in 40 years and interest rates are predicted to continue rising in the coming year, all set against a weak GDP figure and the strong likelihood of the UK entering into a recession. 

We are currently seeing less activity than normal in our core market sector and it may be that the tax saving alone is not sufficient to entice buyers back to the market in a very uncertain economic climate. We are continuing to see more activity at the higher end of the market, where transactions are fully cash or less dependent on leverage, and particularly where international buyers are taking advantage of the weak sterling rate. We would expect such transactions to continue, or potentially increase, given a possibly larger tax saving through any SDLT cuts.

Liz Truss will announce radical plans to cut stamp duty in the government’s mini-budget this week in an attempt to drive economic growth

https://www.thetimes.co.uk/article/liz-truss-to-cut-stamp-duty-in-push-for-prosperity-qrh5nxbcd

Why w(h)ine when you could have a vineyard?

Among “luxury” investments, fine wine was the best performer in 2021 with an average return of 16%, according to estate agents Knight Frank. Those with deeper pockets and more entrepreneurial experience to draw from could see even higher returns if they were to buy a vineyard. 

With temperatures on the rise, the emergence of new technology, and a surge of demand for English wines and fertile land suitable for vines, more and more investors are looking to get it while it’s hot. According to estate agents Strutt & Parker and Cheffins, the demand for English vineyards is indeed on the rise as English wines are proving more and more popular – even more so if they have a profitable business to go with them. 

Buying an operational and commercially viable business could save you the time and headaches that would come with setting up a vineyard from scratch, and starting with a recognised brand would mean that you could really hit the ground running.

Our recent series “Buying and Running a Wine Estate” delves into each of the areas you should consider when buying, expanding and passing on a successful English vineyard and winery. Check it out!

Knight Frank recently sold Hidden Spring Vineyard in West Sussex off market for £3.05m to South African buyers who wanted to buy a going concern in the UK wine market. The property came with a developed business and brand, plus an award-winning wine.

https://www.telegraph.co.uk/property/uk/forget-fine-wines-investors-snapping-english-vineyards/

Kim of all trades?

Kim Kardashian announced that she will be launching a private equity firm. She will be partnering up with seasoned experts in the private equity sphere, as well as her “momager” in order to embark upon her latest business venture. 

Commentary on the announcement has generally focused on the variety of business ventures that Kim K has now embarked upon. Although several pieces seem eager to imply criticism of this ever-growing portfolio, what resonates with me is the overarching longevity of a portfolio which varies from underwear to private equity and how one person can manage to have a meaningful presence in such different worlds.

I see the secret to this success lying, at least partially, in a network of personal and business connections which enables the Kim Kardashian brand to occupy niche areas of several competitive markets. She brings in the experts to build a certain product, but then utilises her own expertise and reputation to market the product to a largely untapped audience (particularly for something such as private equity). 

Taking a step back, this strength of a diverse network and business partnership shows the merit in nurturing diversity and inclusion in business and in enterprise; that the key to success does not vest in one person alone, rather in the pooled resources of a diverse network.

Kim Kardashian, who passed the “baby bar” exam in preparation to become a lawyer last year, just added another job title to her lineup

https://techcrunch.com/2022/09/07/kim-kardashian-private-equity-carlyle-consumer-fund/?guccounter=1&guce_referrer=aHR0cHM6Ly9tYWlsLmdvb2dsZS5jb20v&guce_referrer_sig=AQAAAFzXjfT0O-cw63NdDkGdbtRWau2XdBQrCYQ0V2xT8vUkZht-aSZcMXdpwDTPmRRnguesqdgtOUZsX8SGYcsBD88Z9a_zl9LRT0iEDPjYCRzSWAuxPNN1j2Uvfuc9BALLF3oL4YAI64buOmUZGKaNTSSZKTiASNubnWB43u08Al4F

The new business philanthropy – the Patagonia way?

A modern building with sleek black columns supports a white structure overlooking a vast, calm ocean under a clear, blue sky.

Patagonia has always been one of those businesses that seem to have excelled at combing and embedding their values as a business (and of their founders) and the success of their business built upon those values. They could easily be described as the “poster child” of the business that doesn’t let business get in the way of trying to do the right thing. (And if you are interested in this area and haven’t read “Let My People Go Surfing” by the founder Yvon Chouinard you really should do so!).

Early adopters of the B Corp movement and very vocal in their philosophy as a business, trying to be best in class in sustainability and putting it at the heart of their culture, there is much that was already to admire about the Patagonia approach to the business world. 

As one of the most successful private companies in the world arguably, the unknown was always what would happen in the future, and with this announcement now we know. 

While in the UK we have some recent examples of owners and founders creating an Employee Ownership Trust (Richer Sounds founder selling 60% of the company to an EOT), this would appear to be (in practice) a very similar structure in terms of concept but in this case the beneficiary being organisations that are facing the environmental crisis.

It will be interesting to see if this approach is followed by other businesses or if they go for the route that appears to have been previously considered: a standard exit by sale or listing and then use the funds to set up a foundation or to give it away to charities. Regardless, it seems to me that this cements the combination of business and purpose in all that Patagonia do (and appear set to continue to do in the future).

"Even public companies with good intentions are under too much pressure to create short-term gain at the expense of long-term vitality and responsibility,"

https://www.bbc.co.uk/news/business-62906853

Inaction could see asset values plummet

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

With increased focus on sustainability credentials in the built environment, a new dynamic is forming in relation to those assets considered to be prime and those which are sub-prime. However, as reported by EG Radius, not all sectors of the real estate market are being impacted at the same level.

EG Radius has found that offices are most effected, with high demand from occupiers for energy efficient spaces pushing up prices. There also appears to be an emergence of a preference for retrofitting over new build and it will be interesting to see whether this sparks a market for second hand building materials (reusing materials in their existing form rather than recycling them –  you can read my post on this subject here). At the other end of the spectrum, some retail landlords are struggling to get tenants to focus on the built environment as they are prioritising other, perhaps more cost effective, means of reducing their carbon output throughout their supply chains. But this does mean that there is not such a wide gap in value between sustainable and sub-standard spaces.

At either end of the spectrum, it is expected that failure to improve the environmental credentials of sub-standard assets will result in the value of those assets falling. However, that’s not the only reason we should be upgrading our building stock now. Don’t we all have a responsibility to do what we can to ensure that the planet remains habitable for generations to come?

The occupier push towards highly sustainable specification is strongest in offices, with tenant requirements for the highest levels of certification and NZC performance on the increase, and even early signs of a preference for retrofitted buildings over new build due to the lower whole-life carbon impacts of existing buildings.

https://www.egi.co.uk/legal/valuing-sustainability-and-net-zero-carbon-by-sector/?tceid=631998fef636e919602de9a9

All in the family (business)!

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

Wonderful to see a story like this of a family business like Ridgeview (who featured on our Generation Now podcast series: https://www.forsters.co.uk/news/podcasts/generation-now-episode-four-tamara-and-simon-roberts) take a further step in the growth of its business (and with a B Corp partner too!)

With interest in English wines and wineries on the rise (https://www.forsters.co.uk/vineyards-and-wineries/buying-a-vineyard-or-winery) this looks like shrewd business for now and the future and I look forward to seeing the “fruit” of this new venture!

Luxury Sussex hotel and spa, South Lodge will soon become the latest vineyard hotel within the UK as it plants 19,500 vines in May in collaboration with local vineyard and long-time partner, Ridgeview.

https://familybusinessunited.com/2022/08/25/south-lodge-establishes-its-sussex-roots-with-ridgeview/

Consumer belts are tightening ahead of a hard winter – what does this mean for commercial real estate?

Escalators transport people in a busy shopping mall. Shoppers, some blurred from motion, navigate levels surrounded by sleek glass and modern architecture, creating a bustling, dynamic atmosphere.

The Growth from Knowledge consumer confidence index is at an all time low since records began in 1974. That’s lower than during the global banking crisis of 2008, lower than when the UK was faced with the initial impact from Brexit and lower than during the Covid lockdowns. The index in compiled based on monthly surveys of individuals from a wide range of social and economic backgrounds. The individuals are asked to consider matters such as how their financial position (and separately the UK’s general economic situation) has changed over the preceding 12 months, how they expect it to change over the next 12 months, whether they think it is a good time to make major purchases and whether they think it is a good time to save.

What does this mean for the world of commercial real estate?

Looking at the retail sector, the increased cost of production (especially with increasing energy prices and the shortage of materials), cost of employment (with increased national insurance contributions) and occupational costs (both direct and through service charge contributions fuelled by energy price rises) is being met with reduced consumer spending as the public tighten their belts in readiness for what is expected to be a hard winter. Despite – as reported by the Guardian – a small uplift in consumer spending in July (possibly resulting from the holiday season and the purchase of heatwave essentials – but most likely resulting from inflation rather than the number of items actually sold), there is expected to be a general downwards trend during the latter part of this year.

Other businesses will be feeling a similar pinch, which could affect offices and other commercial property lettings. 

However, whilst starting to drop, the business confidence index is still relatively high. Shop vacancy rates continue to fall whilst online sales are also falling, which suggests a continued shift to in-store shopping. In addition, the central London office market has remained stable during the second quarter of this year. Combined with the uncertainty of the UK Government leadership change, it is difficult to predict what is in store for the commercial real estate market over the next 6 months.

consumer confidence is now weaker than in the darkest days of the global banking crisis, the impact of Brexit on the economy, or the Covid shutdown

https://www.gfk.com/en-gb/press/uk-consumer-confidence-down-two-points-to-lowest-ever-score-of-40

Governments becoming Private Client Advisers? Dubai re-writes the rule book

I suppose 100 years ago the Private Wealth Advisory Sector was very small. Back then lawyers had a monopoly. I don’t think accountants did much succession planning advice in those days, and private offices, family offices and in-house wealth planners did not yet exist (at least not as we recognise them today) and neither did the offshore trust company industry.

In 2022, it is just as well it is not just us humble solicitors giving Private Wealth advice, because there is an urgent need for succession planning around the world. The amount of work that needs to be undertaken in the next 10-15 years is staggering. Moreover, if the process is not managed properly, it will threaten economic stability. Such is the scale of family owned businesses and Private Wealth in the current century. 

It is therefore timely to see the DIFC (Dubai International Financial Centre) taking the initiative with the creation of the Global Family Business and Private Wealth Centre. This new centre, launching on the 1 September 2022, will provide advisory and concierge services, education and training, outreach and networking, in addition to publishing research.

As His Excellency, Essa Kazim, Governor of DIFC, has said: “In the next decade, families and others in the Middle East are expected to transfer AED3.67 trillion to the next generation, which illustrates the urgent need to provide them with specialist, consolidated support to help them grow.”

The need is indeed urgent. The question is whether other governments will recognise the urgency and follow suit with similar initiatives. 

The center will create a hub for bringing together global family-owned businesses, ultra-high-net-worth individuals and private wealth

https://www.arabnews.com/node/2138441/business-economy

Cancelling your own most popular, successful product? That will be Patek Philippe…

Perhaps it may only be something that a family business could do, but this piece in Spear’s with the current CEO (and 4th generation of the family) of Patek Philippe about a decision to stop production of their most popular (if not most iconic) watch is, at its heart, a fascinating insight into the approach of a family business. 

Likening the company structure to “like a monarchy, with ruling responsibilities handed down from father to son” may not be the way everyone would describe the business or even considered a usual approach for a business, but in a family business (as we increasingly see) future generations can be, and are being, trained for their future roles in the business. 

And the interesting piece in this article I find is that I ponder whether any business other than one owned as a family business without multiple outside stakeholders and investors would have made the decision to stop production of such a popular item, but also I am struck by the fact that there is no reference or reflection on the cash cost to the business in making this decision. This strikes me as being a decision that is made on that wider view of the business as being a steward of the business for the long term and not for purely financial return. (Alternatively, one might think that there is sufficient demand and sufficient profit being made for them to be able to take such a decision and gain the additional free marketing exposure).

The other really interesting point I take away from this insight in to the approach of the family is the statement that “finding somebody who has the DNA of the brand, the vision for it – there’s no school for that.” Perhaps that is what often marks out family businesses from those that “merely” recruit top talent and develop them and turn them into excellent staff and leaders of the future, but that to have the DNA of a company perhaps you need the DNA of the family that has owned it for generations? 

At the heart of decision-making today, says Stern, is a deep understanding of the company and its traditions that can only come from within, and a sense of long-term responsibility handed down, like both the watches and the knowledge to make them, from generation to generation.

https://spearswms.com/patek-philippe-under-thierry-stern/

4th August – Cycle to Work Day…

Vertical garden flourishing on a building facade, with lush green plants covering multiple levels, set against a backdrop of tall glass skyscrapers.

Whilst I’ve now been cycle-commuting for a couple of years, it can no doubt be quite daunting to consider starting out, so what better motivation than the opportunity to WIN (yes actually WIN) a new bike courtesy of National Cycle to Work Day coming up on 4th August.

August is one of the best months to be cycling to work – with a lot of people away on holidays the roads tend to be a bit quieter so why not get into the shed this evening, dust of the bike, give it a clean and a bit of WD-40 and be ready for Thursday…. 

Here are some top tips for those thinking of commuting via two wheels :-

  1. Make sure you have a snack mid/late afternoon before you ride home.
  2. Have a number of routes to / from work to mix things up a bit.
  3. Essential bits of kit:
    • MUDGUARDS
    • A bell
    • Don’t skimp on a waterproof / windproof clothing.
  4. There is no such thing as TOO BRIGHT when it comes to hi-viz or lights.
  5. Less is more when it comes to bike lube.
  6. A weekly bike clean makes a massive difference.
  7. Monday and Fridays tend to be quieter “road” days on my routes in the new working week. May not be the same for others.
  8. If you’re commuting any sort of distance regularly you could be looking at changing chains 2 – 3 times a year…… to save you destroying chainset/cassette !

See you all on the streets this Thursday then….

So, this year, whether you’re already a committed cycle commuter or just starting out on your journey - get on your bike and get to work the best way you can.

https://www.cyclescheme.co.uk/cycletoworkday

Are smart cities the future, or a breach of our right to privacy?

In 2020 a proposal by Sidewalk Labs to build a smart city in Toronto fell flat following concerns about privacy. As reported by Surface, the development was to include “robo-taxis, heated sidewalks, and autonomous garbage collection.” The new proposal for the space is described as an “urban oasis” with sustainable, affordable housing and plenty of green space. Seemingly a world away from the original tech heavy design.

It has been said that data collection is key to achieving Net Zero in the built environment and “prop-tech” is a current buzz word in the real estate industry. But how does that fit with a need to maintain privacy and what might the smart cities of the future look like?

It was reported in The Retail Gazette this week that Boots has launched its first drone as a trial for delivering prescription medication to more remote areas. Forbes has also reported on potential smart city tech, listing easier to access, more efficient services and lowering carbon emissions as some of the benefits. The tech considered includes:

  • smart parking spaces, which can be located and booked by app;
  • automated technology, such as drone delivery;
  • self-driving cars and smart traffic management systems;
  • data collection and environment management in the built environment for comfort and efficiency; and
  • adaptable buildings that can be changed to meet the community’s current needs.

But with the risk of individuals’ data being harvested for commercial gain, this technology will need to be heavily regulated if it is to earn the public’s trust.

what many people may not realize is just how big an impact combined smart city technologies could have on the ways we live and work in the coming years.

https://www.forbes.com/sites/forbestechcouncil/2022/07/27/smart-city-technologies-that-could-soon-change-the-way-we-live-and-work/amp/

Let’s get phygital!

Escalators transport people in a busy shopping mall. Shoppers, some blurred from motion, navigate levels surrounded by sleek glass and modern architecture, creating a bustling, dynamic atmosphere.

Nike launched its most innovative European store this month, highlighting the astronomical increase in the use of technology within today’s shopping experience.

The Nike West London store in Westfield is the latest step in the evolution of Nike’s Rise concept, offering a unique in-store digital experience by streaming real-time, responsive and localised sports stories (obtained via Nike’s activity apps Nike Training Club and Nike Running Club) onto LED screens at the entrance to the store. The store also features the first Track Table in Europe, an interactive footwear comparison tool enabling customers to learn about the specifications of each model, read reviews and make an informed decision as to the suitability of individual products. A bespoke pop up customisation desk featuring West London focussed Nike graphics created exclusively for the store by local artists also enables unique customisation of products. Nike’s aim is to make customers feel more engaged with the local area, motivated to play sport and ultimately to be well kitted out in its merchandise whilst doing so. By offering an experience that cannot be had online, Nike hopes to attract customers to experiential stores such as Nike West London and to embed itself in the local community – an impressive feat for a global brand.

Nike West London reinforces Nike’s commitment to the ‘phygital’ store, which merges the physical and digital experience. Its first significant foray into phygital stores came in 2018 in New York City and Melrose, Los Angeles. The New York store enabled busy New Yorkers to use the NikePlus app to select their desired product, size and colour before entering the store and to either collect it at the changing room or a self-service locker. The LA store adopted a more personal approach, using data collected from local NikePlus members to connect the city, sport and athletes and create a store specifically tailored for the local clientele. For example, the data collected enables stock to be updated every 2 weeks to keep up with local trends.

Other retailers have been following in Nike’s well cushioned footsteps by investing in phygital stores, such as Amazon Go’s “just walk out” concept, Chanel’s augmented reality smart mirrors and McDonald’s digital kiosks. A recent study by IBM highlighted that 72% of consumers want to go back to a physical store (following the global pandemic) and generation Z feels most aligned with stores that are more digitally enabled. Nike will clearly be hoping its significant investment in phygital stores will lead to an increase in digital footprints entering them. 

Nike has just opened the doors to Nike West London in Westfield Mall, London – a cutting-edge hub connecting sport, the city, and athletes with a bespoke shopping experience unlike any other

https://versus.uk.com/2022/07/get-closer-look-nike-west-london-uk-europes-innovative-nike-store/

Business Rates on the agenda… or not ?

A coalition of UK retailers, including Tesco, Sainsbury’s, Co-op, Greggs, Kingfisher, Morrisons, and Waterstones, have urged Tory leaders to prioritise business rates cuts as the most important tax cut for business and quite frankly… who can blame them ?

Somewhat fanciful plans to “level up” using quasi compulsory purchase powers are certainly useful in terms of tactical diversions or deflections but the rates “can” is now well and truly battered after having been kicked down the road for so long. Will there be a better time to finally tackle this long running saga head on and come up with something that is fit for 2022 and beyond ?

Landlords and Tenants have (in the writers view) worked more closely than ever to ensure that tenancy arrangements reflected the Covid era and are equally fit for purpose in the “post-Covid” era however the combination of the cost of living crisis, inflation, jobs uncertainty and the “B” word (yes that one) means that the upcoming recession is only a matter of when and not if ….. 

So the time does now finally seem right to take on the rates challenge – the Retail Jobs Alliance quite reasonably suggesting that reducing the rates burden will be good for the high street, good for communities and good for jobs. 

That sounds like a combination that would also do a fair job for “levelling up”.. or is this a question for the ballot box in 2025 ?

They must come up with 'serious proposals' to support shops across the country being hamstrung by the so-called 'shops tax', it said.

https://www.thisismoney.co.uk/money/markets/article-11044141/Conservative-leadership-candidates-pledge-cut-business-rates.html

They Just Did It…. ‘Digical’ Retail

Escalators transport people in a busy shopping mall. Shoppers, some blurred from motion, navigate levels surrounded by sleek glass and modern architecture, creating a bustling, dynamic atmosphere.

A significant move forwards in combining the use of digital experience within a physical retail store has been exhibited with the latest Nike Rise Concept store (one of only three globally) opening at Nike West London, which is dealing head-on with the various “gaps” and challenges that have been labelled with physical retail for so long.

The new “hub” seeks to connect sport, the locality and athletes with its very own bespoke shopping experience.

With elements of the store connecting directly with Nike’s core activity apps such as Nike Training Club and Nike Run Club, customers can expect a level of interaction that should take the shopping experience beyond that previously imaginable.

There are also significant strides made in sustainability within the store – which has achieved LEED certification in part due to construction of internal wall finishes making use of embodied carbon.

With customers expectations now at sky high levels, retailers are having to step up to that challenge, so kudos to the “Swoosh” for curating an environment that can appeal to its local audience whilst benefiting from its global presence.

Now… where’s that next pair of Air Jordans at ?

The store is that latest expression of the Nike Rise concept, which offers a first-of-its-kind, unique digital and offline experience that serves athletes better and enabling real-time, responsive and localised sport stories.

https://versus.uk.com/2022/07/get-closer-look-nike-west-london-uk-europes-innovative-nike-store/

Is the Liverpool skyline about to change?

As we all know, Liverpool’s waterfront lost its UNESCO World Heritage Status in mid 2021. Prior to that time tall buildings did not form part of the skyline in the same way as they do in other major cities in the UK. The reason for this, in part, was because of the World Heritage Status. 

Now that the title has been rescinded, it seems only natural for tall buildings to grace the Liverpool Skyline and Liverpool City Council’s Tall Buildings Supplementary Planning Document (SPD) certainly seems to pave the way. 

The SPD is to ensure that development reflects what Liverpool City Council wants to achieve in terms of how and where tall buildings are delivered in the city centre. The SPD, if adopted, will be used in conjunction with local plans to assist in determining planning applications. 

Despite the loss of the World Heritage Status, Liverpool’s waterfront is still an important heritage hub which is loved by residents and tourists alike and so it is very positive to see that one of the 9 objectives of the SPD is to ‘protect and enhance the heritage assets, their setting and views’. 

As someone who was born and raised in Liverpool, it’s nice to see that the city will both continue to grow and regenerate much needed parts. Part of the waterfront, despite some beautiful buildings in situ, has been overlooked in the past and will now hopefully flourish and become an area targeted for sustainable development. I should mention that a few regeneration projects are currently being carried out on the waterfront, including the new Everton football ground at Bramley Moore Dock.

As a whole I think that the introduction of a tall buildings SPD would be good for Liverpool City Centre, provided that the beloved Liver Buildings remain a staple in the skyline.

Read more on tall buildings here.

The city council has produced a framework aimed at guiding the development of tall buildings to ensure they “positively contribute to the legibility and architectural richness of the city”

https://www.placenorthwest.co.uk/liverpool-sets-out-stall-on-tall-buildings/

Could mini deserts aid in the race to Net Zero?

Vertical garden flourishing on a building facade, with lush green plants covering multiple levels, set against a backdrop of tall glass skyscrapers.

Having just experienced the hottest day on record in the UK, thoughts may drift towards the desert. But a new heat storage facility constructed in Finland could bring the desert closer to home (although thankfully a contained desert).

I am talking about sand batteries. A tank of sand that is heated with excess renewably sourced electricity and which can store that heat for weeks, or even months. The heat can then be released into the local heat network as required.

To date, focus has been on lithium-ion batteries for the storage of renewable energy. However, as reported by Dezeen, Markku Ylönen of Polar Night Energy has explained that sole reliance on lithium-ion batteries in unfeasible due to cost and lack of sufficient quantities of lithium. I also posted last week on the issues associated with lithium-ion batteries, which you can read here. In contract sand is fairly cheap and plentiful (taking account of the fact that many types of sand can be used – including that rejected by the construction industry). The technology is also said to produce only low carbon emissions, with the majority coming from construction and transporting the sand.

Whilst the conversion back to electricity is not particularly effective, a huge amount of energy (and the resulting carbon emissions) is used to heat homes and other buildings in the UK each year. It is hoped that sand batteries can form part of an array of storage solutions.

It remains to be seen whether we will see mini (contained) deserts popping up around the UK over the next few years. But it is certainly an interesting technology to explore.

Even even if we dug out all the lithium in the world, we couldn't build batteries big enough to accommodate all the fluctuation in renewable energy production

https://www.dezeen.com/2022/07/14/finnish-sand-battery-solution-renewable-energy-storage-technology-news/?utm_content=Dezeen+Agenda+22+CID_d7b6bbb70dce69eca7c0c32b9002a9b6&utm_term=worlds+first+renewable+sand+battery+was+revealed

Parents, this one’s for you! Clarks offers a financial incentive for the resale of kids shoes

My toddler began walking at the end of May, an exciting milestone that we quickly learnt can come with a hefty price tag! We were advised to have her feet checked every 8 – 10 weeks and, sure enough, she’s already almost at the end of her first pair of shoes.

Clarks have acknowledged that kids often outgrow their shoes whilst they are still in good condition. So they are partnering with resale collective Dotte and actively encouraging the resale or donation of their products by offering a 15% discount on a new pair, once sold on Dotte!  

It’s great to see retailers taking active steps to promote the re-circulation of products once their first owner is finished with them. It’s particularly interesting to see this from a key player in an area such as children’s footwear, a particularly fast area of fashion by necessity – those feet just keep on growing! 

It points to the growing trend of retailers actively engaging with issues of sustainability, as younger generations consciously shop at stores visibly responding to the growing concern for the environment. And whilst it’s no longer unusual to find stores advertising the use of sustainable materials in their products, it’s a larger step to actively encourage resale rather than purchasing one of their shiny new products, and a step that more and more retailers are taking. My colleague Laura has recently commented on that trend here.

It will be interesting to see how successful this partnership is, and whether Clarks competitors follow suit. I imagine there are a lot of parents out there that would happily snap up a pair of barely worn second hand shoes for their little cruiser!

Clarks said the tie with Dotte, “represents a new phase of the sustainability journey, launching new commitments and making sure they do everything possible to protect our precious planet and support global communities for the world ahead. “We’re excited to now close the loop further and offer both our communities a quick and easy solution for their outgrown Clarks kids’ shoes”, it said.

https://www.retailgazette.co.uk/blog/2022/06/clarks-enters-the-resale-market-with-dotte/

Who looks after your investments if you lack capacity?

A lasting power of attorney (“LPA”) is a document put in place while you have capacity to cater for the possibility that you may lose the ability to look after your affairs. Under an LPA you appoint an attorney (or attorneys) to make financial decisions (under a “finance LPA”) or health and care decisions (under a “health and care LPA”) when you are not able to.

To date, the advice from the Office of the Public Guardian (“the OPG”), which registers and monitors the use of LPAs, has been to include a discretionary management clause in the finance LPA. This allowed your attorneys to instruct discretionary investment managers to assist in preserving and growing your assets. Without such a clause, once you lost capacity, your attorneys would have to apply to the Court of Protection for authority to do this.  As well as the costs of making such an application, the time it can take risks the value of your assets diminishing in the meantime. 

The OPG has just announced that LPAs no longer require this wording and that attorneys will be able to delegate investment management to a discretionary investment manager without a court application. So far, so good. However, professionals are encountering that rare occurrence of reality lagging behind the law. Anecdotal evidence suggests that some financial institutions are still insisting upon there being an express power in the LPA (notwithstanding the OPG’s declaration) before they will accept instructions, leaving donors of LPAs in a quandary as to whether or not to include the clause nonetheless. 

We recommend that now, more than ever, people seek legal advice when preparing LPAs, as so often issues are not picked up until it is too late. 

It is not clear when the OPG will formally update the guidance but we understand that this verbal confirmation will be sufficient for an attorney needing to instruct a discretionary investment manager in the interim period.

https://blog.step.org/2022/03/17/lpas-no-longer-require-discretionary-investment-express-provision/

Flying taxis by 2024

Anybody commuting by train, bus, underground or car in the current heat maybe forgiven if they have day dreamed about an alternative faster and cooler way of travelling to work.  Whilst we are probably a long way off BTTF Part II and ubiquitous flying cars, I am sure Dr Emmett Brown would approve of the idea of a flying taxi.

Environmental and other regulatory issues will need consideration.

But what will it do to property prices – will there be another race to space if commuting time is cut?

And when will vertiports become the next must have for the well equipped HNW property?

Trials of zero-emission flying taxis travelling from city centres and across country to international airports are to begin in Britain within two years. Heathrow, London City and Bristol airports are to work with Nats, the air-traffic controller, and two start-ups – Vertical Aerospace, which is building prototypes of a VX4, four-passenger flying taxi; and Skyports, which is developing plans to construct so-called vertiports, helipad-like stations capable of recharging the vehicles.

https://www.thetimes.co.uk/article/zero-emission-flying-taxis-will-get-early-test-on-heathrow-route-jknr8rs2c

How sustainable are lithium batteries?

Vertical garden flourishing on a building facade, with lush green plants covering multiple levels, set against a backdrop of tall glass skyscrapers.

In the race to net zero we are becoming more and more reliant on lithium-ion batteries. There has long been a market for lithium. Previously, the batteries were predominantly used in mobile phones and laptops. However, they now play a significant role in our fight against climate change – used in electric vehicles and as the favoured method for storage of renewable energy. But are we trying to solve one problem by creating another?

Lithium is a finite resource. Whilst there is believed to be plenty of lithium in the ground to keep us going for a century (and one would hope we find a better alternative in that time), it cannot currently be mined fast enough to meet demand. As reported by Mining.com the increased demand for lithium-ion batteries has pushed the price of lithium up by almost 500% in a year. The result will be that the end product (the electric vehicles (which are already expensive) or the renewable energy that has been stored) will become more expensive. When it is expected that 90% of the funding required to meet the UK’s net zero pledge will come from private sources (including individual home owners) and in a cost of living crisis, this could price people out of the green market. 

Renewable energy is currently cheaper than fossil fuels and we need to keep it that way if we have any hope of tackling the rising energy prices. The energy price cap is currently expected to rise by a further 65% in October 2022 and is expected to plunge millions more people into fuel poverty. The UK needs to create cheap, clean energy as a matter of urgency. 

But cost is not the only issue associated with lithium. Lithium is mined from the ground in two ways and either way can harm the soil and cause air contamination. Lithium from Australia comes from ore mining, while in Chile and Argentina lithium comes from the saltwater under salt deserts:

  • Ore mining – the ore is roasted and leached with sulfuric acid. Mining.com states that this process “is energy intensive and together with shipping the concentrate to China for refining can emit 3.5 times more carbon dioxide than lithium extracted from brine”.
  • Mining salt deserts – the lithium rich saltwalter is pumped from under the deserts and the water is allowed to evaporate so that the lithium can be extracted. Whilst this is considered the “greener” method of mining lithium, it is believed to affect the water supply to surrounding areas. There are numerous indigenous communities living around the Chilean salt deserts. In a place were droughts are already common and water scarce there is a risk that these communities will soon find their homes uninhabitable.

At the other end of the production line, whilst rare, there are issues with battery leakages causing land contamination (which could affect public health) and battery fires/explosions. It is also yet to be seen how effectively large lithium-ion batteries can be recycled once they reach the end of their useful lives.

All of these issues lead to the question of whether we should be ramping up research on alternative storage solutions now? There are numerous ways that the lay of the land itself and other alternatives can potentially be used to create storage, some of which I have explored in a previous post which can be found here.

According to BloombergNEF, it can take about 70,000 liters of water to make one ton of lithium.

https://www.mining.com/web/the-trouble-with-lithium/#:~:text=Environmental%20cost&text=According%20to%20BloombergNEF%2C%20it%20can,brine%2C%20according%20to%20Wood%20Mackenzie.

A new cautionary tale for entrepreneurs ?

After the conviction of Elizabeth Holmes on four counts of fraud we now have the outcome of Sunny Balwani’s case, resulting in him being found guilty of 12 counts of fraud.

Having been a high profile and much vaunted Silicon Valley start up story, the subsequent failure of Theranos can also be seen as a trial of the “fake it ’til you make it” culture 

The cautionary tale for entrepreneurs would seem to be by all means keep up the passion and energy and enthusiasm for your start up but make sure it is grounded in realistic expectation and verifiable information. Theranos may be an extreme example which people will be shocked at when reading what the founders knew and chose to withhold from investors, but getting the balance of the story and vision of your start up is more important than ever. 

Investors want to be excited about what founders are doing and what innovation is happening but they also want it to be realistic and achievable.

As the prosecutors said in this case “The story of Theranos is a tragedy” both for the investors who lost money and the clients who were harmed by the actions of the founders. It could also be said to have an element of tragedy for the entrepreneurs who may have to shake the image of this industry that Theranos has created off in their future conversations with investors and the press. 

“The story of Theranos is a tragedy,”

https://www.nytimes.com/2022/07/07/technology/ramesh-balwani-theranos-fraud.html?campaign_id=4&emc=edit_dk_20220708&instance_id=66079&nl=dealbook®i_id=102015490&segment_id=97930&te=1&user_id=0c4dfee2b84be61054071e18e4f2d5df

A clampdown on greenwashing

Vertical garden flourishing on a building facade, with lush green plants covering multiple levels, set against a backdrop of tall glass skyscrapers.

The term “greenwashing” was originally coined in the 1980s. However, with renewed focus on global warming, its use has become prevalent in recent years.

At the British Property Federation Annual Conference (June 2022), Sarah Breeden (Bank of England) highlighted the risks associated with greenwashing. She said that there is a “wall of capital” wanting to invest in sustainability but it is difficult for investors to differentiate between genuine opportunities and inflated claims.

It seems, however, that the risk no longer lies heaviest with investors. At the end of May, DWS’s Frankfurt office was raided as part of an investigation into greenwashing. As reported by the Financial Times, it is expected that this will be the start of a tidal wave of litigation on the subject in multiple jurisdictions. Whilst vocalising green credentials has been seen as a way to attract consumers and capital, it could now land businesses in trouble if they do not have the evidence to substantiate their claims.

With the path to net zero far from clear, it will be interesting to see how such litigation progresses. Maintaining a balance of interests is crucial, but there is a risk that the possibility of a claim could see businesses slow down with their innovation and become more tentative in their ESG reporting.

But with regulatory scrutiny growing on both sides of the Atlantic — and an army of lawyers primed to pursue allegations of mis-selling — few believe the shakeout will end with DWS.

https://www.ft.com/content/1094d5da-70bf-40b5-98f4-725d50620a5a

Urgent Action Required – The Government needs to act on Heat and Buildings strategy now

Chris Stark (UK Climate Change Committee (“CCC”)) said at the BPF Annual Conference last week that decarbonising buildings is one of the biggest sustainability challenges the UK will face in the next 10 – 20 years. Heating homes and commercial buildings is a big contributor to carbon emissions, with an estimated 78% of homes in England and Wales relying on gas heating.

The UK Government’s Heat and Buildings Strategy was published in October 2021. The goal is to improve energy efficiency whilst switching to low carbon sources of heat. In order to do so the Government proposes to:

  • support industry to provide skills training;
  • encourage the use of smart technology;
  • set minimum standards for existing buildings and new builds;
  • reduce direct emissions from public sector buildings; and
  • stimulate and grow heat pump, heat networks, and green finance markets.

It appears that the financial burden is to lay heavily on the public sector.

The CCC’s assessment of the strategy is that, whilst it lays out important high level decisions on the approach to reducing emissions, there is a lot of work to be done and fast. The CCC points out numerous gaps in the strategy, including how to achieve home efficiency measures and where funding will come from. We are experiencing a cost of living crisis now, with energy prices sky rocketing. And the CCC rightly states that urgent action is needed with policies that take into account these new circumstances. Stark suggested that moving from gas to electricity needs to be a priority to both decarbonise and protect consumers from further gas price increases.

It is no good developing heat networks without a sufficient number of skilled professionals trained to connect buildings to those networks. Training takes time and money. The country needs to be acquiring these skills now if we hope to meet 2035 switch over targets. The Government acknowledges that an holistic approach is needed, but that relies on clear pathways being established for all aspects of delivery in a timely manner.

The UK’s Heat and Buildings Strategy is a welcome step in the right direction. However, with little movement since it was published 8 months ago there is a concern that action will not be taken in time.

Delivering on these goals will help to protect UK consumers from future price spikes and increase energy security by reducing energy needs and shifting demand from gas to electricity, which in future will be predominantly supplied from UK-based renewable generation.

https://www.theccc.org.uk/publication/independent-assessment-the-uks-heat-and-buildings-strategy/

I’ll be there for you – collaborating to decarbonise

Vertical garden flourishing on a building facade, with lush green plants covering multiple levels, set against a backdrop of tall glass skyscrapers.

The British Property Federation (BPF) launched its net zero pledge initiative at its annual conference on 15 June. The overarching theme is that of collaboration. BPF is asking all of its members, no matter the size of their businesses, to work together to achieve net zero by 2050.

Decarbonising the real estate sector is a significant challenge, with 40% of UK emissions coming from the built environment. The BPF initiative includes a mentoring scheme and the sharing of data and ideas. Decarbonising should not be seen purely as a marketing opportunity or a way to get ahead of competitors (although businesses have seen financial benefits and this is not to be ignored). It is a global issue which we need to address together.

Chris Stark (UK Climate Change Committee) noted at the conference that whilst the UK is on track for its 2050 target, a lot of the world is not. He stated that global carbon emissions are in fact still increasing. As such, we need to work together to lead by example and to lead the innovation to make global decarbonisation possible.

Guy Grainger, president of the BPF and JLL’s global head of sustainability & ESG, said that the industry needs “radical collaboration” to deliver net zero.

https://placetech.net/news/bpf-calls-for-radical-collaboration-to-address-climate-change/

Is the grid stretched to breaking point?

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

As we endeavour to move away from oil and gas towards a greater reliance on electricity, a very real problem is the ability (or lack thereof) of UK electricity infrastructure to cope with the increased demand.

In the bid to reach net zero, we need to increase generation from clean energy sources. This comes with the additional need for electricity storage, whether in the form of batteries or otherwise. All of these generation and energy sources will need to be connected to the electricity grid. In addition, as we move towards heating our homes and cooking etc. with electricity rather than gas, each household will have higher capacity needs. The UK electricity grid is not built for such a high capacity or for so many connections.

The grid is already overstretched, as highlighted by an article in BloombergNEF. The article reports that requests to connect to the grid have quadrupled in the past four years and there are queues of developers waiting to connect. Also reported by an article in The Economist (behind a paywall), a recent letter from the Greater London Authority noted that new housing developments are being told that they will need to wait until between 2027 and 2030 to be connected.

The road to net zero is not as simple as adding solar panels to the top of buildings. The whole of the UK electricity grid will need to be upgraded. But in a cost of living crisis, the question of who will foot the bill is of great concern.

In the last four years, there has been a quadrupling in applicants to the U.K. power system, and this year the number is expected to rise even further, said Roisin Quinn, director of customer connections for National Grid Electricity Transmission

https://www.economist.com/britain/2022/06/02/britains-overstretched-electricity-grid-is-delaying-housing-projects

EU proposals for the mandatory inclusion of solar panels on new buildings

As reported by Earth.org the European Commission has put forward proposals to make the inclusion of solar panels mandatory on all new buildings in the European Union by 2029. The fuel for this proposal is the aim of dispensing with the EU’s reliance on Russian gas and oil following Russia’s invasion of Ukraine.

Whilst the goal is a noble one, a few obstacles spring to mind. Firstly, who will pay for this technology? The cost of rolling out this proposal is expected to be in the region of 210 billion euros. The cost of energy improvements in the UK typically falls on the private sector, so it will be interesting to see how the EU plan to fund their endeavour.

Another issue is the competing needs for rooftop space. Particularly in respect of commercial buildings, rooftop space is loaded with the plant that keeps the building running. In addition, the tenants of multi-let properties (such as shopping centres) often each have their own external plant. The EU also intends to double the rate of instalment of heat pumps, which will need their own space. How much capacity for solar panels will there be on each building and will there be a mandatory minimum? If the proposals are put into effect, we may see a springboard effect of innovative technological advancements on the types of solar panels available. For example, in the future could we see our windows doubling up as solar panels?

Lastly, how will they manage issues such as energy storage and grid capacity? Will the electricity generated be used locally or sold to the grid? Will local and national grids need to be upgraded to cope with the additional connections?  Will we see a roll out of the popular battery storage, or will larger scale storage facilities pop up around the EU?

Despite these difficulties, it would be great to see this level of commitment to cleaner energy production being achieved. And if the proposals come to fruition, there may be gains for the UK as well in terms of technological advancements and tested solutions to problems encountered along the way.

Currently, 40% of the EU’s gas is imported from Russia at a cost of over USD$110 million a day.

https://earth.org/eu-set-to-make-solar-panels-mandatory-on-all-new-buildings/

Who doesn’t like a second breakfast ?

Vertical garden flourishing on a building facade, with lush green plants covering multiple levels, set against a backdrop of tall glass skyscrapers.

This week at Forsters, we’re promoting cycling to work and having commuted via bicycle since the Summer of 2020, I’ve seen and felt the benefits… and they go beyond the fact that I can have a second breakfast when I arrive at the office ! 

  • Having an hour at the start and end of each day away from a mobile phone is a clear win.
  • Bookending the day with physical exercise also provides for a mental wind down and some genuine “headspace” to think and de-fog after a day at work.
  • Sleep ! – the additional exercise helps me sleep like the proverbial log.
  • Local Knowledge – I’ve started to put additional miles onto the commute and as a result I am starting to see more and more of the City and surrounding areas each day,  giving me a greater understanding of the area.

Finally, my young daughter now cycles to school (alongside at least 1 parent!) and the benefits of a 20 minute cycle across Bushy Park have been immediately apparent.

If you’re curious and need a list of reasons to give it a go then check out this article from Cycling Weekly.

Happy Cycling !

Since a half hour ride to work should be burning between 200 and 500 calories, you've got a license to enjoy a smug second breakfast at your desk

https://www.cyclingweekly.com/news/latest-news/benefits-of-cycling-334144

Hidden Carbon

A recent blog by Matthew Fitzgerald (Savills) has highlighted a commonly overlooked source of carbon from commercial real estate. That is the carbon produced by employees commuting. Fitzgerald states that for many businesses more then 70% of their carbon footprint comes from emissions not created by the company, but that they are indirectly responsible for. These emissions are often forgotten in reporting.

Embodied carbon is now a hot topic, but if businesses want their real estate to become truly carbon neutral (or negative) they will need to consider the wider sources of carbon resulting from the use of their space. As noted in the Savills blog, commute distances could begin to take greater significance when businesses consider the location of their real estate. This could also impact on the size and shape of their real estate as (especially when looked at in conjunction with the effects of the pandemic) more employees may be encouraged to work from home, at least part time, to save on emissions.

A new location can alter employee commuting patterns and could increase overall company emissions without this being taken into consideration.

https://www.savills.co.uk/blog/article/328303/commercial-property/how-occupiers-need-to-report-on-carbon-emissions-from-employee-commuting.aspx

Debunking myths and tackling the cost of retrofitting with green technologies

I have previously posted about the importance of retrofitting and the statistic that it is expected that 80% of the buildings that will exist in 2050 have already been built. However, the cost of fitting green and energy efficient technology can be off-putting, if not prohibitive. It is, therefore, great to see British Land working with their occupiers to do just that and also reaching out to encourage others and dispel myths about the limitations of such technology.

British Land have trialled air source pumps at some of their commercial buildings. Even when the air outside is minus two degrees Celsius, they have found that they generally still use zero gas to heat the spaces in their buildings. Whilst at these temperatures they are still using gas boilers to heat water, this is a vast improvement and has reduced their gas usage by 80%. They have also found that the air source pumps are more efficient and, therefore, cheaper to run than gas boilers.

The technology is still expensive and British Land acknowledge that installation into existing buildings is only generally financially viable when existing equipment has reached the end of its life or when occupiers are on long leases so the energy savings make the upfront cost worthwhile. But they do say that the overall response from occupiers has been positive. 

Whilst the financial challenges of green retrofitting still exist, British Land are showing that taking these steps to meet net zero targets can be done. If other landlords (and their occupiers) can get comfortable with this technology, you may soon be seeing more air source pumps coming to commercial buildings near you.

We have proved that air source heating and cooling works in major commercial buildings – reducing gas use by over 80%, moving away from fossil fuels, cutting energy costs for customers and improving thermal comfort.

https://www.britishland.com/sustainability/our-views/air-source-pumps?tceid=62669d1df636ea15a8a0bae9

More bricks than clicks for Primark ?

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

Primark have always bucked the trend of much of the high street in not even attempting to embrace e-commerce, instead concentrating solely on its physical stores. 

With ever increasing costs and volatility around operating a home delivery e-commerce site, this may prove to be a solid commercial choice in the long-term, but the announcement of a new website suggests an evolution of their strategy, if not quite a full scale revolution.

The new site will not (yet) offer home delivery but instead does offer a stock availability checker. The retailer states that “the move marks a shift in the role of digital within the business as it recognises the critical role online can play to support sales in-store”

It seems clear that the relative certainty and stability of physical store costs remains attractive to this particular retailer – nonetheless the move points to the changing ways in which customers can be reached and how customers interact with their favourite retailers.

Certainly one to watch to see if this initial move morphs into something more….

Despite it’s new website, Primark still views stores as it’s main growth channel.

https://www.retailgazette.co.uk/blog/2022/03/primark-puts-click-and-collect-on-radar-as-it-preps-website-launch/

Could 140 year old iron-air batteries allow us to keep the lights on in the future?

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

As reported by The Independent, a team from the Massachusetts Institute of Technology (MIT) believe they may have a cheaper and cleaner alternative to lithium-ion batteries for the large scale storage of electricity produced from renewable sources. And it turns out that the greater part of the technology is over 140 years old.

I am no scientist so I will not delve too deeply into the technical aspects in this blog. However, iron-air batteries, which were first invented in 1878, are said to have a higher energy density to the popular lithium-ion batteries and are made from (you guessed it) iron (an abundantly available metal) and atmospheric oxygen.

These batteries were previously considered impractical due to rusting which prevented them from being recharged. But the team from MIT believe they have solved this problem, which would allow for the delivery of 100 hours of clean electricity at a cost of $20 kilowatts per hour, compared to the $200 kilowatts per hour of lithium-ion batteries. The potential result being greater storage capacity for renewal energy projects to help keep the lights on in periods of low production.

We are already seeing some renewable energy project developers including provision in their plans for on-site battery storage. If cheaper technology with higher storage capacity becomes available, we can expect on-site storage to become the norm. In the meantime, we should expect developers to require greater flexibility for storage in their leases as this and other storage technologies continue to evolve.

While it may be too late for the breakthrough to allow mass adoption for consumer electronics and electric vehicles, Professor Chiang believe it could revolutionise energy storage for large-scale renewable operations.

https://www.independent.co.uk/tech/batteries-lithium-ion-metal-air-b2036356.html?utm_content=Echobox#Echobox=1647402619

The reimagined Department Store

For some time now the loss of the traditional “anchor” has been the headline grabber as one of many nooses around the neck of retail,  but in a sector not historically known for its adaptability,  it is refreshing to see both new and existing operators grasp the opportunities that are now available.

We have seen significant increases in leisure occupiers taking over larger spaces in the high street and within shopping centres,  and to now see almost 100,000 sq ft of retail space transformed into the new Next “department store” concept is a really positive boost. 

Moving to a new department store model incorporating concessions has seen this particular occupier almost treble its footprint at this scheme, and across the country the use of concessions is of particular note.

Whilst there will still be bumps in the road ahead, it’s good to see that quality retail is still looking for and acting on opportunities.

On a personal note, I’m delighted to be able to lead the Forsters Retail team in delivering this transaction for James Pelly and the asset management team at Global Mutual, working alongside Claire French and the team at Next – fantastic to see large space being reimagined and wish them all the very best for their continued expansion plans.

Next has opened a new department store which combines the brand’s home, beauty and fashion offers for the first time.

https://www.retailgazette.co.uk/blog/2022/04/next-opens-first-department-store/

Good news for retail and leisure as shop vacancy rates fall

Escalators transport people in a busy shopping mall. Shoppers, some blurred from motion, navigate levels surrounded by sleek glass and modern architecture, creating a bustling, dynamic atmosphere.

Interesting article in Retail Gazette suggesting that the worst of the pandemic is over for the retail and leisure sectors with many chains looking at their strategy for growth with an unprecedented level of repurposing for redevelopment.  This is promising news for landlords and retailers and certainly reflective of the large volume of transactions currently taking place in the retail and leisure sectors.  

The number of empty retail stores and restaurants across the UK has fallen for the first time since 2018 according to new data, prompting hopes that a post-pandemic recovery may be under way.

https://www.retailgazette.co.uk/blog/2022/03/vacancy-rates-decline-for-first-time-since-2018/?tceid=623a0420f636e90954286783

Does it need to be battery?

As we aim to become more reliant on renewable energy sources, consideration must be given to how we can keep the lights on during periods of low production. Diversification of production methods will help, but notes in The Guardian that the International Energy Agency has forecast a storage boom over the next decade.

It is expected that the majority of storage will be by way of lithium-ion batteries. However, lithium is itself a finite resource, toxic chemicals are used to process lithium and there is the question of where these batteries will go when they reach the end of their useful lives. In addition, their capacity is limited.

has set out four potential alternatives for storing renewable energy:

  • Gravity Storage – using excess energy to pump water upwards into a reservoir and then, when required, releasing the water to run over generating turbines to generate electricity. Using a mineral-rich fluid with a higher density than water could allow this technology to be used more widely as the slopes would not need to be as high to generate the same amount of electricity. There is, therefore, potential for this type of storage to be incorporated within some solar development sites in place of the more common battery storage.
  • Heat Storage – excess energy is used to heat molten salt or silicone. The salt or silicone is able to maintain the temperature until the heat is used to generate a steam turbine to create electricity.
  • Green Hydrogen – using excess energy to run electrolysers and create green hydrogen, which can then be used to run power plants, factories and heavy vehicles.
  • ‘Cryogenic’ Batteries – excess energy is used to clean, compress and cool air which is then stored as a liquid. When additional power is needed, the air is heated, expanded and used to power a turbine to generate electricity.

We will likely begin to see more and more renewable energy developments incorporating on-site battery storage. There is also potential for on-site gravity storage and green hydrogen production. However, in order to create longer term storage solutions, the future may hold larger scale stand alone storage facilities which separately connect into the grid. Developers will need to make strategic decisions about whether to include battery storage within their projects now, or to wait to see how these other storage technologies evolve.

https://www.theguardian.com/business/2022/jan/10/heres-how-to-solve-the-uk-energy-crisis-for-the-long-term-store-more-power

– what happens when the wind does not blow or the sun does not shine.

https://www.theguardian.com/business/2022/jan/10/heres-how-to-solve-the-uk-energy-crisis-for-the-long-term-store-more-power

Scream if you want to go (sustainable) faster

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

As reported by across-magazine.com, Pragma, a specialist consulting firm for operators and investors in mixed-use, travel and retail property, has set out its understanding of the attitudes and issues faced by the four core stakeholders in the retail industry: consumers, retailers, investors and asset managers.

Pragma believe that whilst sustainability considerations are impacting the choice of what to purchase, it seems that consumers are not yet choosing where to shop based on the sustainability credentials of shopping centres. This may result from limitations on alternatives or a lack of awareness of an assets’ sustainability credentials. 

The jury is still out on whether online or in-store shopping is more environmentally friendly, with studies funded by different organisations coming to opposite conclusions. However, either way, there is increasing pressure from investors to demonstrate the impact their investments will have on environmental concerns.

This all leads to the question of whether asset managers need to be more vocal about the sustainability measures they are taking, and the speed with which they are taking them, if they want to win more investment and more footfall? And will retailers start demanding more from asset managers in terms of making shopping centres more sustainable?

The European Union has set itself the goal of becoming climate-neutral by 2050. Large buildings, such as shopping centers, play an important role to that end. In general, the EU holds buildings responsible for 40 percent of energy consumption and 36 percent of CO₂ emissions, both figures must be substantially lowered.

https://www.across-magazine.com/sustainability-how-the-industry-is-responding/

Is there hope for the high street?

Escalators transport people in a busy shopping mall. Shoppers, some blurred from motion, navigate levels surrounded by sleek glass and modern architecture, creating a bustling, dynamic atmosphere.

Chris Biggs, Global Head of Retail for the Boston Consulting Group (BCG), has found that there is an increasing consumer preference for hybrid (online/in-store) shopping, rising from 39% to 48% over the course of a year. Could this be the trend that saves the high street?

In order to make a success of hybrid shopping, retail spaces will need to be adapted to create a seamless and positive experience from online to in-store, with technology that allows customers to be confident that a particular product is available nearby.

Forbes.com also reports that BCG’s research has found that 90% of consumers are more concerned about sustainability than ever before. The article notes that “the onus in 2022 will be on brands and retailers not just talking about their green credentials, but convincing the customer that their efforts are genuine.” The current energy crisis highlights the need for sustainability in the built environment and we could see pressure from consumers calling for retailers to commit to sustainable real estate as well as sustainable products. 

"In many cases an online shopping journey's best and most convenient destination is a physical store down the road" Nick Brackenbury, CEO and co-founder of NearSt

https://www.forbes.com/sites/catherineerdly/2021/12/28/four-trends-that-will-shape-retail-in-2022/?sh=403f0ede519a

Virtual Land: The world of metaverse

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

If Cosimo de’ Medici was alive today, I wonder what he might have thought of the fast growing world of cryptocurrency – the decentralised digital payment system that does not rely on banks to verify transactions – via the likes of Bitcoin, Ethereum, Litecoin and Ripple. He probably would have created his own (the “Medici”) to enhance the family fortune alongside his bank.

Now in the 21st Century, many transactions are being carried out using cryptocurrency and it is an area Forsters has years of experience advising on (https://www.forsters.co.uk/sites/default/files/Introduction-Blockchain-Cryptoassets.pdf)

As a property lawyer, to date I personally have not crossed paths with the use of cryptocurrency, blockchain and non-fungible tokens – in part, no doubt, as the relationship between these forms of currency/transactions and the Land Registry are in their infancy (at best). So you can imagine I was most intrigued to read about the newest development – the growth of virtual land transactions in the metaverse (which to the untrained eye feels like reliving teenage evenings playing a game of the SIMs or Theme Park but injecting millions of $s worth of cryptocurrency into the mix).

What is a metaverse?

A metaverse is essentially a 3D virtual world where real and digital worlds are integrated using technologies such as virtual reality and augmented reality. In this world, users can meet and communicate as digital avatars, explore new areas and create content – these are immersive digital experiences. Indeed Justin Bieber’s avatar performed a live concert in the metaverse in November 2021.

Can I buy land in a metaverse?

Yes you can buy virtual land and it is becoming quite the fashion – from Snoop Dogg to PWC, people and companies are wanting in on the action.

Metaverse Property or the Metaverse Group describes itself as a “leading virtual real estate company offering exposure to this burgeoning industry via the Metaverses. We facilitate the acquisition of virtual property along with a suite of virtual real estate centric services that are provided by pioneers of the crypto, blockchain and non-fungible token (NFT) industries“. They offer (or plan to offer) services which include buying and selling of virtual real estate across the metaverses, development of virtual land, expert level consulting for all major metaverses, finding a rental within the metaverses to fit any need, property management of the existing real estate and marketing and advertising of businesses in the metaverse.

For example, you can buy virtual land in “Decentraland” (powered by the Ethereum blockchain) where there are districts which include Crypto Valley, Dragon City, Aetherian City, Vegas City, Fashion Street etc. Reuters reported in November 2021 that a patch of virtual real estate in Decentraland sold for a record $2.4 million worth of cryptocurrency to Tokens.com (a cryptocurrency investor). Indeed whilst Metaverse Group is based in Toronto (on terra firma), it has its virtual headquarters in Decentraland in Crypto Valley (metaverse’s answer, they say, to Silicon Valley). There is a fashion precinct in Decentraland which will be used to host digital fashion events and sell virtual clothes for avatars.  No doubt there will be many more diverse offerings too.  Metaverse Property also sells/rents other land, such as in “The Sandbox”, “Somnium” (for waterfront or roadside properties), “Cryptovoxels” or “Upland”.

However, to ensure that the digital real estate has value, supply is limited – so for example, Decentraland is made up of 90,000 “parcels” of land which are each around 50 feet by 50 feet. The land acquired for $2.4m worth of cryptocurrency by Tokens.com in the Fashion Street part of Decentraland last year for example was made up of 116 smaller parcels measuring 52.5 square feet each – so 6,090 virtual square feet.

There are other virtual real estate companies like SuperWorld where apparently the Taj Mahal, Central Park and the Sydney Opera House amongst others are for sale.

Fantasy or Fabulous?

As the New York Times suggests the acquisition of virtual land is still highly speculative and no one knows for sure if this boom is the next big thing or the next big bubble. This type of property is not tangible and cannot offer you somewhere to physically live and invite family in. However, it does open a world of opportunities. As commentators have said, once we had doubts over that thing called the “internet” and now look at us.

So it is very much a case of watch this “virtual” space! But in the meantime, Forsters are here to help you with your physical property needs (excuse the shameless plug!)

Watch this "Virtual" Space!

https://metaverse.properties/

Checkout free? Not sure it’s for me

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

Maybe I’ve just reached an age where certain technological advancements create consternation rather than excitement. Maybe people felt the same way when debit cards were first issued, but the truth is that the new till-free checkouts being trialled by certain supermarkets don’t fill me with glee.

I can’t say I enjoy going to the supermarket and long queues can be a nuisance; we all lead busy lives after all, but aside from the expectation that we should all happily install multiple apps on our mobile devices without question, there’s also the question of whether minimising social interaction to the nth degree can really be described as progress? I’m not so sure it can…

The German discounter’s new store on Greenwich High Street lets customers simply pick up shopping items and walk out without scanning items or going to a checkout.

https://www.standard.co.uk/business/aldi-shop-and-go-amazon-fresh-checkout-free-sainsburys-tesco-b977274.html

The Hong Kong Expat’s Dilemma

Hong Kong’s status as a leading international financial centre, together with its reputation for providing a good quality of life for families, are just some of the reasons why many of our expat clients continue to enjoy working and living in the city.

In the early days of the pandemic, expats were able to manage their global business interests and children being educated overseas, even with Hong Kong’s strict quarantine requirements for international travellers. As time has gone on though, and with no signs of the city’s zero-Covid strategy abating, the situation has become increasingly unsustainable. This has led to a growing contingent of Hong Kong expats (many being c-suite executives) feeling they have run out of options and are looking to move (back) to the UK. Many have sought advice from us on a variety of associated issues ranging from pre-arrival cross-border estate and tax planning to assistance with obtaining the relevant UK visas (typically) for their spouses.

Hong Kong expats are relocating at a faster pace than before, but Singapore isn’t their only destination

https://www.scmp.com/week-asia/people/article/3162495/hong-kong-expats-are-relocating-faster-pace-singapore-isnt-their

Gove closes tax loophole on second homes

According to the government, around 96% of holiday homes currently qualify for small business rate relief (SBRR) and as a result, pay no business rates at all.  

The government  has previously noted that owners of holiday lets currently pay business rates rather than council tax if the owner declares that they intend to make the property available to let for 140 days in the coming year, but the government has also acknowledged that checks to verify this were not undertaken.

It was announced today that this will change from 1 April 2023  so in addition to the requirement that furnished holiday lets (FHLs) have to be available to be rented out for 140 days a year to qualify for  SBRR; from April 2023, second homeowners will have to prove that their holiday lets are being rented out for a minimum of 70 days a year to access SBRR.

Holiday let owners will have to provide evidence such as the website or brochure used to advertise the property, letting details and receipts.

Secretary of State for Levelling Up Rt Hon Michael Gove said: "However, we will not stand by and allow people in privileged positions to abuse the system by unfairly claiming tax relief and leaving local people counting the cost. The action we are taking will create a fairer system, ensuring that second homeowners are contributing their share to the local services they benefit from."

https://www.gov.uk/government/news/gove-closes-tax-loophole-on-second-homes

Government consults on Biodiversity Net Gain

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

A DEFRA consultation is ongoing until 5 April 2022 to gather views on how the biodiversity net gain requirements, contained in the Environment Act 2021, should be delivered. The results of the consultation will feed into the secondary legislation required to deliver the aims of the Environment Act.

Whilst much of the Environment Act 2021 is not yet in force, the intention is for the mandatory 10% biodiversity net gain requirement to take effect in November 2023.

For schemes currently in the pipeline, it is worth considering now how these schemes will achieve the mandatory gain – particularly as this will need to be addressed as part of the planning application process. Providing a net gain off-site is available only as a last resort, where it is evidenced that securing an on-site gain is not possible. It will therefore be necessary to consider possible off-site locations which could be used to deliver the required biodiversity gain.

The consultation is asking developers, planning authorities, environmental professionals, landowners and other interested parties for their views on the details of how biodiversity net gain should be delivered when building new housing or commercial development.

https://www.gov.uk/government/news/protecting-and-enhancing-the-environment-to-be-at-the-heart-of-new-housing-and-infrastructure-developments

Is the seller who you think they are?

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

This recent article about a house owner coming home only to find that it had been sold by someone impersonating him is a reminder that property fraud is still very much a concern, despite HM Land Registry’s continued efforts at requiring ID checks by solicitors. 

Conveyancers are under an obligation to check the identity of their clients. If there are any warning flags (such as the property being vacant, or the person purporting to be the seller using a different address or providing information different to that disclosed by searches) conveyancers should consider asking for further documentation to establish their client’s link to the property. This could be utility bills in their name, correspondence relating to the property acquisition, or invoices for works done to the property.

But what steps can a property owner take to avoid coming home after a period of absence to find new owners registered at HM Land Registry and happily drinking a cup of tea in the living room? There are a couple of options available. HM Land Registry offers a property alert service which sends out an email alert if someone applies to change the register for the property. This won’t block any changes being made to the registered title, but it will provide a prompt alert by email so that action can be taken quickly if necessary.

Where there is genuine concern that a property may become the subject of an attempted fraudulent disposition, typically where the property owner is overseas, an application can be made to HM Land Registry to enter a restriction on the property title. This provides protection against forgery by requiring the conveyancer to certify that they are satisfied that the person acting as seller who executed the document submitted for registration is the same person as the registered proprietor (or, in the case of property owned by a corporate entity, that the person signing does hold their stated office at the company). This gives an extra layer of protection for more vulnerable properties, which might also act as a deterrent to would-be fraudsters. It does, of course, put the onus back on the conveyancer to do careful ID checks, and not take anything at face value. Otherwise, property owners may find themselves in the same position as poor Reverend Hall.

The Land Registry paid out a total of £3.5m in compensation for fraud last year. It said: "We work with professional conveyancers, such as solicitors, and rely on them and the checks that they make to spot fraudulent attempts to impersonate property owners. "Despite our efforts, every year we do register a very small number of fraudulent transactions."

https://www.bbc.co.uk/news/uk-england-essex-59069662

The silent revolution

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

I’ve been noticing more and more electric vans silently gliding along the streets in my area doing their daily delivery drops. Today’s Logistics Manager reports that the NHS is also joining the electric vehicle revolution, with its logistics provider, NHS Supply Chain, enhancing its fleet of sustainable vehicles across the UK. 

Of course, when switching to an electric vehicle fleet you need to pay close attention to where you are going to charge them, what speed of chargers are needed (electric vans will typically need a rapid charger) and whether your existing infrastructure can support this additional requirement – and these are just the headline points. For further analysis of issues which property owners and occupiers should consider in relation to EVCPs, please review our Quick Guide on the topic. 

"The new fleet allows for a reduction of 2.1 tonnes of CO2 per vehicle per year, and the engines are HVO ready and can be run on Hydro treated vegetable oil."

https://www.logisticsmanager.com/new-sustainable-fleet-servicing-nhs-trusts-across-england-rolled-out/?utm_term=0_95229da346-395d10451a-130403782

When is a garden commercial?

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

With a potential 12% differential in SDLT rates as between the mixed use/commercial rates and the residential rates (once the 2% non-resident surcharge and the 3% higher rates for additional dwellings surcharge are both taken into account), it is tempting for buyers to push the boundaries. 

However, given the large number of valuable prime properties in central London that surround communal gardens, it was always unlikely that, once they properly considered the amendment to the relevant SDLT land transaction return, HMRC would allow the refund, as it would create a dangerous precedent. The tribunal found against the taxpayer on points of fact and legislative detail.

If you are going to amend your return, always assess where the boundary is and not where you’d like it to be.

He claims that Tedworth Square Gardens — a Victorian garden owned by the Cadogan Estate to which all residents have access — should be designated non-residential land because it is not physically attached to his house and is also used by other people.

https://www.thetimes.co.uk/article/garden-cafe-should-bring-900-000-stamp-duty-refund-on-new-house-city-executive-claims-3jkjtbw5v

Everyone deserves… EV charging at Waitrose

Good news today for all my fellow Waitrose-lovers out there, as they team up with Shell Recharge to install 800 electric vehicle charging points across the retailer’s estate by 2025. As part of the deal, there will be more Waitrose food and access to John Lewis’ Click and Collect service offered in a number of Shell forecourt stores.

It’s great to see another major retailer getting on-board with rolling out further electric vehicle charging points, although the concern remains – can the infrastructure needed to power the sites keep up?

For further information about key issues and questions for property owners to consider when installing EVCPs, see our Quick Guide on the topic. You can also visit our Sustainability and ESG Hub

The likes of Marston’s, Lidl, Morrisons, Tesco and Mitchells & Butlers have all increased investments in EV charging points for customers in recent months, along with several of the UK’s biggest retail real estate operators.

https://www.edie.net/news/8/Waitrose-teams-up-with-Shell-to-install-EV-charge-points-across-UK-stores/?utm_content=news

Fail to plan, plan to fail: Artists should make wills to avoid legacy disasters

We are fortunate in England to have ultimate testamentary freedom; we can leave our estates to whomever we please when we die. However, where we fail to take advantage of this by making a will, the blunt instrument of the intestacy rules can have devastating effects. This was the case for the artist Fred Yates’s estate, part of which passed to the Crown as he died without making a will and without heirs. Yates’s dealer submitted a detailed proposal for his works to be displayed in Cornish museums facilitating public access which could be funded by royalties. Despite this, works are beginning to be sold off without regard to Yates’s legacy or impact on the future value of his works. The message to artists, and to the rest of us, is a simple one: take advice and make a will.  The alternative can have disastrous consequences.

An art dealer is calling on the UK government to reverse a policy he says will destroy a ground-breaking initiative to safeguard the legacy of Fred Yates and, potentially, other artists who have died without making a will.

https://www.theartnewspaper.com/news/gallerist-fights-to-save-remains-of-fred-yates-s-estate

Transporting us into a Net Zero future: are cycle hubs the answer?

Vertical garden flourishing on a building facade, with lush green plants covering multiple levels, set against a backdrop of tall glass skyscrapers.

An interesting piece in today’s Property Week, highlighting the new £1.2 million three-storey cycle hub which has recently opened next to Kingston Station. 

With many London Boroughs implementing Low Traffic Neighbourhood schemes (albeit not without controversy) and vastly improved cycleways springing up all over the Capital, London has probably never been a better place to cycle. However, bike theft has surged during lockdown, meaning secure cycle storage facilities are in demand. Whilst the hub at Kingston, as well as a smaller scheme at Carnaby Street, are each free to use, other existing schemes –  such as those run by Spokesafe – are income-producing. Is this the future for transport in London?

A bike hub makes especially good financial and environmental sense compared with the cost of building an equivalent car park. Murdoch estimates it would cost 10 times as much to build a multi-level building capable of storing 450 cars – and it would need to be much bigger too, of course.

https://www.propertyweek.com/insight/can-cycle-hubs-help-steer-us-towards-a-net-zero-future/5114880.article?utm_content=Daily+Daily+News+CID_d215dae451b35b441d495ec54d453f92&utm_term=Can+cycle+hubs+help+steer+us+towards+a+net+zero+future

Bank of England is assessing climate change risk across the financial and insurance markets. What will be the cost?

The BoE is undertaking an assessment of the key risks of climate change in the CBES. The risks are the “transition risk” – being the structural changes required to the economy to effect net zero emissions and the “physical risk” – being the increase in global temperatures. The CBES seek to test the financial and insurance markets so that BoE can better understand the climate change risks and the interaction with the financial system. This is simply a research tool at this stage but it will be interesting to follow this closely. Most importantly once that data is captured and the consequential actions proposed, what the cost will be to those institutions of implementation.

The Bank of England (Bank) has today published the Climate Biennial Exploratory Scenario (CBES) to explore the financial risks posed by climate change for the largest UK banks and insurers (participants).

https://www.bankofengland.co.uk/news/2021/june/key-elements-of-the-2021-biennial-exploratory-scenario-financial-risks-from-climate-change

Green loans and sustainability linked loans are still up up and away!

Whilst this year has been tricky economically as a result of the pandemic, it appears that the desire for green loans and sustainability linked loans continues to have a meteoric rise. The LMA has updated the Green Loan principles in 2021 for REF facilities as has the LSTA and APLMA to promote best practice. This new Qatari Diar £450m loan is testament to the growth of such loans and is welcomed with open arms by all. Watch this space for further regulation changes to lenders disclosure requirements. 

Qatari Diar lands £450m green loan By Jessica NewmanThu 20 May 2021 Qatari Diar has secured a £450m green loan – one of the largest single property asset green loans ever in the UK – to finance the construction of The Chancery Rosewood, its luxury retail and hotel scheme in London’s Grosvenor Square, Property Week can reveal.

https://www.propertyweek.com/news/qatari-diar-lands-450m-green-loan/5114355.article?utm_content=Weekly+Breaking+News+CID_105e8a607924f9dad96bedb0e5b7fb46&utm_term=Qatari+Diar+lands+450m+green+loan

Cycling Re-volution – Part Two.

Escalators transport people in a busy shopping mall. Shoppers, some blurred from motion, navigate levels surrounded by sleek glass and modern architecture, creating a bustling, dynamic atmosphere.

Stage 2 of this years Tour de Retail highlights the lovely people at Ribble Cycles, born and built in the UK since 1897 but only really discovered by me in the depths of lockdown 2020 !

What Ribble lack in terms of number of retail outlets they certainly make up for in terms of quality and adopting a thoroughly modern approach to their revamped stores seems like a bold but very positive move on their part – even more impressive for a company know as “digital first” to be making such positive strides in respect of their physical proposition.

Complimented by a user friendly website which includes a eye watering and potentially wallet burning “build your own” bike facility and an exceptional live video function with very knowledgeable in-store staff that you can use at times to suit you.

The cycling re-volution has plenty of miles in its legs yet with no need to reach for the energy bars for a boost just yet.

So its a second Chapeau of this series… this time to the folks from Clitheroe… Ribble Cycles.

This new flagship showroom showcases our significant investment and dedication to and vision for the brand's future with the digital technology integrated into this physical proposition enhancing and complementing our industry-leading online customer journey demonstrating the ambition and scale of our strategy

https://www.cyclist.co.uk/ribble/9477/ribble-opens-new-flagship-showroom-in-clitheroe

IPSX real estate trading platform finally launches as Mailbox hits the market

After several false starts and around 6 months of delays, the first listing on the International Property Securities Exchange (IPSX) has launched this morning (14 May 2021).  

The IPSX platform, which intends to allow for the tokenised acquisition of individual real estate assets, has been set up in an attempt to democratise ownership of large, institutional grade real estate assets which previously would largely have been the sole preserve of major pension funds, private equity groups and sovereign wealth funds. 

The first asset listed is the 700,000 sqft prime central, office led scheme at the ‘Mailbox’ in Birmingham which is owned by Mailbox REIT PLC.  The company has already secured almost £26m of investment (comprising around 30% of the issued share capital) prior to the launch of the IPO from various private investors and the IWG group, who occupy a sizeable proportion of the building as part of their flexible office space operation. 

The listing has been made on the ‘IPSX Wholesale’ market, which is aimed at existing institutional investors in real estate, rather than the ‘IPSX Prime’ platform which is IPSX’s regulated market on which individual retail investors will be able to buy shares in real estate assets as well.  As such, this listing will not truly show the market appetite for individual members of the public to own a piece of a major, investment-grade real estate asset but if successful, IPSX will likely be encouraged to push more assets onto the platform, at which point we will really be able to assess their credentials as a real estate industry disruptor.   

Mailbox REIT, which owns the 700,000 sq ft mixed-use Mailbox scheme in central Birmingham, will this morning (May 14) become the first company to have its share admitted to trading on the International Property Securities Exchange (ISPX).

https://www.thebusinessdesk.com/westmidlands/news/2051632-mailbox-reit-becomes-first-company-to-have-shares-admitted-to-new-property-focused-stock-exchange

Knight Frank’s M25 and SE Office Report

Yesterday morning Forsters’ Occupiers team attended the launch event of Knight Frank’s M25 and SE Office Report: The Next Chapter 2021. In case you missed it, here are my key takeaways:

Climate

It should come as no surprise that ESG was a key talking point. 

With more and more businesses committing to a net-zero carbon future, the ESG credentials of buildings are going to attract ever greater scrutiny. Landlords and developers need to think about how they can demonstrate their green credentials to potential occupiers, who are increasingly required to demonstrate this to their stake-holders. Having the right accreditations will be key in attracting occupiers (and maintaining rent levels). 

Green finance and sustainability-linked loans are on the rise. Occupiers without a strong ESG profile may find that they are seen as a credit risk and can only access finance at uncompetitive rates. For many companies real estate can comprise a large part of their carbon overhead (the vast majority for some professional services firms). The environmental impact of premises will therefore become a key factor in whether or not businesses can access debt and therefore a key factor when selecting new premises. 

Connectivity

The importance of connectivity is nothing new, but Covid has put this front and centre in having a workplace that can attract and retain the best talent. Having a best in class building, with fibre and mobile connectivity, will therefore become critical for both landlords and tenants. Proximity to data centres is also crucial, especially for businesses which rely on low latency for competitive advantage.

It is not just about data and power, but also physical connectivity, such as road and rail. Crossrail – when it opens – will have a major impact on east-west travel and may see those areas which it serves become more attractive to occupiers.

The top three areas in the M25 connectivity index were: Chiswick, Richmond and Wimbledon. 

Life Sciences

Life Sciences attracted much attention in the presentation as a potential growth sector. With greater on-shoring being muted following the pandemic, this is certainly an area to watch.

Life Sciences rely on innovation which requires the seamless integration of people and technology, so proximity of talent, specialist facilities, knowledge centres and NHS sites are key factors in creating critical mass. Outside of the traditional hubs of Oxford and Cambridge, west London and Stevenage were both highlighted.

A copy of the report can be downloaded here.

With the accelerated pace of change comes opportunity. Transformation always follows dislocation

https://www.knightfrank.com/m25-offices

The door is opening further for UAE domicile: but domicile is a tenacious character…

The UAE has recently, for the first time, started awarding passports to expatriates. Among those first in line to be awarded UAE passports are a former Real Madrid soccer player and a number of tech and aviation executives.

This is a significant development for the UAE. Not only will it attract larger numbers of wealthy individuals, but it will likely lead to greater numbers of Single Family Offices and businesses being established in the UAE. The promise of permanence will encourage many individuals to lay down deeper roots in the UAE.

A potential consequence of establishing deeper roots is that UK expatriates in the UAE will now have the ability to claim to have acquired a UAE domicile. In a piece I wrote back in September 2020 (viewable here), I speculated whether the introduction of a Retirement Visa in the UAE opened up the door to UAE domicile. However, any lingering doubt over whether expats can acquire a UAE domicile of choice (as it is understood under English law) appears to have evaporated with the government’s decision to award passports. Expats can now remain in the UAE for the rest of their days.

The establishment of a UAE domicile may have succession planning and divorce implications for expats from around the world. In addition, UK expats in the UAE will have a particular interest in the acquisition of a UAE domicile, as that could open up wide ranging tax planning opportunities, especially in the context of UK inheritance tax.

That said, the acquisition of a non-UK domicile of choice can be very difficult, as a domicile of origin (that acquired at birth, usually from one’s father) is notoriously tenacious. Acquiring a UAE passport will not of itself mean an individual has acquired a UAE domicile of choice. Rather, it may be one of a number of factors that provide evidence that an individual has formed the intention to reside in the UAE permanently or indefinitely, which is the threshold that must be satisfied to establish a non-UK domicile. Thus there is unlikely to be a flood of new UAE domiciliaries, but the significance of the passport development is that it opens the door to the possibility of acquiring a UAE domicile, which was previously not a realistic option.

Of course, before taking any action, British expats applying for passports should take legal advice to ascertain their domicile position.

UAE shakes up residency rules by offering passports to wealthy expats

https://www.ft.com/content/a297d29c-b7fe-4e81-be50-073f837f0e2c

Beeple on Blockchain – is digital art a fad or the future?

Black and white chess pieces are positioned on a chessboard, focusing on two knights facing each other amid rows of pawns, set against a blurred, neutral backdrop.

With the huge surge in the value of digital currencies, such as Bitcoin, crypto-assets are moving ever further into the realm of mainstream investments. While bitcoin is the best known crypto-asset, the platform on which it is hosted, Blockchain, can be used to embed all types of property, including real estate, and most recently, works of art such as those created by digital artist, Beeple (real name, Mike Winkelmann). 

While such digital art could be dismissed as a craze, the increasing popularity and serious investment potential of other digital assets, coupled with the interest of the traditional art market, suggests that this is a form of art that may be here to stay. Even concerns regarding authenticity and the value of such art on the secondary market may be alleviated as a result of the permanent record of creation and ownership provided by blockchain technology. 

Blockchain verification can be used for all forms of art – whether traditional or digital. Looking ahead, blockchain’s potential to improve provenance could eventually lead to a downturn in ownership and title disputes, which is surely another reason for collectors to welcome the arrival of a Blockchain art market. The fact that it arrives at a time when the whole world has been forced to live their lives digitally, and to admire art online, seems likely to enhance its ease of acceptance by investors and enthusiasts alike.

The art market’s latest craze is for Non-Fungible Tokens (NFTs) and this month Christie’s will be the first major auction house to offer a digital work in this format. NFTs essentially stamp the art on the blockchain and — for works made virtually — are proving appealing.

https://www.ft.com/content/d7523a73-8aa3-40eb-8b3d-bf27cd2494a0?accessToken=zwAAAXe539TwkdPXUjpziqNA69OLPb8nzSSUoA.MEUCIAKe8txOHBUYmfZMqgfjGru9dBm8tZXDfNZ_mmiKeHhRAiEAyu62-EgwCPVNVEiwj8-HmiOd9hUstXh4gDiqgLDJkXo&sharetype=gift%3ftoken%3d47aab514-b5fb-4914-b043-fb625a31818b

Wealth tax to pay for COVID-19 measures?

The Wealth Tax Commission sees a one-off wealth tax as being:

a)  fair as it falls on the broadest shoulders – although I would note that some of the assets in the taxable pot, such as a pension, are likely to be illiquid.  Furthermore, for many people, much of their wealth arises from inflationary gains on the value of their home (particularly in the South East of England). Wealth tied up in bricks and mortar may well be owned by people on low salaries or those who have retired.

 Effectively, taxing business profits twice also seems odd, or is really a tax on undistributed profits.  This creates a tax on the prudent who leave profit in a business to be prepared for future emergencies. Surely, if business and the government have learnt anything from Covid-19, it should be the value of being prepared and retaining a contingency fund?  A wealth tax is likely to discourage such sensible behaviour.

b)  efficient as it would not discourage economic activity and the administrative costs of collection should be relatively low – I disagree with this conclusion, as I fear it may deter many foreign investors from investing in the UK.

Some assets are relatively easy to value but others, such as shares in unquoted companies, are notoriously difficult. Even the value of shares in quoted entities can vary considerably over a short space of time.  As such, if fairness is genuinely important to those implementing this tax, it may be necessary for volatile assets and pension pots (which tend to include such assets) to be valued on an average/smoothed out basis.

c)  very difficult to avoid – this is not necessarily the case, as there could be a flight of capital out of the UK by non-domiciled HNWs.

As an economy, undoubtedly we need to raise more taxes to pay for the costs of the pandemic.  However, a productive way of achieving this is to encourage wealth generation.  That way, the cake as a whole is bigger, thereby increasing the government’s share. The risk with a wealth tax is that it has the reverse effect and discourages people from saving and investing in their futures.

Further, it is billed as a one-off tax – does Hansard note whether William Pitt the Younger promised the House the same for income tax raised to fund the Napoleonic wars?

The Wealth Tax Commission has recommended that households pay a 1% levy on wealth over £500,000 each year for five years. The tax would apply to a person's wealth -including their home and any other properties, pension pots, business and financial wealth. Any debts, such as mortgages, would be deductible

https://www.egi.co.uk/news/one-off-wealth-tax-could-pay-covid-bill/

H&S considerations – WFH

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

This article in the Sunday Times is a useful reminder to employers.

It tells the story of an individual (perhaps ironically an employment lawyer!) having an accident “at work” – luckily he was not too injured. “At work”, in this case, being his own home.

Whilst staff are working at home, employers should still think about their obligations under the Health and Safety at Work etc Act 1974. They should conduct a suitable and sufficient risk assessment of all of the work activities carried out by their employees – including homeworkers – to identify hazards and assess the degree of risk. If they don’t and an employee suffers an injury, he or she could potentially bring a personal injury claim against their employer arguing that they had breached their duty of care towards them.

– Do staff have the correct equipment? A safe place to work?

– Do staff feel able to “switch-off” and get sufficient down time?

This is certainly an area employers should think about seriously, especially with the latest government guidance encouraging people to stay working at home until March next year.

His experience illustrates one of the perils of working from home — and one of the potential liabilities for employers, which would usually carry out workplace health and safety checks

https://www.thetimes.co.uk/article/is-working-from-home-as-good-as-a-10-pay-rise-5hnb3ntz6

Tax simplification

Glass building walls curve gracefully, reflecting geometric patterns. The structure's sleek, modern design contrasts with a vibrant blue sky, while golden foliage accents the foreground.

A tax lawyer wanting simpler tax rules might sound like a turkey voting for Christmas. Nevertheless, from a macro perspective, I fully applaud the calls from economists, academics and business people for a “light regulatory burden”, although this is likely to come at a cost. As part of such a simplification, I would also urge the Government to avoid constantly tinkering with the tax rules as (amongst other key requirements) business needs a stable regulatory framework within which to operate.

However, in my view, reducing all tax rates is an unrealistic prospect. Of course, one way a government may achieve lower headline tax rates is by withdrawing or narrowing exemptions and reliefs, so beware the details if tax rates do fall – they are, as we know, where the devil resides. A lower and completely flat rate of VAT of 17.5%, or preferably 15%, for example, may have an initial appeal until you remember the sectors that benefit hugely from zero rating.

 

Rishi Sunak has been urged to embark on a major tax simplification. Proposals include cuts in corporation tax, a top rate of income tax of 40%, stamp duty of no more than 4% and a "light regulatory burden" as well as VAT at 17.5%.

https://www.egi.co.uk/news/sunak-urged-to-simplify-taxes/

BVI to make company details publicly accessible

Glass building walls curve gracefully, reflecting geometric patterns. The structure's sleek, modern design contrasts with a vibrant blue sky, while golden foliage accents the foreground.

The British Virgin Islands (BVI) has committed to creating a publicly accessible register of company ownership by 2023. Is Private Eye celebrating? In September 2015, it created an easily accessible online map of properties in England and Wales owned by offshore companies, and provided a link for readers to submit any additional information they might have about these properties.

On a more serious note, offshore companies are now broadly subject to tax on rental income on the same basis as UK tax resident companies, the comprehensive non-resident capital gains tax regime is in place since April 2019, and the advantages for inheritance tax (IHT) purposes of holding UK residential property through a non-UK entity have been removed.  As such, some investors may wonder whether it is simply easier to own a property though a special purpose vehicle (SPV) incorporated in their home jurisdiction (and thus save on the directors and other fees charged by the BVI advisors, and associated administrative burdens). 

This announcement may, alternatively, lead to an increase in onshoring i.e. using a UK holding vehicle, although this is likely to be appropriate predominantly for investments in UK residential property, as IHT is still a relevant consideration for individuals who indirectly own commercial property.

The British Virgin Islands (BVI) has committed itself to creating a publicly accessible register of company ownership by 2023 in a move welcomed by the UK government.

https://www.thetimes.co.uk/edition/news/british-virgin-islands-to-stop-companies-hiding-their-owners-kstzxjptq

UAE Retirement Visa: opening the door to UAE domicile?

The UAE has recently launched its long awaited Retirement Visa programme.

Eligible applicants must be older than 55 and have valid UAE health insurance. They must also satisfy at least one of the following financial requirements: (i) UAE real estate investment of a minimum AED 2 million; (ii) UAE savings of a minimum AED 1 million; or (iii) minimum monthly income of AED 20,000.

The Retirement Visa lasts five years with the option of renewal every five years on an indefinite basis, provided applicants continue to satisfy the criteria. This could continue until their demise.

The programme may encourage the UAE’s large expat population to build their long-term plans around the UAE, which may motivate them to hold more of their global assets within the UAE. This will enhance the importance of estate planning (for instance non-Muslims executing DIFC Wills).

The announcement is significant for British expats. Previously, British expats in the UAE have not been able to establish a UAE domicile of choice, as that requires them to make the UAE their home on a permanent or indefinite basis. That has prevented British expats from transferring non-UK assets into most types of trusts/foundations, for fear of triggering an immediate 20% inheritance tax charge on the value transferred (in excess of the nil-rate band of £325,000).

The launch of the Retirement Visa potentially changes this, if British expats are able to make the UAE their permanent or indefinite home. Establishing a non-UK domicile of choice is notoriously difficult, and UK legal advice is needed, as an individual’s domicile of origin is tenacious. However, the UAE Retirement Visa opens the door to what may be an interesting debate: whether long-term British expats are now able to establish a UAE domicile of choice, giving them the ability to transfer their non-UK assets to trusts or foundations without incurring UK inheritance tax.  

Whilst this presents a real opportunity for new tax planning, any planning should not be rushed, as individuals born in the UK with a UK domicile of origin are automatically deemed domiciled on their return to the UK, with a potentially adverse effect on the tax status of trusts they have settled.

The programme offers long-term residents of the city who are familiar with Dubai’s value proposition an easy and hassle-free retirement option

https://www.thenational.ae/uae/government/dubai-promotes-retirement-visa-programme-for-over-55s-1.1072149

Art businesses welcome High Court’s ruling concerning business interruption insurance policies

Black and white chess pieces are positioned on a chessboard, focusing on two knights facing each other amid rows of pawns, set against a blurred, neutral backdrop.

This week, the UK High Court clarified the interpretation of business interruption insurance policies in the test case brought by the Financial Conduct Authority (“FCA”) against a group of insurance companies.

The High Court largely found in favour of the FCA, who brought this case following a wave of refusals by insurance companies to pay out under business interruption policies in respect of Covid-related losses.

For many art businesses, whether policies do indeed cover the significant losses arising from the pandemic will be fundamental to their recovery and ultimately to their survival. 

There is currently a class action claim being brought on behalf of over 50 claimants (including galleries, museums and sole traders) against a group of insurers relating to these same issues. Whilst there is no “one size fits all” approach, and the ability to recover losses from insurers will depend on the wording of individual policies, this High Court ruling bodes well for the class action claimants and for art businesses generally. 

That said, it is highly likely that this week’s High Court decision will be appealed and this is therefore by no means the end of the matter.  

The High Court's ruling on the FCA case is good news for art businesses

https://www.theartnewspaper.com/news/uk-high-court-ruling-on-covid-19-business-interruption-insurance-could-offer-hope-to-art-firms

Is remote working from the beach a possibility?

Grey, cushioned chairs surround a glass coffee table in a modern office lounge. Wooden blocks serve as side tables. Large windows offer a view of greenery, adding natural light.

It seems that remote working is here to stay (for the time being at least).  Those with ‘cabin fever’ might be considering jetting off into the sunset with their laptop in hand (and a pina colada in the other).  However, this poses numerous issues for both employees and their employers.  For example:

1. Immigration approvals/visas might be required if an employee plans to work in a country for a significant period.

2. The employee could be required to pay taxes in-country and/or by performing services remotely create a permanent establishment in the jurisdiction for the employer for tax purposes.

3. The employee might be in breach of their employment contract.

Other issues around cyber security and data protection also exist.  So, in summary, sadly jetting off into the sunset won’t always be that easy.  Take advice first!

So if you're getting bored of the same four walls, are you allowed to pack up your home office and work remotely from another country?

https://www.bbc.co.uk/news/business-53524486

Sustainability – Big Players, Big Moves

Vertical garden flourishing on a building facade, with lush green plants covering multiple levels, set against a backdrop of tall glass skyscrapers.

The big boys and girls are coming to the Sustainability table it would seem with recent announcements from Alphabet Inc (Google it if you don’t know!) selling $5.75 billion of sustainability notes and now Visa announcing a $500 million green bond. 

Visa’s commitment is enhanced with the appointment of its first Chief Sustainability Officer in Doublas Sabo alongside its $500 million green bond offering the profits of which will be used to fund projects including upgrades to buildings, energy efficiency improvements, expanded usage of renewable energy sources, water efficiency projects, employee commuter programmes, and research and initiatives focused on sustainable consumer behaviours.

Meanwhile Alpabet’s earlier announcement confirmed that they hoped that the transaction would help develop this emerging asset class and with a focus on green buildings, clean transportation, circular economy and design, affordable housing and a commitment to racial equality they certainly seem to be taking a very large step in the right direction.

A recent Bloomberg Green article summed it up rather well by sharing a quote from James Rich of Aegon Asset Management commenting that “When Google does something people notice, whether they are in the tech space or not…”

Whilst i am more than partial to a large helping of cynicism about certain corporate actions I cannot help but be encouraged by these latest developments so it seems that there is now genuine momentum in this area so I’ll raise a glass and suggest that now just might be the time when things can be done with a little more long term thinking.

Global digital payment technology company Visa has expanded its commitment to sustainability by issuing a $500 million green bond.

https://www.powerengineeringint.com/renewables/visa-commits-to-environmental-sustainability-with-500-million-green-bond/

“Tax us” – a call to arms from the wealthy

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

In the UK last week, Boris Johnson played down the likelihood of introducing a wealth tax, and in his Summer Economic Statement, the UK Chancellor, Rishi Sunak, introduced tax cuts aimed at stimulating the economy rather than tax rises. In the meantime, however, 83 millionaires from around the world have this week signed a letter calling for higher taxation for themselves and other wealthy people to pay for the fall-out from COVID -19.

A recent YouGov poll in the UK indicated that 61% of respondents were in favour of a wealth tax for those with assets over £750,000, excluding their pensions or residential property. However, among other disadvantages, wealth taxes are expensive to administer, valuation of different types of assets can be difficult, and the imposition of such a tax risks discouraging inward investment to the UK at a time when it is most needed. Furthermore, a wealth tax is a tax primarily levied on “dry” assets, and releasing funds to pay it may prove difficult.

Nevertheless, the Institute of Fiscal Studies has recently launched a project looking at the desirability and feasibility of a wealth tax in the UK, and its findings may prove interesting reading for the Government.

Recent events, however, suggest that the UK Government’s sights may be set elsewhere in advance of the Budget in the Autumn. This week, Rishi Sunak asked the Office of Tax Simplification to review capital gains tax (CGT), considering, among other things, the interaction between the taxation of capital gains and of income.

We will have to wait to see whether this may signal an intention to raise the rates of CGT, possibly to re-align them with those of income tax. Currently , CGT rates are set at 10% (basic rate) or 20% (higher rate) for assets other than residential property, which is taxed at 18% or 28% respectively. These contrast with income which is taxed at 20%, 40% and 45% for basic, higher and additional rate taxpayers.

Alternatively, and more radically, the Government may be considering a flat rate of income tax and CGT. This suggestion was made in a recent report by Warwick University and the London School of Economics, looking at tax rates paid by the wealthy. The authors suggested that anyone earning over £100,000 could be asked to pay tax on their income and gains at a rate of 35%, potentially raising £11bn.

Clearly, one question arising from such a proposal is whether the suggested rate would be high enough to raise substantial sums for the Exchequer while also being low enough to encourage wealthy individuals to pay tax rather than seek to avoid it, or to move or invest elsewhere.

Another issue for the Government to consider is whether such a flat rate would be politically acceptable to the general public, or might be perceived as a tax cut for the wealthy.

Whatever route the UK and other Governments take to raise taxes, there is no doubt that funds are going to be needed worldwide to pay for the COVID-19 pandemic. While determining how best to achieve this, they may find some reassurance in the open letter that some wealthy people have recognised the contribution that they can make to this, and are keen to do so. 

A group of 83 millionaires are pleading in an open letter to be taxed more in order to pay for the damage COVID-19 had caused to economies around the world.

https://www.businessinsider.com/millionaires-ask-tax-them-more-fund-coronavirus-recovery-2020-7?r=US&IR=T

Frasers Group to withhold rents indefinitely

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

In a move that will surprise absolutely no retail landlords, Mike Ashley’s Frasers Group has announced that it intends to withhold rent “indefinitely” (or rather, until trading has returned to the levels envisaged when its vast portfolio of leases were entered into).

Such a position would, of course, leave major scope for debate in terms of when the Group – which expanded further with the £97m purchase of a 5% stake in Hugo Boss last month – would deem it appropriate to restart rental payments across their retail empire.

The announcement brings into focus the lack of teeth behind the Government’s “Code of Practice for commercial property relationships” – a voluntary set of non-binding principles designed to encourage a collaborative approach between landlords and tenants to navigate the economic uncertainty caused by Covid-19.

The Code of Practice, together with the moratorium on forfeiture for non-payment of rents and suspension of other landlord protections, were intended by the Government “to be exceptional, time-limited measures to deal with unprecedented times of acute market shock”.  

Frasers’ announcement last week implies an ‘all or nothing’ (or, more realistically, ‘some or nothing’) approach, which fails to account for the grey area between brands being unable to trade out of retail shops at all and a fully recovered, thriving retail market (it is debatable when this last was a reality). 

The retail market is in the middle of this grey area now that stores have been permitted to open for trade.  LandSec have reported that as of 30 June, 79% of their retail units in England are trading and in the two-week period since non-essential retail opened on 15 June, footfall was at 60% of levels for the equivalent period in 2019 and like-for-like store sales were at 80% of 2019’s equivalent figures.  

There is a perception that the real estate market generally has responded well to the challenge laid down by the coronavirus outbreak, with huge numbers of concessions having been agreed by institutional landlords to support their tenants in their time of need and this has been facilitated by much closer communication and collaboration between landlords and tenants.  

The continuation of this sort of constructive engagement and crucially, the willingness to make reasonable concessions, will be pivotal in ensuring the success of both landlord and tenants’ businesses going forward.    

Frasers Group has told landlords that it intends not to pay rents until trading “reaches a level” that parties would have “envisaged” when its lease agreements were drawn up.

https://www.egi.co.uk/news/mike-ashleys-frasers-plans-to-withhold-rents-indefinitely/

Should families adopt the same approach as Gucci?

The notion of shadow boards is not new, but I have in recent weeks had two virtual meetings (both with trust companies in the Channel Islands) where shadow boards have come up in the family context.

Shadow boards are usually comprised of younger individuals, and will be asked to carry out the function of a board, often in an observational or advisory capacity.

For those of us advising families on their wealth holding structures, a regular discussion point is how to begin to integrate the second or third generations (G2 and G3). Shadow boards offer a potential solution to this.

In a rapidly changing world, the importance of involving G2/G3 is increasingly recognised. For some families, the answer may lie in giving direct power to younger generation members, whether by appointing them as a director of a family investment company, or appointing them to the board of an operating business.

Alternatively, younger family members may be given power at a higher level, such as board membership on a Private Trust Company, or as a member of an offshore Foundation Council.

Other families deny younger family members direct involvement in the family business or its investments, but encourage them to be active on the family’s philanthropic boards.

As an alternative method of integration, shadow boards are an increasingly interesting option. Shadow boards composed of younger employees have been used recently by companies such as Gucci, and in Gucci’s case it coincided with a rise in profits.

Thus, in the family context, shadow boards could be useful committees, as well as incubators for future leaders. Whether they are given mere observer status, or more of an advisory role, is open to discussion. There is nothing to stop shadow boards being given formal powers over family trusts and companies, although that may trigger additional legal and tax considerations.

As the wealth of many families worldwide is gradually transferred in the coming years to G2 and G3, perhaps we ought to consider: should families go the same way as Gucci?

Gucci created a shadow board of millennials who regularly met with senior executives. Sales at Gucci went up during this period

https://www.forbes.com/sites/forbesbusinesscouncil/2020/06/10/why-having-young-people-on-corporate-boards-is-a-game-changer/

Adapting to changing real estate market… the Ghost Kitchen example

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

It’s fair to say that the commercial real estate sector may not ever have been described as innovative and certainly its ability to “flex” has rightly been called into question in the past.

How refreshing it is then to hear stories highlighting areas of flexibility. Ghost Kitchens are not a new concept but their place in the sector has taken on a very different relevance in recent times.

The ability to re purpose existing spaces to cope with increased demand in some areas and decreased or variable demand in others is possibly a matter of survival or liquidation for a vast number of operators and landlords / developers.

With increased numbers of people likely working from home into the foreseeable future can we expect to see repurposed spaces in commuter towns with pop-up cafes, restaurants and bars with pick up points for online shopping  ?

The thought of Ghost Kitchens at the heart of mixed community hub covering both pick up and delivery requirements  seems rather sensible. Having these concepts adding to the sense of neighbourhood is rather appealing and with more and more office workers being turned away from a 1 or 2 hour each way commute 5 days a week and with increased pressures on the logistics of warehouse to home delivery its seems there is a very real opportunity to provide new experiences and uses incorporating online shopping collection points in what we would have previously labelled “commuter belt” towns and villages. 

Fingers crossed to see this kind of innovation in the UK coming to a neighbourhood near you…..

For restaurants that have already established themselves in the physical world, ghost kitchens can be a way to adapt to shifting trends. Frjtz, a San Francisco restaurant beloved for its Belgian-style fries, closed its brick-and-mortar location in the Mission in 2019, after nearly twenty years in business, and now operates—delivery only—via CloudKitchens. Delivery-only kitchens can also work as a sort of triage effort for restaurants that are doing well.

https://www.newyorker.com/news/letter-from-silicon-valley/our-ghost-kitchen-future

Restoration beyond recognition

After a valuable copy of Murillo’s Immaculate Conception joined the list of paintings left disfigured after having undergone restoration works, experts in Spain are calling for the laws surrounding restoration to be tightened.

This botched job not only gives rise to questions of liability and whether regulation should be put in place to afford owners (and their works) greater protection, but it may also lead to wider discussion about the impact of restoration on a work’s identity and authenticity. Restoration is vital to protecting art and enables a work’s lifespan to transcend the generation of its creator, but where is the line between preservation and replication?

A private art collector in Valencia was reportedly charged €1,200 by a furniture restorer to have the picture of the Immaculate Conception cleaned. However, the job did not go as planned and the face of the Virgin Mary was left unrecognisable despite two attempts to restore it to its original state.

https://www.theguardian.com/artanddesign/2020/jun/22/experts-call-for-regulation-after-latest-botched-art-restoration-in-spain

German lessons on VAT?

Glass building walls curve gracefully, reflecting geometric patterns. The structure's sleek, modern design contrasts with a vibrant blue sky, while golden foliage accents the foreground.

Will Rishi Sunak follow the example of the German government, which has announced that the German VAT rate will be reduced temporarily for the period from 1 July 2020 to 31 December 2020 from 19% to 16% (and the reduced rate from 7% to 5%)?  Could the UK standard rate be dropped similarly to 15% (as it was during the financial crisis for the period from 1 December 2008 to 31 December 2009)? Alternatively, should VAT reductions be targeted to help specific industries, i.e. leisure and hospitality?

Further, should fiscal incentives be focused on social and environmental objectives by providing incentives to builders, landlords and property owners to install “green” energy efficient technology into new and existing buildings?

a further fiscal stimulus for the UK economy in the weeks ahead

https://www.ft.com/content/b6cc50e8-a865-48d0-b21e-a825ec865b69

Taxing the wealthy without deterring investment – would a flat rate be the solution?

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

A report by Warwick University and the London School of Economics looking at tax rates paid by the wealthy, and discussed in the article below, raises an issue that is likely to give rise to much discussion, particularly as the country is facing a potential financial crisis – that those tax rates are often (though not always) significantly lower than the rates paid by lower earners.  

The authors of the report suggest a possible solution to this anomaly that may raise additional tax. The question is whether their solution will appeal to the UK Government, and whether it would be acceptable to those it targets.

Clearly the UK Government, like others around the world, will need to find politically and socially acceptable ways of raising funds in the wake of the coronavirus pandemic. Estimates from the Office of Budget Responsibility already suggest that costs resulting from the crisis, including measures put in place to support individuals and businesses, could be as high as £298bn for this financial year alone.

Low and middle earners are already experiencing financial pain as a result of furloughing, pay cuts and redundancy. At the same time, to boost the economy as the retail and commercial sectors start to open up, the UK needs people to start spending. Raising general taxation risks harming the economy further.

While the Government will rightly not want to alienate wealthy investors and risk sending them overseas, it may decide that raising their taxes is unavoidable, politically and economically.

A wealth tax has been floated as an idea. However, wealth taxes are notoriously unpopular, and principally tax “dry” assets, raising cash flow issues.

A rise in the rate of capital gains tax (CGT) is another option. After all, prior to 2008, CGT was taxed at an individual’s marginal rate, 40% in many cases. However, investors have become used to far lower tax rates in the years since, and a rise may not be welcomed.

As an alternative, the authors of the report suggest that anyone earning over £100,000 might be required to pay tax on their income and gains at a rate of 35%, potentially raising £11bn.

While this is an interesting idea, the Government would have to consider whether such a measure would increase the overall tax take long term. Would such a rate be low enough to deter tax avoidance or capital flight, but high enough to be politically acceptable to the general public? Would the additional revenue that may be raised justify any resulting loss of investment from overseas?

 There is little doubt that revenue will have to be raised somehow, but whether this proposal may form part of the Chancellor’s plans for doing so remains to be seen.

the average person with £10m in total remuneration had an effective tax rate of just 21 per cent – less than someone on median earnings of £30,000.

https://www.independent.co.uk/news/business/news/wealthy-uk-tax-cost-rate-capital-gains-income-tax-a9566211.html

Major players in the UK art market take on the insurance sector

Black and white chess pieces are positioned on a chessboard, focusing on two knights facing each other amid rows of pawns, set against a blurred, neutral backdrop.

In circumstances where several businesses’ post-pandemic survival is hanging in the balance, a group of over 50 claimants (including galleries, museums and sole traders) are preparing to bring a class action claim against insurers for failure to pay out on business interruption policies. 

There has already been considerable political pressure placed on insurance companies globally to pay out on such policies (as there was in the aftermath of 9/11, giving rise to a strange sense of déjà vu). It will be interesting to see on which side the UK Court comes down, and how it balances individual circumstances and policy wordings with more far-reaching practical and economic considerations. 

The outcome of this case could also have an impact on the stream of frustration and force majeure claims with which the Court is expected to be inundated. Litigators operating across all sectors are therefore going to want to watch this space carefully.

“To be told vital cash flow from a resource on which you thought you could rely was no longer available could now severely hinder our route to survival. I know I am not the only business having these sleepless nights and it seems remarkable that, having shown years of loyalty paying expensive premiums, our insurer refuses to recognise these unprecedented times and support the businesses that have helped keep their balance sheets so profitable.”

https://www.theartnewspaper.com/news/insurers-hit-by-art-world-class-action

Hong Kong migration to and investment in the UK: the more things change, the more they stay the same.

At the beginning of this year, I began writing a blog for the firm’s website reflecting on the growing demand from our Hong Kong based private clients for advice regarding the movement of people and capital to alternative jurisdictions in the wake of the city’s 2019 anti-government protests. With the UK being a popular choice for many of them, my blog intended to highlight the associated UK tax and immigration issues that our clients had encountered and the need for proper planning.

These issues quickly took a backseat in February/March when the COVID-19 pandemic took hold globally and ground to a halt international movement. And so, my blog has not seen the light of day…yet.

This may change soon, now that political issues and unrest have returned in Hong Kong as it emerges out of the pandemic. Many families in the region are starting to revisit their original plans to move to and/or invest in the UK again. A rise in UK real estate enquiries has already started as this SCMP article indicates, spurred on by the UK government’s announcement last week of plans to grant enhanced UK immigration rights to British National (Overseas) passport holders if the new security law is passed.

It is therefore vital that Hong Kong private clients interested in a move to or investment in the UK seek advice on UK tax and immigration rules at an early stage and, where relevant, put in place robust and appropriate pre-arrival structuring and planning. A few key considerations include: the various UK tax implications for overseas investors in UK real estate; complex considerations for those relocating to the UK and becoming UK tax resident especially if they are non-UK domiciled; and the impact of UK residence on the wider family, dynastic structures and family governance arrangements. 

Even though the post-coronavirus world might feel like it’s completely changed, these considerations will be more relevant now than ever.

She said the number of inquiries about homes in the UK from Hongkongers has returned to where it was between May 2019 and the end of January, a period during which the city was rocked by violent street protests over a now-abandoned extradition bill. The number of inquiries during those turbulent months was 10 per cent higher than before the extradition bill was introduced.

https://www.scmp.com/business/article/3087329/demand-uk-property-set-rise-boris-johnson-promises-visa-shake-benefit

“Covid the catalyst” in BTR

Last month, we saw Richard Simpson, Chief Executive of Watkin Jones, describe Covid-19 as BTR’s “coming of age moment“. Today, at Built Environment Networking’s online conference on Housing & BTR, we heard similar sentiments e.g. Ed Ellerington of Packaged Living describing Covid-19 as a “catalyst” that will see more appetite in the sector. Time will tell. 

One thing continues to resonate. The theme of flexibility looks set to play a key part in sector success- on a number of levels. 

  1. Flexibility in product: Simpson mentions it. Plus it is not just about about multi-family apartment blocks, but also single family housing. It was interesting to hear that Packaged Living’s single family housing fund is set for imminent launch (perhaps a good time?). BTR product needs to cater for all.
  2. Flexibility in pricing: It is not just about high end, urban apartment blocks. It was interesting to hear today from Jamie Kellett on the BMO/ Home Group low-to-middle market strategy (launched in January- again perhaps not a bad time?). BTR pricing needs to cater for all.
  3. Flexibility in design: The rapid impact of Covid-19 has highlighted the need for adaptability e.g. are BTR developments primed for more WFH? As mentioned by Ellerington, there is certainly one area that can accommodate flexibility- communal amenity space. BTR product needs to adapt to changing customer demand.

Covid-19 has only enhanced the need for flexibility. From plenty of fascinating debate today, it seems many are already wise to and confronting the challenge. 

“Firstly, people want more flexibility on their tenancies – BTR puts the consumer first and offers a range of tenancies,”

https://www.propertyweek.com/news/watkin-jones-chief-btr-sector-will-offer-post-lockdown-flexibility/5108044.article

BN(O) Passports: Will they live up to the promise?

The news this week that British National (Overseas) (“BN(O)“) passport holders could be granted extended UK visa-free access and enhanced immigration rights with a pathway to British Citizenship is welcome news for many Hong Kong private clients.

Currently, the vast majority of people in Hong Kong would have to apply for a UK visa in order to move to the UK for more than 6 months. The Tier 1 (Investor) Visa has been a popular option for many of our clients, as it grants the most flexibility for them and their dependant spouses and minor children to live, work and study in the UK, and potentially later acquire Indefinite Leave to Remain here and British Citizenship.

The potential for BN(O) passports to offer another option of relocating to the UK is therefore an interesting one. However, details of the UK government’s plans for such passports are scarce at present, leaving more questions than answers.

One important question for many is whether the potential benefits of the passport will extend to family members? Hong Kong residents born on or after 1st July 1997 cannot apply for BN(O) status, and children cannot acquire this status from their parents. While the UK government has indicated that dependants of BN(O) passport holders (presumably spouses and minor children) could benefit, this provides little reassurance for many with adult children who may have a young family of their own. So those in the city concerned about the future of their children and future generations without BN(O) status will have to continue to wait with bated breath for answers.

What is a BN(O) passport, who in Hong Kong is eligible and how will holders be affected by London’s plan to relax visa rules?

https://www.scmp.com/news/hong-kong/politics/article/3087454/what-bno-passport-who-hong-kong-eligible-and-how-will

Real estate lenders – what do they need? Certainty.

For the last 10 weeks or so we have had the ‘great debt pause’ whilst lenders look after their existing borrowers – deal with waivers, amortisation holidays, interest deferrals, agree tenant variations, extend completion dates etc.

Lenders need to lend. So the ‘great debt pause’ must come to an end at some stage soon. Although the obvious fall out of that is more equity upfront and higher pricing no doubt.

Snippets here and there of new financings are generally refinancings with existing lenders or existing schemes which may mask the real new deal stories. 

With so many different types of lenders now with different risk appetites and stressers, the common factor is the need for certainty. Certainty of income, certainty of value and certainty of exit. When that returns as we move into the brave new world, so the lenders can start to find that certainty.

Overall, the uncertain market outlook means lenders are reluctant to enter new lending opportunities, says Brookland’s Anker Parson. “The key obstacle for banks to start returning to more normal levels of lending is therefore one of short-term uncertainty rather than liquidity or capital or the lack thereof.”

https://www.recapitalnews.com/covid-19-will-test-banks-appetite-for-commercial-real-estate-lending/

Amazon — The Infrastructuralist

I finished a recent post with a comment that without flexibility and change in the retail / leisure sector we could see new operators simply find their own way to market rather than relying on the traditional “mall” offering. 

Watching the Amazon / JC Penney rumours continue to grow certainly adds to the wider discussion and we should be watching with interest – their foray into real estate with Amazon Go potentially being a precursor to something much more significant.

Those that may think this is light years away here in the UK might cast a glance towards Clas Ohlson who are now removed from the UK high street and selling its products directly through Amazon.

It is also reported that Amazon will be looking to start selling its cashierless “Amazon Go” technology to retailers surely the start of a journey towards greater integration / collaboration.

As a company built from the ground up on tech / data its fair to say that if Amazon do seek to “control the technological operating platform for the shopping mall of the future” then it could make for a very different global retail experience and landscape.

An entire mall could have an Amazon front end web experience, each store could run on any number of Amazon tech platforms (from GH Lab-style mobile scan-and-go below to Amazon Go-style computer vision), returns could all be processed at one or multiple Amazon return desks (thanks, Kohl’s, for teaching Amazon how to do this), and every retailer within the mall could also co-share fulfillment out of an onsite Amazon warehouse similar to how they share Amazon distribution facilities for online sales now.

https://www.forbes.com/sites/christopherwalton/2020/05/29/the-value-of-amazon-buying-jc-penney-could-far-exceed-that-of-buying-target-kohls-or-anyone-else/#278a9c2cbcd9

The time is now…

Vertical garden flourishing on a building facade, with lush green plants covering multiple levels, set against a backdrop of tall glass skyscrapers.

Last week, Great Portland Estates launched a new “sustainability statement of intent“, comprising four ESG pillars. One pillar is a commitment to decarbonise the business to become net zero by 2030. This follows the REIT’s £450m “ESG-linked” financingearlier this year, with potential margin adjustments linked to KPIs, including decarbonisation. It is a commendable start to the decade.

As GPE was making its announcement, I was leading a discussion at Forsters on the state of regulation in the commercial sector. As a reminder, the government has consulted on an increase in the minimum MEES threshold to a B (or alternatively a C) by 2030. The BPF is fully behind the shift. See my previous blogs here and here. A regulatory shift upwards is inevitable. 

Are building owner’s anticipating this change? By 2030, we are set to see a much wider proportion of the built environment fall within the scope of MEES restrictions on letting. At the same time, we are seeing a plethora of sale-and-leasebacks/ reversionary leases, where landlords are committing to occupational arrangements that span the 2030 date, including energy inefficient stock. In these circumstances, arguably the time to think about this regulatory shift is now. In short, who is going to pick up the cost of improvements down the line, landlord or tenant?  

GPE seem very much ahead of the game. As Chief Executive Toby Courtauld said: “When we think about strategy, it may well be that over the next few years we look at certain buildings that we are unable to retrofit – not just green roofs and similar, but actually more fundamentally where we think the carbon footprint is only going to get worse – and I’m sure it will be the case that we will make strategic decisions based upon that sort of input, which historically we wouldn’t have done”. Is there set to be more talk of “evicting” energy inefficient stock from portfolios? As MEES thresholds increase in law, and ESG continues to gain prominence on the business agenda, surely the answer is yes? Perhaps even on a par with the current rush to minimise portfolio exposure to retail…?

Great Portland Estates buildings that are not suitable for retrofitting to a new set of standards launched by the REIT today could find themselves evicted from the portfolio

https://www.egi.co.uk/news/gpe-puts-climate-adaptability-and-wellbeing-at-the-heart-of-its-strategy/

London offices – The Good, the Bad and the Reality

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

I have just read the recently released Deloitte London Office Crane Survey, given all the noise currently emanating on the future of offices post COVID,  there is not much revealed in the well researched survey that to my mind is altogether surprising.  Here are my main takeaways for offices in London for landlords/developers:

THE GOOD

Pre COVID office vacancy rates were historically low. The supply line for new build stock is low.  The market should be able to absorb the increase in office supply in the short term. Never underestimate the national and global draw of London.  The need for central office space will remain – what will change is the quality requirements of that space.

THE BAD

Economic uncertainty.  Development by its nature is risky – there is now the added unknown of the increase of construction costs reflecting the potential lack availability of labour and materials.  There is the extra risk for developers that going forward contractor tenders will exclude the impact of COVID related measures – if there is a second COVID spike and a reintroduction of lockdown measures a developer may be in a vulnerable space.   As importantly what will be the tenant demand for space against a background where more of the workforce will be working from home and business balance sheets have taken a hammering?  

THE REALITY

Offices will remain essential as a forum for human interaction, the exchange of ideas and the building of business culture and working relationships.   Occupiers will still want high quality, sustainable, “safe” office space.   For businesses to thrive they need to attract the best talent – the statement that now candidates will not just interview the business but also the premises of that business is a pertinent one. 

Short term (6-9 months) – as evidenced in the Survey with so much uncertainty there will be a steep decline in the commencement on site of new office schemes. Long term – the development of quality London offices will be back.

The London office development sector is in a funny place. Before the coronavirus pandemic, with Brexit apparently sorted, confidence surged and new development picked up. Today, occupiers aren’t abandoning the need to move entirely, but confidence among developers is on the floor.

https://www.bisnow.com/london/news/office/everything-you-need-to-know-about-london-office-development-in-7-numbers-104485?utm_content=outbound_newsletter1%2coutbound_newsletter1

Success for retailers in ATM dispute – Cardtronics v Sykes

Yesterday the Supreme Court handed down its much awaited decision in Cardtronics UK Limited (and others) v Sykes and others (Valuation Officers). In what is a fundamental decision to the law on ratings, the Supreme Court found that ATMs should not be separately assessed for business rates, regardless of whether they are situated inside or outside of a retail store.

When considering the significance of an ATM at a retail store, and whether it was to be considered a separate hereditament, the Supreme Court found that the presence of an item of non-rateable machinery, such as an ATM, should not be ignored when determining whether a separate hereditament exists. However, it went on to say that whilst, once a machine has been installed there should be no difficulty in defining the boundaries of a fixed ATM site with sufficient precision to satisfy the geographic test of self-containment, the retail stores had not, in any of these cases, parted with possession of the site of the ATM.

It added that both the retailer and the ATM provider derive a direct benefit from the use of the ATM site for the same purpose and share the economic fruits of the specific activity for which the space is used. Therefore, the ATMs should not be separately assessed for business rates.

This finding will be welcomed by retailers, some of whom can expect a large refund on rates already paid. However, with 34,000 rates appeals awaiting this decision, its impact will be far reaching and, particularly given the current pandemic, smaller retailers will no doubt be glad of the additional money but the requirement for local authorities to refund what is thought to be around £430 million could be detrimental.

Real estate adviser Altus Group predicted that retailers will receive £428.69m in reimbursement for business rates bills on more than 15,000 cash machines in England and Wales since 2010.

https://www.propertyweek.com/news/supreme-court-win-for-retailers-in-430m-atm-business-rates-case/5108016.article?utm_content=Daily+Daily+News+CID_046517677cf097b306362c106afa48f2&utm_term=Supreme+Court+win+for+retailers+in+430m+ATM+business+rates+case

New restrictions on terminating supply contracts

Clients who are owed money under supply contracts may no longer be entitled to rely on clauses that provide for termination on an insolvency event, thanks to new legislation being introduced by the UK government.  They should consider carefully how to manage contractual risk.

This Bill will do this through: introducing a new moratorium to give companies breathing space from their creditors while they seek a rescue prohibit termination clauses that engage on insolvency, preventing suppliers from ceasing their supply or asking for additional payments while a company is going through a rescue process introducing a new restructuring plan that will bind creditors to it

https://www.gov.uk/government/news/government-introduces-legislation-to-relieve-burden-on-businesses-and-support-economic-recovery

Succession: TV Show or Reality in Family Businesses

Lack of trust, lack of common purpose, control and avoidance of difficult conversations.  Essentially the plot lines for the hugely compelling TV drama, Succession  but also too often the reality in family businesses.  The payoff of aligning a family business’s shared purpose, mutual trust, and collective decision-making produces results  in business performance, family relationships, and a more effective force for positive social impact.  Forsters corporate and private client lawyers have enormous experience in helping family businesses navigate these complex issues and in designing structures which bring the solutions together into a governing framework.

Four common fault lines that lead to family business breakdowns: Lack of trust: Only 30% of family businesses survive into the second generation. This means that in 70% of cases, the family loses control of the assets. A lack of trust and communication are responsible for 60% of that failure rate. Lack of a shared purpose:  Family members in different generations may have different values, a shared purpose can help employees to align their values and interests in support of a common mission. Control vs. care: Family businesses can go under for many reasons, including conflicts over money, poor management, and fighting about the succession of power from one generation to the next. Cordial hypocrisy: Family members too often avoid tough issues by avoiding meaningful conversations. Left unaddressed, these tensions increase distrust in families and obstruct performance in their organisations.

https://hbr.org/2020/05/4-tensions-in-family-businesses-and-how-to-work-through-them?ab=hero-subleft-2

The growth of datacentres as a thriving real estate investment class

The rapid adoption of home-working into our lives has given birth to a growing population of Zoom experts, seamlessly slipping between shared screen slide-decks and polished presentations, delivered in front of a carefully curated selection of the best high-brow literature we could find in our lofts. 

The lockdown imposed as a result of COVID-19 has given rise to a mammoth surge in our use of internet infrastructure, with weekday broadband traffic increasing by 35-60% since lockdown began, according to Ofcom.  Nowadays, where there is a demand for data, there is a demand for datacentres (i.e. buildings dedicated to housing computing and telecommunications systems) to store and process that data.

Recent years have seen a huge increase in the development of datacentres by technology giants such as Amazon and Google, as well as an influx of investment into the sector by banks and investment funds. This trend looks set to continue, with almost all the respondents (92%) to a pre-COVID 19 survey conducted by DLA Piper last year confirming that they expect investment in datacentres to increase over the next 24 months.

Datacentres have been described as ‘the new beachfront property’ from an investment perspective by Tom Walker from Schroders on the AJ Bell Shares: Money and Markets podcast, although the ideal locations for such buildings couldn’t be more different – with cool climates helping to regulate the huge amounts of heat generated by a busy datacentre.  Where datacentres are located in warm areas, massive amounts of water are required to control their temperatures. For instance, plans by Google for a datacentre in an Arizona desert are said to require 1m gallons of water per day to cool the facility. By comparison, a typical Arizona household is said to only use up to 15,000 gallons per month.

Environmental concerns over the depletion of local water supplies have led to some inventive solutions, with Microsoft developing an underwater datacentre off the coast of the Orkney Islands and a number of tech companies developing facilities around the Arctic Circle in a bid to reduce their reliance on natural resources to keep their datacentres cool.

The UK can’t quite boast the frozen climate of the Arctic Circle (despite what an icy winter’s morning in Aberdeen would have you believe) but with real estate investment in this sector already growing in similar nations such as Germany, Ireland and the Netherlands, perhaps our relatively cool climate coupled with our established physical and financial infrastructure will see the UK become an attractive destination for real estate investors looking to take advantage of our new found zest for Zoom.

The need to build facilities to store data is increasing exponentially, making this one of the most dynamic sectors in the industry but also one with an extraordinarily high entry level. So where are the opportunities and how are firms investing in them?

https://www.egi.co.uk/news/data-centres-accommodating-the-zettabytes/

Is possession really nine-tenths of the law?

Black and white chess pieces are positioned on a chessboard, focusing on two knights facing each other amid rows of pawns, set against a blurred, neutral backdrop.

In what appear likely to be bitterly fought proceedings, the heir to the Bic pen fortune demands the return of millions of dollars of art from his wife, Baroness Veronique Bich. He is claiming that a trust of which she has never been a beneficiary is the rightful owner; meanwhile the 28 works in question remain on the walls of apartments in New York and Paris that she occupies. It will be interesting to see in whose favour the Delaware Court rules, and whether these notable works from the Bich family collection ever do form part of a separation agreement between the estranged couple.

Bruno Bich, the heir to the Bic pens fortune and the company’s former CEO, is suing his estranged wife over a Pablo Picasso painting, a couple of Alberto Giacometti sculptures, and several other works of art.

https://news.artnet.com/art-world/bic-pen-heir-suing-wife-art-1862076

Drone technology and ‘socially-distanced’ logistics

The first stage of responding to the coronavirus pandemic has been focussed on understanding the virus and how best to contain it, but as new hospital admissions slowly start to stabilise and advances begin to be made in the testing and – hopefully – treatment of the virus, the focus will inevitably shift towards the nation’s distribution networks and their readiness to roll out medical supplies to meet what will be an unprecedented level of demand.

The challenges of social distancing have already changed the way we expect ‘last metre’ delivery to take place, with the nation quickly adapting to the notion of mysterious packages being left on doorsteps by an ever-increasing army of delivery drivers. Perhaps a similar leap of faith will lead to the adoption of new technologies in respect of our ‘last mile’ logistics.

Drone technology was being trialled for the transportation of medical supplies in Switzerland as long ago as 2017 and in recent weeks, Transport Secretary Grant Shapps has announced the acceleration of existing plans to create a drone supply network between Southampton and St Mary’s Hospital on the Isle of Wight.  These plans are designed to address logistical difficulties on the island, which have been exacerbated by the on-going COVID-19 crisis. Personal protective equipment is being shipped during the initial phase of testing with a view to using these drones to make vital deliveries of blood and organs in the future.

The use of drone technology to make deliveries as opposed to traditional, more labour intensive, logistical solutions complements the on-going need for social distancing, as well as reducing the reliance on road networks, which could become busier again in the weeks and months to come as employees return to work by car, due to concerns over the safety of public transport.

The last few years have seen a large increase in the amount of rooftop real estate being acquired across London and other major cities for potential use as hubs for commercial drone services, which will become attractive as and when aviation regulations begin to permit the widespread use of commercial drones in the (previously) busy airspace above our heads. If the unique medical and logistical demands posed by the COVID-19 outbreak lead the Government to accelerate their review of the regulatory framework in this area, even more landlords might find themselves looking upwards to re-appraise the value of their currently underutilised rooftop spaces.

The UK will trial using drones to deliver urgent medical supplies and equipment as part of the fight against COVID-19.

https://www.businessinsider.com/uk-drones-blood-medical-delivery-2020-4?r=US&IR=T

Let’s reward our key workers and tackle issues within the property sector at the same time

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

The weekly clap for key workers and the street parties for VE Day certainly indicate that a sense of community spirit is returning to these shores.

We need to ensure that this renewed sense of community spirit is channelled into dealing with issues that have blighted the property sector for years.

It is great to see the forming of “Homes for Heroes”, a national alliance of housing associations, public figures, business leaders and manufacturers of modular homes which is calling on the government to build 100,000 modularly-constructed affordable homes for key workers.

This initiative will reward key workers as well as help to combat the housing crisis. 

A campaign calling on the government to build 100,000 modularly-constructed affordable homes exclusively for keyworkers has been backed by heavyweights from across the residential sector.

https://www.propertyweek.com/news/industry-stalwarts-call-for-100000-homes-for-key-workers/5107879.article

Tax rises on the horizon?

Glass building walls curve gracefully, reflecting geometric patterns. The structure's sleek, modern design contrasts with a vibrant blue sky, while golden foliage accents the foreground.

The current bail-out measures will have to be paid for eventually by us all as taxpayers. There are many questions: when, by whom and how?  I would urge the Chancellor not to increase taxes in the short term – the recovery may be fragile initially.  In fact in the short term there should be incentives which could include: PPE equipment bought by employers being zero rated; and capital expenditure to promote social distancing at work should all be tax deductible in year one – without using up a business’s annual investment allowance (AIA). The bail-out measures had to be enacted fast and in a blanket way, but the long term balance of tax incentives for some particularly hard hit sectors (e.g. restaurants, theatres)  versus tax increases for those not so greatly impacted (e.g. internet service providers) should be measured, proportionate and thought through.  We might be “all in it together” now but a nuanced approach is needed going forwards.

An internal Treasury assessment has proposed a £30bn "policy package" of tax rises and spending cuts...

https://www.egi.co.uk/news/tax-rises-planned-as-furlough-scheme-extended/

Lessons of 2008 – real estate will bounce back

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

I am an optimist.  As someone involved in the real estate sector I act for clients who by their nature are optimistic – why develop or buy a building if one queries that the building in question will not make you money.

In 2008 the fear was the collapse of the banking and financial system.  The fear now is the impact COVID will have on GDP and how the virus and associated lockdown affects everyone – short term the impact will be worse than it was in 2008 – its scary out there at the moment.

Notwithstanding that, my view is that a vaccine will be developed (even if this is 12/18 months away) and we will be back to normalcy or a new form of normalcy and capital (of which there is a wall of out there) will return to the real estate market in a significant way.  How we cope in the interim will be a challenge – businesses will need to be relevant and resilient.   However what 2008 taught us is that real estate will be back and the optimists in the 2008 gloom proved correct. 

What The Sentiment Of 2008 Can Teach Us About The 2020 Crisis

https://www.bisnow.com/london/news/capital-markets/what-the-sentiment-of-2008-can-teach-us-about-2020s-crisis-104340?utm_content=outbound_newsletter1%2coutbound_newsletter1

Productivity at home

A rather more positive story by Personnel Today about employees remaining productive during the lock-down. With updated government guidance expected imminently – which will very likely require employers to keep those who can work from home at home – this article is reassuring.  It also reminds us of the importance of keeping in touch with staff whilst they are working remotely – engagement is key.

Employees have managed to remain productive in most organisations despite the challenges posed by coronavirus, according to a survey by Willis Towers Watson.

https://www.personneltoday.com/hr/workplace-productivity-not-suffered-during-coronavirus-survey-claims/

How the pandemic will drive litigation

This article neatly sums up the competing forces that will affect commercial litigation in the coming months.  For some clients, the coronavirus pandemic will crystallise the need to pursue claims that might otherwise have been ignored.  For others, the pandemic will have exhausted their resources to pursue claims.  Access to litigation funding combined with expert legal advice will provide a path through.

“While we hate the idea of trading on human misery, the reality is that the world post-Covid is going to be a world with an awful lot of disputes and less corporate liquidity to pursue those disputes,” said Christopher Bogart, chief executive of Burford, one of the world’s biggest funders of litigation, in a recent call with analysts.

https://www.ft.com/content/48d230ae-8df5-11ea-9e12-0d4655dbd44f

Webinar: Occupier Engagement: Nice-to-have or Necessity? – 5 takeaways

On Tuesday 5 May 2020 I joined Bisnow’s webinar Occupier Engagement: Nice-to-have or Necessity? which brought together speakers from British Land, Deutsche Bank and Equiem. It was an insightful and focused 30 minute session, looking at how landlords and tenants can work together to streamline the return to the workplace, with a particular emphasis on the role of technology.

Here are my 5 takeaway points:

1. The return will be phased. With the need to maintain social distancing, businesses need to consider how they can get staff safely back into their workplaces, which have traditionally been based on hyper dense floor space ratios. Employers have a duty to the welfare of their staff and also a vested interest in avoiding a mass outbreak among their employees. Firms will have to think carefully about who benefits most from being in the office to fulfil their role – those for whom close collaboration has the biggest impact on productivity. It may be that a shift pattern and phased start times are part of the solution, but following lockdown many employees may need to continue working from home. 

2. The role of technology will be key. Social distancing in the workplace will be one of the main challenges faced by landlords and their occupiers. The use of technology will be needed to help make the workplace a non-contact environment. From IoT enabled sensors, to touch free access, proptech will have a leading role in getting us back into our offices. Can meeting room booking software be utilised to reserve a specific desk or even a cycle space, to help maintain social distancing? Can businesses arrange for an at desk click-and-collect lunch service, to mean staff can avoid unnecessary interactions? Whatever the challenge, technology is well suited to assist in finding solutions to avoid unwanted physical contact. 

3. Virtual community is here to stay. The rapid, unexpected and compulsory rise in homeworking has spawned a vast array of innovative ways for staff to socialise in the virtual space. From online pub quizzes, to Zoom bingo and cocktail hour over Skype, firms are getting creative and people seem to like it. Participation rates are reported to be up, even against traditional in-person social events. With homeworking now an established part of everyone’s working routine, firms will have to maintain and grow their virtual communities. 

4. Less space, better space. What does the future look like for occupier demand for office space? Businesses are likely to seek to capitalise on homeworking as a way of controlling property costs. However, for every employee at home, you cannot simply get rid of their desk. We are likely to see a cultural shift towards less dense occupational ratios, even after social distancing has stopped being mandatory. Hot desking may also become a less popular choice, as health and hygiene become business priorities. Once businesses consider ‘what is the office for?’ we may see more floor area being given over to collaboration and project areas. As such, occupiers may take less space, but this will take time to work its way into the market, as lease events occur. 

5. How will landlord’s build confidence and bring joy into their buildings? The challenge for landlords of multi-tenanted buildings following lockdown will be how they implement strategies and work with their occupiers to give staff the confidence to return to their workplaces. Their answer to this question will be a key factor in the landlord and tenant relationship going forwards. However, landlords also need to consider how they make their buildings places people want to be: art, music, events? Could office space face the same challenges retail has been experiencing with the rise of on-line? Does the office need to become a ‘destination’? 

Speakers:

Julian Barker, Head of Smart Places, British Land

Kathryn Harrison-Thomas, Managing Director, Deutsche Bank

Gabrielle McMillan, CEO, Equiem

Hosted by: Mike Phillips, UK Editor, Bisnow

How can employers and landlords prepare now for a more seamless quarantine-reintegration?

https://www.bigmarker.com/bisnow/Occupier-Engagement-Nice-to-have-or-Necessity?utm_bmcr_source=Website

Its about us and our buildings from now on

I love the quote in this article from the Harvard Business Review about employees interviewing us and our buildings. It’s a thought provoking way to look at how we configure our offices on a return to work. 

I’m sure many business owners will be considering distributing PPE (if any can be found), working out social distancing measures (tape on the floor and perspex screens) and perhaps alternating  teams WFH. It’s an excellent opportunity to look at all the other things that make for a healthy workplace – natural light, healthy air flow, clean carpets, less dust – all of which contribute to sick days amongst employees and colleagues. Our use of office space is about to dramatically change and the future stars businesses wish to recruit and retain will become much more discerning about employers and the space they occupy.

Further, consider the talent you will want to attract in a post-Covid-19 world. Today, businesses need to understand that prospective hires will not just be interviewing you, they will be interviewing your buildings. And you can be sure that future employees will be paying close attention.

https://hbr.org/2020/04/what-makes-an-office-building-healthy

Georgia retail and restaurant blues

Skyscrapers rise into a cloudy night sky, their windows glowing with interior lights. Nearby buildings reflect on the glass surface, creating an urban atmosphere.

As the quote states Georgia has been one of the first US states to relax its economic lockdown rules. It appears that for many restaurant and retail operators the re-opening has not gone well. By way of example, the public is not rushing back to restaurant dining and I would expect a similar behavioural pattern in the UK. 

However my main takeaway from the article is that it highlights the importance of landlords and tenants communicating frankly and transparently with each other at the earliest opportunity. A tenant rental default with no landlord communication or the landlord receiving a proforma letter from the tenant claiming financial hardship and refusing to pay will not engender a positive landlord response. I appreciate there are logistical challenges for national retail/restaurant chains and institutional landlords/large property companies in having meaningful interaction to work out every lease situation, however in my recent conversations with landlord clients and contacts, what has impressed me is how the majority of them have gone out of their way to engage personally with their tenants. Short term the letting challenges are significant (and the June quarter day looms large), however the positive is that for the landlords and their tenants who make it through the current economic turmoil working together, there is real potential to build mutually beneficial long term development/occupational relationships.

All eyes are on Georgia, one of the first states in the nation to allow some retailers — including restaurants, salons, gyms and small entertainment venues like bowling alleys or ax-throwing — to open or begin to seat customers after a stay-at-home order. Gov. Brian Kemp's decision to allow some nonessential businesses to reopen was decried by medical experts and some businesses as hasty. Even President Donald Trump, who days earlier reportedly asked governors to start reopening their economies, called Kemp's decree "too soon." Despite the public health and political debate, one thing is clear: The longer retailers and restaurants stay closed, the harder it will be for them to survive.

https://www.bisnow.com/atlanta/news/retail/for-georgia-restaurants-and-retailers-its-not-landlords-that-cause-the-pressure-104166?utm_content=outbound_link_1

Recovery for the PE industry?

Is the PE industry in shape to weather the storm we find ourselves in?  There is clearly a decline in activity but is this temporary?  Activity must return, the question is when and how deep will the downturn be in the meantime.  This EY survey suggests the industry thinks the downturn in deal activity will be no more than 25 % but when will the upturn come?  That is not something I have seen called yet in any consistent fashion, some are predicting an extremely busy round of fundraising in the fourth quarter, others a much slower return to activity. At the moment, I sit in the latter camp, but I would dearly love to be in the former!

The flip side, or course, is that despite evidence of declining sentiment, a strong majority of PE professionals remain convinced that the model remains robust, and that the industry remains well-positioned to adapt and respond, even after knowing (or at least having strong indications of) the massive amount of disruption that was poised to occur and that is still unfolding. Consequently, most PE professionals are expecting some measure of decline in deal activity – although the overwhelming majority of respondents feel it will not exceed 25%.

https://www.ey.com/en_gl/private-equity/how-private-equity-is-responding-to-covid-19?WT.mc_id=15121686&AA.tsrc=email&mkt_tok=eyJpIjoiWm1JeE1HTm1aVGRsTkRZNCIsInQiOiJ3WTJlODgrdE4xMFNXMkdEYm1ycHU5U3NEK2RHdjdsc1NnN1VQTHljdTkrMDhicm96QUlGNXRJXC9yR3JydTJrTlNrT1p3RXhSM0NOTE5sWTlkbGxwSHl0MCtiT2VGbmlcL0N3ZWFRT0hHTFdhaHBLSG9RWThcLzNOemxHUTdpbHFLaSJ9&tceid=5eb192558cb62a0f8cdb5460

Reopening the doors of galleries and museums

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

Galleries and small museums could be reopened during the first stage of France’s easing of lockdown, although the public will still need to adhere to social distancing and other safety measures. 

The UK is waiting with baited breath for Boris to announce on Sunday the Government’s plans for the next stage in its response to the pandemic; could it be that galleries and museums are amongst the earliest businesses to reopen in this country too?

The Fondation Giacometti in Paris, a small establishment, is planning to reopen on 15 May. “We've decided to open soon because it's important to serve the public and reintroduce people to artworks after this virtual-viewing period and to say, symbolically, that the world is starting again and that culture is here,” Catherine Grenier, the foundation's director, tells The Art Newspaper. “We're asking people to register online to enable us to have small groups of ten people every 20 minutes and to come wearing masks.”

https://www.theartnewspaper.com/news/galleries-and-small-museums-to-re-open-in-france

The planning system, Covid-19 and the “democratic deficit”

Blueprint displaying a detailed architectural floor plan, showcasing rooms, corridors, and spiral staircases. Grids and lines indicate measurements and sections. Text includes numbers and labels like "SALON."

One of the supposed strengths of the UK planning system is the involvement of local politicians – elected councillors – to ensure that decision making is taken as close to the public as possible.

The advent of Covid-19 has raised legitimate questions about how to maintain the involvement of the public without the public being involved (at least in person).  

Virtual committees are springing up to fill the void, but some Councils are seeing the benefit of using executive powers to get decisions through quickly and efficiently on the premise of “keeping the Country moving”.  

That is a noble aim, but caution must be exercised – without the necessary compliance with the requirements of national legislation (and each Council’s own constitution!), such decisions could be open to a myriad of legal challenges which, if successful, could take the decision maker back to square one.

Campaigners have called on the government and councils to ensure that the public continues to have a say in planning decisions during the coronavirus outbreak, highlighting a series of "troubling cases" where decisions made by 'virtual' committees or under delegated powers are alleged to have been taken with limited public involvement.

https://www.planningresource.co.uk/article/1681726/campaign-groups-warn-abuses-planning-process-councils-switch-virtual-delegated-decision-making?bulletin=development-management-bulletin&utm_content=Development+Management+Bulletin+(47)%3a%3awww_planningresource_co_uk_art&email_hash=

Silent hypoxia – another trap when considering capacity during Covid-19

All of us who work in the private client sphere have been considering the issues which might arise when making Wills or LPA’s in the Covid-19 environment, whether it is how to assess capacity when someone is isolated in hospital, how to witness a Will or LPA effectively whilst protecting those involved, or what sort of challenges we might expect to see when these Wills are eventually proven.

Many of us had considered the effect that a small decrease in oxygen saturation has on capacity and whether blood oxygen readings should be taken from hospitalised testators to assist with questions of their testamentary capacity. But doctors are now reporting significant reductions in oxygen saturation in patients who had been at home and presenting well. Some patients were alert and interacting with others, yet had blood oxygen levels which would usually cause loss of consciousness, or worse.  This could mask a lack of capacity, in the same way that coping mechanisms can mask a decline in capacity in the early stages of dementia.

Whilst silent hypoxia is not unheard of in other conditions, it is unusual for similar diseases like flu or other types of pneumonia, which means that anyone currently drafting Wills or LPAs might want to become familiar with the symptoms of hypoxia. Equally, anyone reviewing Will files in future could be well-served to remember that the decline in a Covid-19 patient’s capacity might not have been as sudden as it initially appeared.

It is a mystery that has left doctors questioning the basic tenets of biology: Covid-19 patients who are talking and apparently not in distress, but who have oxygen levels low enough to typically cause unconsciousness or even death. The phenomenon, known by some as “happy hypoxia” (some prefer the term “silent”)

https://www.theguardian.com/world/2020/may/03/happy-hypoxia-unusual-coronavirus-effect-baffles-doctors
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Are there green shoots maybe for new debt in the real estate market?

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

It put a spring in my step to read in Property Week that some lenders are indeed progressing new finance deals albeit with lower LTVs, higher pricing etc. Its good to move things forward from the “debt pause” there was in the immediate wake of lockdown commencing. What we need next are the valuers to be able to get on site as getting valuations done has been a major stumbling block to preventing the real estate finance deals closing.

Lenders and debt advisers report that some new funding deals are progressing, even in sectors that have been adversely affected by the coronavirus outbreak.

https://www.propertyweek.com/finance/real-estate-debt-market-down-but-not-out-despite-covid-19/5107699.article?utm_content=Weekly+Breaking+News+CID_daa97fb73525d9d362880352fea3185f&utm_term=Real+estate+debt+market+down+but+not+out+despite+Covid-19

The new way of working ….

Employers are eagerly awaiting the prime minister to reveal his “roadmap” out of the lockdown, which we expect on Sunday. In the meantime, BEIS have shared draft guidance with businesses on what this might look like for their workforce. Don’t share equipment (or share pens!), keep people working from home, stagger shift times, provide PPE and physical screens between workplaces, reduce ‘hot-desking’ and keep your canteens closed! These are just some of the ideas being considered. It’s certainly worthwhile employers giving thought to the practicalities of bringing their workforce back now.

Reduced hot-desking and alternatives to social distancing where it is not possible are among measures being considered to let workplaces reopen.

https://www.bbc.co.uk/news/uk-52525127
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Mass redundancies during the pandemic

It’s becoming a sad reality: another day and another large organisation announcing potential large scale redundancies.

In these unprecedented times, it is important that employers remember that the normal redundancy rules will still apply, notwithstanding the pandemic.

Employers looking to make more than 20 redundancies will need to follow collective redundancies rules, which includes consulting with employees and/or their representatives for up to 45 days.

However, will employers be able to afford to do this if cash-flow is tight?  Will employers try and rely on the “special circumstances” defence (which is hard to rely on!) and argue that such consultation was not reasonably practicable?  Will some employers even remember?

For assistance managing any redundancy processes, we can help.

Heathrow airport has warned that it may soon follow British Airways in announcing mass redundancies unless the government restores confidence by planning for how flying could restart

https://www.theguardian.com/global/2020/may/01/heathrow-boss-ba-redundancies-john-holland-kaye-safety-air-travel
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

A new type of furlough

Many employers with employees on furlough leave will be starting to think about the future and what will happen at the end of June when the scheme (as currently planned) will come to an end.

It’s clear that life as we knew it will not simply resume, and that social distancing (in some form at least) will continue for some time. Whilst businesses may start to re-open, it is likely that this will be gradual and that in some industries (such as hospitality) not all staff will be required to return at once.

To guard against this, some employers are already considering redundancies (especially as, depending on the number of proposed redundancies, employers need to consult with employees and/or their representatives for up to 45 days). 

The news that the Treasury is thinking about extending the furlough scheme to allow employers to furlough staff on a more flexible basis is a welcome development. Let’s watch this space…

“You can’t just flick the switch and everything is back to normal. That might not happen this year or even into 2021,” said Richard Warren, head of policy at UK Steel. “Companies want the same system as Germany where instead of 30 per cent of staff not working, all staff work 30 per cent lower hours.”

https://www.ft.com/content/4dd0a1b2-0822-4e4e-bcff-5dbee40d3561
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Is the logistics sector immune to Covid-19?

In the current pandemic, we have all benefited from the UK’s logistics sector. 

The sector has kept our cupboards stocked with food and has also alleviated the stresses and strains of working from home by delivering thousands of office chairs and monitors (although I must confess that I continue to persevere with the kitchen table chair/laptop combo).

Indeed, the logistics sector looks well equipped to respond to the changing nature of the world that we live in. Increased automation will certainly be a legacy of Covid-19 and the demand for products to be delivered to our doorsteps is unlikely to cease.

That said, certain segments of the logistics sector have more antibodies than others. Whilst essential global powerhouses such as Amazon and supermarkets continue to be in demand, there are others which are experiencing the pain which is shared by the majority of the economy. 

46% of the UK’s truck fleet is parked up and the four main cargo companies in the UK have warned of the imminent collapse of the sector. The raft of closed restaurants and airports explains these startling facts.

Just like every other sector in the economy during this pandemic, the logistics sector has its winners and losers.

But something getting less attention is the polarised logistics economy we have at the moment.

https://www.logisticsmanager.com/editors-blog-the-winners-and-losers-of-post-covid-19-logistics/

Community building and being visible during lockdown (and beyond!)

In an industry that has been traditionally slow to embrace technology and digital change, It has never been more important for lawyers and other experts to be visible and develop their online profile.

All major social platforms have reported surges in content posting during lockdown with LinkedIn stating a 55% increase in engagement between connections in recent weeks and a rise in C-Suite platform usage. As people look for trusted guidance and clarity in these uncertain times it’s important to ensure that you stay part of the conversation and reach the right audiences by sharing insights, and conveying your values and personality.

Timely and relevant content creation gives you a chance to elevate your credentials within your profession, be it with clients or amongst your peers, as well as create connections with the wider business brand. Together we help inform our audiences and build trust for the long-term, not just for right now. This has always been important, but changing circumstances have brought this to the fore and will likely now help accelerate that understanding and those practices within our profession for people who previously saw this as an optional approach. Whilst the circumstances are far from ideal, we are seeing the impacts of coronavirus forcing many individuals and firms to change their approach and relationship with digital for the better.

However, with many taking this approach to content creation and enhancing their online presence, we are now being bombarded with messages surrounding the ongoing global pandemic and it would be easy for people to feel overwhelmed, and indeed easy for our own content to get lost and miss the mark. How do we ensure we standout? 

The key message is to be authentic and genuine, providing help where it’s needed and avoiding the hard-sell. Identify those client pain points and help provide innovative and relevant solutions – talk to people, listen, ask questions, be supportive and ensure your expertise stay front-of-mind whilst also just being yourself and showing some personality. Being human, relevant and authentic have never been more important.

People will continue to have other problems in their lives that are not related to the pandemic so it’s important to continue to share ‘business as usual’ content and not just focus on COVID-19 related issues. With everyone out there talking about coronavirus, now is a great time to ensure your evergreen content is in order and ensure your core service messages are also getting through and that may well be how you actually end up standing out amongst the noise.

Here are some top tips on building your LinkedIn community, staying relevant and visible, and making sure you can standout in the crowd:

  • Complete your profile – Having a complete profile is an important part of conveying your credibility and presenting yourself as a serious business leader to the outside world – it’s how potential contacts, including clients, will find and identify you. Ensure your headline says who you are and what you do – this is probably not your job title. Make sure your summary is engaging and conveys your areas of expertise and something of your personality and who you are – don’t just copy/paste your website bio!
  • Develop your network – Connect with the people that matter and ensure you stay visible, relevant, and up-to-date with trends and opportunities in the circles that align with your commercial goals. Don’t just connect with colleagues and friends – make sure you’re keeping your network and reach in mind and look for opportunities to reach new and influential contacts. Sell yourself through your network and think about who you’d like to target. Connect with clients (where suitable), intermediaries, peers and key influencers in your space. Always personalise connection requests and use them to spark up conversation and confirm your relevance.
  • Be visible, every day – Make sure you show up – every day! You reap what you sow and you’ll only cultivate the benefits of LinkedIn if you are regularly contributing to your network and taking actions that make you visible to it. Invest in relationships – remember social media is meant to be social, not just for broadcasting or listening. Engage the people you know, and the people you want to know.
  • Position yourself as an expert – Develop content that will position you as a leader, and someone that people will want to know and follow. Think about client pain points and look for opportunities to write and give something away or just to join a conversation and add value or help someone.
  • Develop your content feed – The easiest way to find suitable content to engage with on a daily basis is to ensure that your feed is populated with content from relevant, authoritative and trusted sources that align with your commercial ambitions. Staying abreast of industry news is key to building your expertise, strengthening your position as a leader, and increasing respect from your peers.
  • Join and engage with groups – Join relevant groups which align with your specialisms, industry, experience and target audiences – these will often expose you to highly relevant niche networks and open up new possibilities to both connect and establish you as a leader in your field, elevating your personal brand as well as increasing awareness of the wider brand offering and people.
  • Develop social reciprocity – Celebrate others and support each other. By liking and sharing content and being proactive on a daily basis your contacts are far more likely to return that favour and engage with your own content thereby helping to raise your visibility within their networks. It’s a ‘you scratch my back, I’ll scratch yours’ type arrangement.
  • Listen and research – Learn to use search tools and identify opportunities for conversation engagement or network development.
  • Use hashtags and mentions in your posts to amplify reach – Make sure you’re using mentions and relevant hashtags in your posts to maximise your reach across networks and amplify the visibility of your posts as well as encouraging engagement from those mentioned, otherwise, without any meaningful engagement, your posts will only ever reach your immediate network.
  • Be helpful and be yourself – Build trust by being kind, helpful and supportive of others and work on cultivating relationships long-term. Forget the hard-sell and just be authentic. Ask questions and take the focus off of you and look for opportunities to help. Convey some of your personality – show people who you are.

In a world full of lawyers and experts, your key differentiator is you, so don’t overthink it. Just show up and be yourself.

Your job and career may change directions or evolve while we’re in this time of uncertainty, but you and your network are on a professional journey together, and the stronger your network, the further everyone goes together.

https://www.linkedin.com/pulse/you-alone-why-now-even-more-important-time-give-get-help-roslansky/?trackingId=KHh%2fP%2f37SPSv9ohZV9FhJg%3d%3d%3ftrk&utm_content=community-help&trk=social_twitter_global_bcs_covid19
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

COVID-19 and construction: RICS publishes Conflict Avoidance Pledge

Following the positivie news that building contractors are reopening their sites, developers and contractors are bound to return attention to analysing their respective contractual rights and remedies.    

Closures of sites, ongoing social distancing measures and supply chain issues are just some of the matters which will need to be grappled with as discussions regarding the price and programme effects of COVID-19 continue.  

Although there is no substitute for knowing your contractual rights and obligations, early dialogue between employers, contractors and other key stakeholders may help to stave off contractual disputes down the line.

To that end, the RICS has published a conflict avoidance pledge which has been endorsed by the Construction Leadership Council.  The pledge aims to:

  • promote working proactively to avoid conflict and facilitate early resolution of potential disputes
  • encourage early identification of potential disputes and the use of conflict avoidance measures
  • promote the value of collaborative working to prevent issues developing into disputes
  • enhance commitment of industry partners to work together to identify, promote and utilise conflict avoidance mechanisms

The pledge can be accessed here: https://www.rics.org/uk/products/dispute-resolution-service/conflict-avoidance-pledge/

The Construction Leadership Council has backed a new conflict avoidance pledge developed by RICS in the wake of the covid-19 pandemic.

https://www.building.co.uk/news/clc-backs-conflict-avoidance-pledge/5105803.article
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Welcome news from Land Registry will simplify completions

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

One of the biggest practical issues we have been grappling with during lockdown has been getting documents circulated and signed for completion. Until now, HM Land Registry’s stance has been that they would only accept wet-ink signed documents for registerable dispositions, which includes transfers, charges and registerable leases. This has equalled a major headache, particularly where overseas parties are involved.

However, to a flurry of cheers from real estate lawyers across the land, HMLR has announced that with effect from Monday they will accept documents signed in accordance with “Mercury Option 1” – which, in brief, is where signatories attach a scanned image of their signature page together with a final agreed copy of the document on a single email and completion is effected on that basis.

More detail will follow in the form of a practice guide but, suffice to say, this is a significant modernisation from HM Land Registry and a triumph for common sense.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Should offshore companies be banned from using furlough?

Skyscrapers stand prominently against a blue sky with scattered clouds, surrounded by lower buildings. The tall structures feature modern glass facades, creating a skyline in an urban setting.

Furlough is first and foremost about protecting jobs and ensuring that hard working employees are not made redundant during the current emergency.  Undoubtedly there are changes that could be made to our tax system to ensure that a “fair” amount of tax is paid by all, but it would be harsh to penalise employees of international groups by prohibiting their international employers from participating in the current government support arrangements.  And it is also wrong to assume that all offshore companies do not pay their taxes in the UK.  All companies (onshore or offshore) would be wise,however,  to review their tax strategies and remember “we are all in it together” and that in interpreting tax rules the courts in the future  will  be looking through  “new normal” lenses.

Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Re-commencing construction in lock down: positive signs?

Construction workers in high-visibility vests and helmets stand and communicate amidst metal scaffolding at a construction site, with sunlight streaming through an open structure.

It is fair to say that one of the sectors for which lock down has caused the most confusion, is the construction sector.  

When lock down was announced six weeks ago, the government was slow to confirm whether or not it was safe for construction operations to continue on site.  As a result, many contractors took decisions to close sites or dramatically scale down construction operations, in some cases without discussing with their clients first. 

According to Build UK, 70% of its members’ construction sites have now reopened and anecdotally, clients and contractors are telling us similar.  But it feels as though this is only the start of the story for the construction industry.  

Over the last few weeks, we have all adapted to the new normal and measures that seemed unthinkable two months ago (such as people being 2 metres apart at all times) are becoming second nature.  As government advice is adapted and eventually relaxed, contractors who are on site already will need to keep adapting working practices whilst endeavouring to mitigate delays to completion of the works.  For works which have not yet commenced, developers and their contractors will need to have open discussions about the possible effects of COVID-19 on project delivery and agree the contractual risk allocation in terms of possible delays and costs.  

What lies ahead for the UK is inherently uncertain, but we do know that developers and contractors will be talking about COVID-19 and its effects for many months to come.  

Major contractors are now working on nearly 70% of their sites as the return to work in construction continues.

https://www.constructionenquirer.com/2020/04/29/major-contractors-now-working-on-70-of-sites/

The end of the working environment as we know it?

A row of modern townhouses features large glass doors and brick façades. The buildings have balconies above the ground floor, and the symmetrical design is set in a suburban environment.

Working from home has become the norm for so many over recent weeks.

I, for one, have relished in no daily commute and being able to spend more time (even virtually) with family and friends. However, I have to say that the lack of face to face meetings with people, particularly in a business context, could be detrimental long term. Perhaps a hybrid of the two, where companies will genuinely permit employees to work in an agile manner, will become standard?

Knight Frank’s report on this topic is therefore timely and I wonder whether any of our readers have any views on this?

Almost a month into lockdown, working-from-home has provoked restless opposers and productive supporters. 

https://www.knightfrank.co.uk/blog/2020/04/29/key-factors-that-will-shape-the-future-of-the-office?utm_content=posting
Nadine Gibbon
Media contact

Nadine Gibbon

View profile

Wealth tax: the right answer, or the wrong question?

How the governments of the world will redress the economic fallout of Covid-19 is a growing topic of debate in the media and elsewhere. As such, it’s unsurprising to see the concept of a ‘wealth tax’ being increasingly discussed in jurisdictions such as the UK that do not currently have one. Indeed, it has become a popular subject of discussion within our private client circles domestically and internationally, as it was after the 2008 global financial crisis.

Governments will almost certainly look to recover their finances quickly by increasing taxation. A wealth tax seems a straightforward means of doing so. However, its nature as an annual tax on illiquid capital assets makes it a political hot potato that is a quagmire for any government wishing to add it to the policy agenda.

Which is perhaps why to avoid political controversy, the UK government and others may instead be inclined to tweak existing methods of taxation, such as inheritance tax or other forms of estate tax.

After all, most nations have a form of tax that arises on an individual’s death to tax their estate. It seems more likely then that governments would prefer to adjust what already exists than to introduce something new like a wealth tax. 

Increasing the rates of taxation would be the obvious first step. It might seem that countries with higher rates of inheritance tax (such as the UK at 40%) could not possibly go any higher before becoming unsustainable. While this may be the case, changes could be made to the tax itself with the aim of recovering more tax without raising (or even while lowering) the headline rate.

For example, in the UK earlier this year a cross-party group of MPs published an informal report proposing radical reforms to inheritance tax (IHT), which followed two reports by the Office of Tax Simplification on the same subject. With IHT reform clearly already on the UK government’s radar, the economic impact of C-19 may be the catalyst that leads to significant IHT changes.

Wealth tax rise could raise £174bn to tackle Covid-19, expert says

https://www.theguardian.com/politics/2020/apr/22/wealth-tax-rise-could-raise-174bn-tackle-covid-19-expert-says

Is the big office dead?

It’s interesting to see that Barclays, a large commercial occupier, is asking itself if the ‘big office’ has had its day.

Barclays are considering a strategy of converting unwanted retail banking space into offices; so, is decentralisation of the work force, combined with increased agile and home working, going to kill the big office model?

Clearly real estate is a major overhead and business will be currently looking at ways to reduce their costs. However bringing staff together in one location can have many benefits – cross pollination of ideas, easy collaboration, learning and development, social interaction and building a firm wide culture.

Staff are increasingly demanding better spaces in which to work, socialise and spend, what is often, most of their time. Health and well-being are as important to many as salary and bonuses. How will businesses look to address these concerns, while asking employees to spend increasing amounts of time away from the office and colleagues?

Working from home is here to stay, but there remains an underlying need for offices. With the supply of prime office space at an all time low, firms will need to think carefully before rushing to reduce their office space, which may be hard to replace. Increased home working will also give an opportunity to move away from hyper-dense floor space ratios and to rethink the office. If Covid-19 has shown anything, it is that space is important. 

"The notion of putting 7,000 people in the building may be a thing of the past."

https://www.bbc.co.uk/news/business-52467965

Could Covid19 accelerate proptech uptake?

The difficulty I have always seen with merging the worlds of Property and Technology is how to convince those within the real estate industry to discard tried and tested practices for new ways of thinking,  and how to ensure new tech is not innovating for the sake of innovating, without solving issues within the market.

Enter the current pandemic. Almost overnight those within the industry have had to adopt business as usual whilst being forced to heavily rely on tech, whether that be remote working, virtual auctions or transactional issues when completing physical documents. 

Long term effects of this will remain to be seen. However, I think the current pandemic will now be a vital point of reference for businesses within the real estate industry to see the benefits of tech and also realise the danger of being behind the curve in the uptake of tech. This in turn will ensure organisations are leaner and ready to take on any future challenges we may face.

Interested to know peoples’ thoughts on the use of tech post zoom calls with children, pets and sweatshirts. 

As a result of the current pandemic, the spotlight will be on firms that focus on more ambitious solutions, such as end-to-end management software, performance tracking in real-time or global data sharing. The most successful technologies will be those that address a process, not just a task.

https://www.egi.co.uk/news/could-covid-19-accelerate-proptech-consolidation/
Nadine Gibbon
Media contact

Nadine Gibbon

View profile