Implementation of the new TRS rules

• 30 September 2020
• News

The Money Laundering and Terrorist Financing (Amendment) (EU Exit) Regulations 2020 were laid before Parliament on 15 September 2020. Among other things, this statutory instrument (SI) implements the new Trust Registration Service (TRS) rules, as extended by the EU’s Fifth Money Laundering Directive, which came into force on 10 January 2020. It is expected that the SI will be implemented as drafted.

When does the SI come into force?

We have previously written about the extension of the TRS rules to require registration of non-UK (and UK) trusts that acquire an interest in UK land, as well as trusts with a UK trustee that enter into a business relationship with a UK-based adviser (or other relevant person). Provided that the SI is implemented as expected, many of the provisions of the SI, including those relating to such trusts, will come into force 21 days after the day on which the SI was laid in Parliament, i.e. 6 October 2020. Thus, trustees of relevant trusts who acquire an interest in UK land or enter into a relevant business relationship on or after this date will be within the extended scope of the rules, and will be required to register on the TRS by 10 March 2022.

Trustees who are in the process of acquiring an interest in UK land or entering into a relevant business relationship may wish to bear this date in mind. However, it should be noted that an acquisition of UK property by a trust is likely to trigger a liability to stamp duty land tax, which itself would prompt a requirement for the trustees to register on the TRS under existing rules.

What are the deadlines for registration on the TRS?

Trustees of non-taxable trusts that fall within the extended registration requirements before 9 February 2022 will be required to register by 10 March 2022. From 9 February 2022 onwards, registration will be required within 30 days of the event that triggers registration.

If you have any queries in relation to the new SI or the requirements for registration on the TRS generally, please get in touch with your usual Forsters contact.

Robert Payne is a Senior Associate, and Julia Ramsden-Gunduz, Counsel, in our Private Client team and part of our Regulatory group.

Student Housing Conference 2020 – 5 key takeaways

• 23 September 2020
• News

On Tuesday 22 September 2020 I attended the virtual Student Housing Conference 2020, together with Ronan Ledwidge, Partner in our Commercial Real Estate team. The overall message from the many speakers was one of positivity and optimism – here are my 5 takeaways from the event:

1. Sector resilience – student accommodation remains a sought-after asset class in the real estate market. Whilst it will inevitably be a tough year for investors, the impact of the Coronavirus crisis should only be temporary for the PBSA market.
2. Location, location, location – location is more crucial now than ever, both in terms of the town or city itself and the location of the accommodation in that locality. Developers must continue to give strong consideration to whether it makes sense to build their scheme in a particular location.
3. The preferred option – the latest data shows that private purpose-built student accommodation (PBSA) has become the preferred option for students attending university in the UK, both international and domestic. StudentCrowd survey results reveal that students rank PBSA above university dorms in terms of value for money, location, management, cleanliness, Wi-Fi and quality of social spaces. The next focus for PBSA going forward should be the enhancement of the social experience, albeit that will have to wait until social distancing is a thing of the past.
4. Collaboration – the rise in popularity of PBSA has brought about the strengthening of partnerships between universities and operators, particularly in respect of pastoral and social care for students. Universities – who will have to rely on the private sector now more than ever – are continuing to work closely with investors to maximise the potential benefit that quality accommodation can bring. Investors should also work closely with their debt providers and engage early if any road bumps are encountered.
5. Looking ahead – the latest evidence clearly suggests that students still want the university experience – you cannot rely on Zoom for everything. It is hoped that by September 2021, students will be looking forward to the academic year ahead with Covid all but behind us. If that is the case, then student demand for PBSA should be greater than ever. As for the current academic year, the coming weeks will be crucial. An encouraging number of rooms have been booked, but it remains to be seen if everyone will turn up…

Anthony Goodmaker is a Partner in the Commercial Real Estate team.

Restrictions on forfeiture of business tenancies and CRAR extended to 31 December 2020

• 17 September 2020
• News

The Government has announced that the current legislation which prevent landlords from forfeiting commercial leases, or levying execution on the tenant’s goods by way of CRAR to recover outstanding rent, will be extended from 30 September 2020 until 31 December 2020 to provide further protection for tenants who have not paid their rents or other sums due under their leases.

These restrictions had already been extended once before and this further extension was strongly opposed by landlords who feel that this is allowing tenants who can afford to pay to continue not to pay. However, the government’s priority is to protect vulnerable businesses, and it hopes that retailers and restaurants and the like can make some recovery over the autumn and Christmas period if protected from eviction or the use of CRAR.

The changes means that between now and 31 December 2020, CRAR may only be exercised:

• On or before 24 December 2020, if at least 276 days’ rent (i.e. 3 quarter’s rent) is outstanding when the notice is given and when the goods are taken control of for this first time.
• On or after 25 December 2020, if at least 366 days’ rent (i.e. a year’s rent) is outstanding when the notice is given and when the goods are taken control of for this first time.

The government’s latest press release does not comment on whether the restriction on using insolvency proceedings to recover sums due will also be extended, but this seems highly likely to follow suit.

The government continues to place faith in landlords and tenants reaching agreement for deferrals or rent reductions by following the guidance in the Code of Practice governing commercial property relationships (“the Code”) that was introduced in June 2020. The Code seeks to promote open and constructive discussions between the parties where the tenant cannot afford to pay sums due. Where payment is not possible, a number of possible compromises are suggested. But many tenants are unwilling to engage fully with the Code and, in particular, to disclose their true financial position.

Landlords do remain able to pursue debt claims through the Courts in respect of unpaid rent and other sums. Their right to do so has been unaffected by the current restrictions, and it is the only remaining option available to landlords wishing to recover payment from tenants who can pay, but who refuse to do so. If nothing else, a Judgment secures interest at 8% per annum on the sum due and can still be enforced in various ways.

Charlotte Ross is a Senior Associate in the Property Litigation team.

Disclaimer

The current global crisis is evolving rapidly, and the rules and guidance for individuals, companies and other entities to manage its implications are similarly fast moving. Notes such as this may be out of date almost as soon as they are published. If you have any questions prompted by this article or on any other matter relevant to you, please get in touch with your usual contact at Forsters.

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