Month: May 2024

Diversification opportunities for farmers following recent planning changes

There has been some good news for owners of farms and estates with the government confirming a series of reforms to permitted development rights under Classes Q and R of the GPDO 2015 which will make diversification and growth on farms and estates easier.

Class Q covers the change of use from agricultural buildings to dwellinghouses, and Class R covers the change of use from agricultural buildings to various commercial buildings. The new reforms introduce the following changes:

  • An increase from five to ten on the maximum number of residential dwellings which can be created from a barn conversation;
  • An increase from 865m2 to 1,000m2 on the total permissible floorspace for residential dwellings created from barns, with a limit of 150m2 per individual unit;
  • The ability to construct small single storey extensions to barns (subject to certain size constraints);
  • An extension of the permitted uses to which agricultural buildings can be converted under Class R. The new permitted uses include outdoor sport and recreation facilities, larger farm shops, and farm training centres; and
  • An increase from 500m2 to 1,000m2 on the limit to the total internal floorspace of buildings that can be converted under Class R.

As of 21 May 2024, all of these changes have now taken effect. However, it is worth noting that the changes will not apply to ‘Article 2(3) land’ such as National Parks, World Heritage Sites, the Broads, Areas of Outstanding Natural Beauty, or conservation areas. In addition, the changes are subject to a number of more specific parameters, limiting their scope in places.

The changes have come as a result of the Department for Levelling Up, Housing and Communities’ consultation on introducing additional flexibility to the agricultural sector, published last year. The intention behind the changes is to encourage greater housebuilding and commercial development on farms, areas which have typically lagged in light of stringent planning requirements. It will also help create new sources of income, diverse business opportunities and increase the value of property. It remains to be seen whether the major parties will commit to any further changes to permitted development rights going into the upcoming General Election, but the recently published DLUHC consultation on changes to permitted development rights certainly indicates that this could be the case.

Forsters shortlisted for ‘Solicitors Firm of the Year’ at the 2024 ERMAs

We received the exciting news today that Forsters has been shortlisted as a finalist in the ‘Solicitors Firm of the Year’ category at the News on the Block Enfranchisement and Right to Manage Awards 2024.

Celebrating its 15th anniversary, we are delighted to participate and be recognised in this prestigious awards ceremony. Well done to our Enfranchisement Team in securing this shortlisting, and good luck to all the other finalists.

We look forward to the award ceremony, and celebrating the excellence in our industry, on 11 July at Leonardo Royal Hotel, St. Paul’s.

View full shortlist

Amy France speaks to CoStar on how investors are finally waking up to the potential of care homes

Published as one of CoStar’s expert opinions, Amy France discussed the big supply-demand imbalance the private sector can plug and how investors are finally seeing the potential in care homes.

The gaping supply-demand imbalance for care homes has now reached acute levels, yet delivery has been slow and investors have been reticent in making serious moves into the asset class. However, numerous factors and a succession of significant deals indicate that in the first quarter 2024, sector activity is picking up and looks set for a period of sustained growth.

According to the Office for National Statistics, the proportion of the population over 85 years old in the UK is forecast to more than double over the next three decades, from 2.5% in 2021 to 5.2% in 2051. Research from Knight Frank has found that by 2035 there will be a shortfall of 58,000 beds across the later living sector and that by 2050 an additional 350,000 older people will potentially need a care bed, which indicates an even greater acceleration in the demand for more beds.

Read the full article published on 29 May 2024 on CoStar’s website here.

Private drainage systems on third party land – all the information you need at your disposal…

Buying a property with a private drainage system, such as a septic tank, comes with an array of factors to consider. However, those factors are amplified when the system is located on land that is not part of your property.

The first and most pressing concern is to understand how a system on third party land works (for example, who uses it, rights to use it, access for maintenance, splitting maintenance costs). 

You also need to consider whether the drainage system complies with the General Binding Rules.

How the drainage system works

Where a drainage system is located on third party land it may either be used exclusively by your property, or sometimes is shared with neighbouring parties.

Where the drainage system is located on neighbouring land you should ask the question:

‘Does the title to the property have a sufficient legal easement for use of, and access to, the  drainage system (for repair and maintenance)?’

The length of time the drainage system has been there should also be considered. There may be the possibility of acquiring an easement due to a long historic period of use. If this is the case, and you are buying the property in question, you should obtain a statement of truth or statutory declaration. The statement can be from the seller, or the neighbours on whose land the drainage system is located (if amenable and with sufficient period of knowledge), which will confirm the length of use. This will support an easement application at the Land Registry.

If the drainage system is shared with neighbouring properties you should make enquiries as to how many share the system, any maintenance regimes and costs, and consider a survey to ensure there are no issues.

The General Binding Rules

Drainage systems can either be:

  • Cesspits/cesspools – these are sealed tanks that collect effluent, but don’t discharge any liquid residue to the surrounding land.
  • Septic tanks – these collect effluent and historically then filter liquids out over a ‘soakaway’ or ‘drainage field’. Soakaways are no longer permitted and need to be upgraded to a drainage field. It is also illegal to discharge effluent into a watercourse from a septic tank without an environmental permit. Without such a permit, the septic tank would need to be upgraded to a sewage treatment plant (mentioned below) or connected to the public foul sewer, however this may not be possible. 
  • Sewage treatment plants – these clean the effluent to a greater degree, and so can sometimes discharge into ditches or watercourses. 

The General Binding Rules (the guidance to which was most recently updated in 2023) govern situations where a septic tank or small sewage treatment plant discharges waste water to surface water (such as a stream or other watercourse). They therefore do not apply to cesspools.

Where a drainage system which is subject to the General Binding Rules doesn’t comply with them, the person responsible for it must either connect it to a public foul sewer, or change the system so that it complies. If neither of these things are possible, the operator must apply for a permit. Note that a permit won’t be granted if the Environment Agency think it is reasonable for the operator to connect to the public foul sewer, or that it could meet the General Binding Rules by making changes to the system.

The guidance to the General Binding Rules particularly notes that, in the case of septic tanks, prior to a sale an agreement taking responsibility for the replacement or upgrading of the septic tank should form part of the sale negotiations.

Once you have determined that the General Binding Rules apply, which ones the system needs to comply with depends in part on when it was installed. The key dates are:

  • discharges starting before 1 January 2015
  • discharges that started after 1 January 2015 but before 2 October 2023; and
  • discharges starting after 2 October 2023. 

Some of the rules apply to all discharges irrespective of when the system was installed. Examples include:

  • limits to discharge volumes
  • the type of waste that may be discharged; and
  • ensuring that any discharges are not in a groundwater source (protection zone 1) without an environmental permit. 

On a sale, it is therefore important to determine the nature of the drainage system in order to assess whether the General Binding Rules apply, how the system complies with them, and if an agreement for upgrading or replacing the system will be needed. 

Please note that building regulations and planning permission may also have been, or will be, needed for any drainage system. 

Key takeaways:

  • If the drainage system is on third party land, it is important to establish that there are adequate rights to use it.
  • The application of the General Binding Rules depends on the nature of the drainage system and the date of commencement of discharges.
  • It may be necessary to agree to upgrade or replace any non-compliant septic tank as part of a sale.

The Leasehold and Freehold Reform Act 2024

On 24 May 2024, the Leasehold and Freehold Reform Act (the “Act”) was the last act passed in the current Parliament, and, quite possibly, by this Government. It was pushed through the Commons at speed to ensure it received Royal Assent before Parliament was prorogued. The debate of the House of Lords amendments started at 19:21 and 11 minutes later all 67 amendments were passed. Parliament was prorogued at 20:46.

It is striking that the Act grew from 65 clauses and 8 schedules to 124 clauses and 13 schedules during its passage through Parliament. That speaks to the complex and technical nature of the matter area; but equally raises questions about the scrutiny those amendments received.

In the course of the debate, Sir Peter Bottomly praised Michael Gove for “getting a grip of the horrors in residential leasehold.” However, it remains to be seen whether the Leasehold and Freehold Reform Act and indeed Michael Gove’s legacy will stand the test of time. The new Act’s journey into the statute book has obvious parallels with the Landlord and Tenant Act 1987. The 1987 Act was also rushed through by a Conservative government three days before the dissolution of Parliament in the build up to the General Election of that year. It is widely regarded as one of the worst examples of legislative drafting and has a resulted in significant amounts of often unnecessary litigation for tenants and landlords alike. Unfortunately, there is scope for the new Act to go the same way.

Much of the commentary so far has focused on what is not in the Act. Michael Gove’s plan to remove ground rent for existing leaseholders or cap it at £250 was the most high-profile absentee. However, the ban on forfeiture of long residential leases and the introduction of commonhold also ended up on the cutting floor.

So what now? The Act is, of course, not yet in force. The parts of the Act that amend the Building Safety Act 2022, and deal with rent charge arrears, will become law on 24 July 2024. The remainder of the Act (including the 990 year lease extension, the new ‘standard valuation method’ (which will make it less costly for leaseholders to extend their lease or buy the freehold), the tenant’s right to buy out its rent, the ban on leasehold houses and the changes to service charge demands to make them more transparent) will be commenced by the Secretary of State via statutory instrument.

As Parliament is now in purdah, this responsibility will fall to the next government. The question of how the deferment and capitalisation rate should be fixed is complicated, politically charged and is highly likely to result in a human rights challenge. However, given the broad cross-party support for the Act, there is little doubt that the next government will grasp the nettle and bring the Act into force. When exactly this will be is anyone’s guess. Perhaps the most realistic guide is Baroness Scott’s 1 April 2024 written response, which estimated that the majority of the reforms would come into effect during 2025-2026.

In the interim, the leasehold enfranchisement industry remains in purgatory, although we now at least have an Act. For now, all we can do is work together to ensure that the new legislative landscape is understood as clearly as possible, so we are ready for the new Act when it becomes law.

Helen Streeton features in BTR News’ Legal Perspective: five minutes with Forsters Head of Build to Rent

Helen Streeton, Head of Build to Rent at Forsters, recently sat down with BTR News to discuss her role at Forsters, the challenges facing the industry and the future of the sector.

In the interview, Helen discusses her 30 year career in real estate and the different challenges and opportunities she has come across over this time. From the affordability of UK housing, the sense of community that Build to Rent can bring, and the Renters Reform Bill, Helen shares her thoughts on key considerations in the market – you can also find out a few fun, non-property related facts about her too!

To read the interview in full, please visit BTR News, here.

Is the UK housing market facing the prospect of rent controls? Louise Marin-Bataller shares her thoughts with IPE Real Assets

Louise Marin-Bataller, Senior Associate within our Commercial Real Estate team, has shared her industry reactions to The Renters Reform Bill with IPE Real Assets in a feature named ‘Is the UK housing market facing the prospect of rent controls?’

Louise questions “how long could a reform of the court system take? Will it ever happen and will section 21 ever go?” It seems unlikely during the current government’s lifetime.

There are many other aspects to the Reform Bill, however, which might still have implications if not further amended. Worries around the private student housing market appear to have abated, which is lucky as some of the original proposal regarding changes to notice were quite simply “a minefield” in Marin-Bataller’s opinion.

She remains worried about proposals to stop landlords accepting more than one month’s rent in advance. This could cause problems for foreign renters or those with bad credit histories, who “would normally get around the credit referencing issue by paying six to 12 months’ rent in advance,” Marin-Bataller says. “What will happen to this group of people, particularly when some have suggested that guarantors should also no longer be allowed?”

Tenants could clearly benefit from landlords being unable to service notice to terminate a lease until six months into the lease term. But unless proposed amendments are accepted, “landlords could be faced with notices served on day one by tenants resulting in short-term lets of two months”. Marin-Bataller wonders: “Will this ultimately lead to landlords leaving the PRS?”

Real the full article, alongside comments from other industry leaders from the BPF, Get Living and Nido, on IPE Real Assets’ website here.

The key to a successful country home or farm sale – Adam Saunby shares his insights

Adam Saunby joins Matthew Allen and Richard Gadd of Fisher German, on their podcast ‘Fisher German Talks’, to share his insight and expert analysis of the rural property market.

In the podcast, Adam highlights the importance of thorough preparation before properties are marketed. He covers:

  • Pre-sale preparation
  • The importance of site visits
  • The conveyancing process
  • Replies to enquiries
  • Preparing a data room
  • Drafting the contract
  • Holdover for crops and farm machinery auctions
  • Overage and its complexities
  • Key challenges in the process

You can listen to the full episode here.

If you are preparing to sell your country home or farm and would like expert advice on the process, please do give Adam or a member of our Rural Land and Property team a call.

The rise of the Branded Residence

True to its name, a Branded Residence is a property attached to a brand. Historically, we’ve predominantly seen renowned hotel brands absorbing the lion’s share of the market: Six Senses/The Whiteley, The Four Seasons/Twenty Grosvenor Square, Raffles/the OWO, the Peninsula/the Peninsula Residences, to name but a few.

Recently, other well-known names have started to move into the market: fashion designers, car manufacturers, jewellers and even luxury restaurants are demanding a place at the branded residence table.

Why invest in a Branded Residence?

These prestigious brands have a track record in the highest levels of customer care, hospitality and amenities, resulting in, quite literally, all singing all dancing accommodation – residential living with the services, facilities and luxuries of a hotel.

Never has the word “turnkey” been more apt than for a hotel branded residence. Need your car? The valet will have it at the entrance before you’ve made it downstairs. Staying in the UK intermittently/for short periods at a time? Someone will stock your groceries before you arrive. Looking for somewhere to eat? The concierge knows a place – and can get you a table, at short notice. And that doesn’t even cover the world-class gyms, swimming pools, spas, private dining rooms, private cinemas, not to mention the highest levels of security… the list goes on.

On top of this, there is of course the fact, that by aligning themselves to a particular property/development, these brands are accepting a certain level of responsibility with regard to the running and overall “feel” of a building, often beyond their contractual duties; there is automatically a reassurance as to the quality and management. Whilst there is likely to be an independent managing agent “running” the residential aspects, it is likely be the household name that people remember and automatically associate with the property, wrongly or rightly and for good or bad reasons. This offers comfort to buyers – they are not just purchasing a property, they are investing in a trusted brand.

What are the legal implications?

The agreement for lease (i.e. the purchase contract) and the long residential lease which would need to be entered into by buyers on completion are likely to be very similar to those seen on a high-end new build estate without the branded element. The legal paperwork will often be more detailed than that of a second-hand sale and purchase in order to:

  1. cover the ongoing development;
  2. deal with snagging/the Seller’s pre-completion obligations;
  3. address any other complexities across the site; and
  4. take into account any third party operator involved (such as a hotel brand).

That said, there is unlikely to be a significant amount to consider legally on the branding side. This can be positive (global brands often means hugely complex, sensitive and probably confidential agreements) but ultimately this is simply because it is unlikely that a brand operating at this level will agree to enter into a direct contractual relationship with individual buyers.

Given that the majority of “new” long residential leases are granted for a term of 250 – 999 years, it is understandable that these companies are unwilling to be held to ransom for the duration of these leases which often vastly exceed the term of the agreement between the freeholder/superior landlord and the brand in question. In some instances, developers (and/or the brands themselves) may even require a waiver signed by the buyer, confirming that they understand the brand could withdraw from the estate in future.

The considerations are largely commercial and, as one might expect, tend to relate to the costs involved. A luxury brand is likely to come with a luxury price tag, not to mention luxury services and therefore, luxury service charges. Service charge deposit deeds requiring 6 – 12 months of service charge on account are often required by management companies at this level, employing concierge teams of the highest calibre costs money and buildings insurance on these schemes isn’t cheap.

In conclusion, branded residences offer a harmonious blend of luxurious living and hotel-style services. With turnkey convenience, world-class amenities, and the assurance of a trusted brand, buyers invest not only in property but also in a lifestyle. While, as a potential buyer, considerations on the branding side are likely to be more commercial than legal, buyers should be sure to appoint a lawyer who is well-versed in the intricacies of new developments/off-plan paperwork, and of course be prepared for the potential costs of such a high-end living experience.

Understanding Biodiversity Net Gain: part two – landowners

With many environmental factors and new green legislation for the real estate industry to consider, we continue to focus on Biodiversity Net Gain in the second of our two-part special.

In part one, we discussed Biodiversity Net Gain obligations imposed by the Environment Act 2021 through the lens of developers; today in part two, we focus on landowners. Alongside Polly Montoneri, Partner in our Rural Land and Business team, and Planning Associate, Sophie Smith, we talk about the impacts of Biodiversity Net Gain obligations and the challenges landowners are faced with.

Read more about Real Estate Sustainability.

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Five factors shaping the future of landed estates: Henry Cecil quoted in Spear’s

Henry Cecil and other industry experts have provided their insight on the future of landed estates to Spear’s.

The article, ‘Five factors shaping the future of landed estates’, discusses various challenges and emerging trends in the management and ownership of landed estates. Henry’s key takeaways are summarised below:

Legislative Changes

  • The phasing Basic Payment Scheme (BPS) has previously acted as a safety net for farmers and crofters by supplementing their main business income, but it also presents a challenge for in-hand estates.
  • It could lead to significant opportunities with new streams of income in natural capital markets.

Diversification

  • There is a growth in interest for landowners wanting to enter into natural capital markets, ranging from biodiversity net gain projects to nutrient neutrality and exploring landscape recovery schemes.
  • There has been an expansion in the scope of Agricultural Property Relief which now includes environmental land management schemes. This is a step in the right direction for landed estate owners to have confidence to enter natural capital markets.
  • With diversification on the rise, there are growing opportunities in renewable energy and other emerging markets.

Climate Change

  • There is an increase in flooding in parts of the UK at the moment. While it is area dependent, estates must prepare for changes in response to environmental and climate shifts.

Global Ownership

  • Although British farmers and entrepreneurs make up the majority of buyers and sellers, there has been a recent uptick in interest from American buyers.

Forsters’ CTE team support the inaugural Junior Litigators Forum

Head of Contentious Trusts and Estates, Roberta Harvey will be chairing the inaugural Junior Litigators Forum, hosted by ConTrA and Informa Connect.

Taking place from 9-10 May 2024 at The Grand Hotel in Birmingham, the conference will bring together junior litigators to discuss issues surrounding trusts and estates. The agenda will be delivered by senior industry figures and rising stars, including topics such as:

  • Keynote sessions delivered by HHJ Paul Matthews and Ellen Radley (Forensic Document Examiner).
  • Debate: Will challenges get easier every year (and so they should).
  • It’s a free country: testamentary freedom verses forced heirship Professional negligence in wills, trusts, and probate.
  • When the gloves come off: dirty tricks in litigation and how to deal with them.
  • Trustee blessing applications and other useful directions.
  • Building your personal brand.

Chambers High Net Worth Awards 2024: Forsters shortlisted for Residential Property Team of the Year

Forsters have been shortlisted for ‘Residential Property Team of the Year’ at the Chambers High Net Worth Awards 2024.

The awards reflect the team’s achievements over the past 12 months including their outstanding work and excellence in client service. The awards honour law firms across the world and we are delighted to be recognised.

The winners will be announced on 11 July.

HNW Awards Shortlist

Spear’s Legal Indices: Forsters’ Landed Estates lawyers retain their Top Recommended status

Forsters Partners Henry Cecil, Andrew Lane, Rupert Mead, Polly Montoneri and Consultants Penny Elliot and Christopher Findley, have retained their ‘Top Recommended’ status in the latest Spear’s Legal Index.

The Spear’s rankings showcase the highest calibre of landed estates lawyers, advisers who can support their clients on wide ranging issues, from tax and succession planning to land development and diversification.

The full listing can be viewed here.

Owen Spencer quoted in Property Week on the increase of film and TV studios in the North

Owen Spencer, Counsel in our Commercial Real Estate team, has been quoted alongside other industry experts in Property Week’s article discussing the increase of film and TV studios being developed in the North.

The article ‘Northern Hollywoods’ reports that several film and TV studios are set to significantly increase production capacity in the North of the UK, and explores the reasons to drive development in the North.

When most people think about the film and TV industry, their minds turn to Hollywood’s rolling hills or maybe Manhattan’s skyline. Increasingly, however, US production companies, among others, are choosing to shoot in the UK, attracted by a variety of factors including tax breaks and highly skilled production staff.

Owen adds that while living and working in the North has many attractions, being dependent on one studio would not appeal to everyone. “It will be a key challenge for new studios to train and bring forward their own skills pathways,” he says.

The full article, published on 26 April 2024, can be accessed here, behind a paywall.

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Victoria Du Croz speaks to Property Week on the slow path to planning reform

Partner and Head of Planning, Victoria Du Croz, met with Property Week to discuss the planning system and the government’s decision to increase application fees.

Many people attribute delays in the planning system to under-resourced local planning authorities. However, the government’s solution – to increase planning application fees at the end of last year – caused an outcry among developers, with many rushing to submit applications before the fees hike.

Much of the outcry focused on the government’s refusal to ringfence income from the increased fees so that it could only be spent within the planning department of the local authority. Given how cash-strapped local authorities are, it would be understandable if income generated from fees was diverted to prop up other council services.

In practice, this means many developers are paying the increased application fee and are still being asked by local authorities to enter into a planning performance agreement (PPA). PPAs will usually set out an agreed programme for determination, including commitments on officer engagement in return for the developer paying a fee.

However, what can a developer do if the local planning authority does not keep to the determination programme set out in the PPA or fails to ensure a sufficient level of officer involvement? Many are calling for PPAs to have more teeth, but in practice what penalty could there be other than requiring the local planning authority to return the PPA fee?

The developer still would not have any certainty over the determination period, and the local planning authority would have to return money it has probably already spent.

The full article, published on 18 April 2024, can be accessed here behind the paywall.