Head of Developer | Head of Real Estate | Head of Real Estate Disputes
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This legal update provides a summary of legal and regulatory changes over the last three months.
We’ve identified key issues and legislative updates that may impact your business and split them into high, medium and low impact issues in our developer and property insights summary. These include everything from the Building Safety Act to cases about interpretation of documents.
Move through the key changes to check what is important for your business.
This update is accurate as of 30 September 2023 and will be updated periodically.
This Bill is making its way through Parliament and, in its current form, may make some amendments to the Register of Overseas Entities established by the Economic Crime (Transparency and Enforcement) Act 2022.
If a counter party in a transaction (for example, a seller) is an overseas entity then the provisions of this Act will be engaged.
In Great Jackson St Estates Ltd v Manchester City Council , an application to modify or discharge restrictions on development of two redundant warehouses was rejected as the degree of control the restrictive covenants gave to the freeholder secured a practical benefit and substantial advantage which would be affected if the restrictions were modified.
This case could be relevant when considering the interpretation of restrictive covenants in leases in so far as they impact use.
In Radcliffe Investment Properties Ltd v Meeson , leaseholders were not responsible for the cost of a waking watch in a block of flats where the reason for the fire safety defect was the landlord’s failure to comply with the necessary annual review of the fire risk assessment and so costs were not reasonably incurred.
This may be relevant on review of compliance with fire safety requirements for blocks of flats.
In Dunlop v Romanoff , a 2018 conveyance was rejected by the Land Registry because of a discrepancy between the plan (which excluded the relevant land) and the written description of the property (which included it). The Upper Tribunal held that where the written wording was precise and clear but inconsistent with the plan, the plan did not necessarily prevail. In this case the court could look at extrinsic evidence which was in favour of the wording in the schedule to the conveyance. This interpretation was legitimate and necessary to read the plan as if it included the relevant land.
This may be helpful if discrepancies arise between descriptions used in conveyances but also flags the importance of reviewing property descriptions carefully before proceeding with transactions.
The Bill would reform the residential rental market in England by replacing fixed term assured tenancies and assured shorthold tenancies with periodic assured tenancies. The Bill also proposes to abolish section 21 “no fault” evictions but widen the grounds for possession under section 8 and Schedule 2 of the Housing Act 1988.
If you need to obtain vacant possession of property let on residential assured shorthold tenancies this could be relevant, however the Bill is in its early stages so developments should be monitored.
In Vodafone Ltd v Potting Shed Bar and Gardens Ltd , the Court of Appeal reversed the decision of the Upper Tribunal to hold that the parties which are currently entitled to the benefit and burden of a Code Agreement can exercise the rights in Part 5 of the 2017 Electronic Communications Code to renew or terminate the arrangement.
This could be relevant for sites with telecoms apparatus in situ.
In Eastpoint Block A RTM Company Ltd v Otubaga , the Court of Appeal held that a right to manage company could apply for a determination that a flat leaseholder is in breach of covenant (by using their property for business and causing nuisance to others) under section 168(4) of the Commonhold and Leasehold Reform Act 2002. The facts were not decided, only the right to apply.
This could be relevant in blocks if there is a RTM company which wishes to enforce against an individual leaseholder.
In Lazari Properties 2 Ltd v SoS , the court held that a condition in a planning permission limiting the extent of the property which could be used for class A2 and A3 to safeguard the retail function and character of a shopping centre meant that the claimant could not freely move between use classes, even though the Town and Country Planning (Use Classes) Order 1987 had since been amended to subsume both use classes within the wider class E. In the context of the permission granted, A2 and A3 could not now mean any use within class E.
The case is relevant to the impact of the 2020 changes to the Town and Country Planning (Use Classes) Order 1987 and interpretation of planning permissions. In this case, the interpretation of the planning permission at the date of grant was relevant.
The government guidance on conservation covenants had been updated to reflect DEFRA’s launch of the application process to apply to become a responsible body and the DEFRA guidance on the criteria for selection.
As a conservation covenant binds successors in title and secures the land for conservation purposes, if you acquire a site which is bound by a conservation covenant, this could affect the development potential of the site.
In URS Corporation Ltd v BDW Trading Ltd , defective design work was discovered after practical completion on a development by developers BDW. By that time, BDW had sold all flats and so had no proprietary interest. BDW issued a claim in tort for professional negligence as the design consultants’, URS, contractual limitation period had expired, as had any collateral warranties and the six-year limitation period under the Defective Premises Act 1972. BDW sought to amend pleadings following the Building Safety Act 2022 to include a previously time barred claim under section 1 of the DPA 1972 (as the limitation period had extended from 6 years to 15 years) and section 1 of the Civil Liability (Contribution) Act 1978. The Court of Appeal unanimously dismissed the consultant’s appeal and allowed the developer’s claim to continue alongside the new DPA claim.
The Court of Appeal clarified that the cause of action in tort starts to run from practical completion and as the developer had a proprietary interest at the time, they had a potential claim. It was irrelevant that the developer had no obligation towards the current residents.
There was nothing to prevent a claim under the DPA being added to the ongoing proceedings. Even though the residents had not yet brought a claim, under the Contribution Act 1978 the flow of loss from the developer’s liability under the DPA would flow to the duty owed by the consultants.
The case shows that developers can bring claims under the DPA against professionals whose work is substandard. This is in line with the purpose of the BSA and the aim for the cost of remediation to be passed on to those who are responsible.
In Denton Homes v Cobb , an option agreement allowed the option period to be extended for a further period if the buyer of a development site, Denton Homes, was awaiting a decision on a planning application subject to a long stop date. The court had to consider whether the wording of the option permitted multiple extensions.
The option period was extended three times by agreement. At the final expiry date, a planning decision was outstanding resulting in a further extension of 50 days after issue of the written decision notice. Shortly before the expiry of that 50-day period, Denton Homes made a fresh application for planning permission and claimed that this resulted in a further extension of the option period. It also purported to exercise the option shortly before the long stop date (even though at that date the new application had not been decided).
The Court held that, based on the facts at the date the option was entered, the agreement anticipated only one extension due to an outstanding planning application and it did not anticipate further planning applications being submitted within the extended option period. There was no clear commercial purpose in permitting multiple extensions. If further applications after a failed appeal were intended, the parties should have provided expressly for this. As a result, Denton Homes had not validly exercised the option.
If option periods are drafted to allow for multiple extensions, ensure they are clearly drafted and give effect to the parties’ intentions.
This Bill is making its way through Parliament and includes these provisions impacting property:
A proposed amendment to remove the requirement for new housing projects to ensure they comply with nutrient neutrality requirements was defeated in the House of Lords.
The Bill will impact development transactions, but the legislation is not yet finalised and has changed many times since it was first introduced in May 2022. Currently the government anticipates Royal Assent in November 2023.
The Environment Act 2021 introduced the concept of biodiversity net gain (BNG) to make it mandatory for all planning permissions in England (with a few exceptions) to deliver at least 10% BNG. While the statutory requirement is still formally intended to be introduced in November, we expect that this will be delayed until the New Year at the earliest as the regulations setting out the detail of the process have not been published.
This will be an additional consideration for all development work once it is in force.
The Building Safety Act 2022 (BSA) widely impacts development and occupation of residential and mixed use multi-let properties but is not yet fully in force. These are the main updates in the last six months.
2-4 Leigham Court Road – in this case, a remediation order requiring a landlord to remedy specified relevant defects was granted under the BSA by the First Tier Tribunal to a group of leaseholders.
The government published its response to the consultation on the new safety regime for occupied higher-risk buildings.
New regulations have been published including:
The Building Safety (Responsible Actors Scheme and Prohibitions) Regulations 2023 came into force on 4 July 2023. The Scheme prohibits residential property developers who refuse to sign the government development remediation contract from operating in England. The scheme was launched on 24 July 2023.
The Cladding Safety Scheme was launched on 25 July 2023 to fund the cost of remediating unsafe cladding on residential buildings over 11 metres outside London and between 11 and 18 metres inside London (the Building Safety Fund will continue to deal with buildings over 18 metres inside London).
The Building Safety (Leaseholder Protections etc) (England) (Amendment) Regulations 2023 came into force on 5 August. These amend the two sets of regulations which implement the leaseholder protection provisions of the BSA. As well as changing the form of landlord’s certificate, there are new service requirements.
On 10 August 2023, the Department for Levelling Up, Housing and Communities published guidance on the amendments made by these regulations.
Existing higher-risk buildings must be registered with the Building Safety Regulator by the principal accountable person by 30 September 2023. See this Foot Anstey article for more information.
We can provide training on the impact of the revised limitation periods and changes to the Defective Premises Act 1972 as a result of the BSA. We are continuing to monitor the anticipated changes in relation to the gateways and golden threads in relation to higher risk buildings. Please let us know if you would like to discuss.
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