Head of Developers | Head of Property Litigation | Real Estate
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This legal update provides a summary of legal and regulatory changes over the last six 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 Real Estate Disputes and Land Registry to conservation covenants.
Move through the key changes to check what is important for your business.
This update is accurate as of 31 December 2022 and will be updated periodically.
The Law Society/CLLS note on electronic signatures has been updated to incorporate the 2019 Law Commission report and clarifies that physical presences is necessary to witness a document and remote witnessing (for example, via a video call) is not yet a valid method of execution. It also clarifies that the safest course is not to use an e-seal on electronic documents. The note also reflects changes in practice adopted by the Land Registry and is updated to reflect the wider use of electronic signatures since the Covid-19 pandemic.
If any transaction documents will be executed using a witness, remember it is important that the witness is physically present.
On 30 November, the Land Registry launched a redesigned online portal for business customers, such as law firms. Customers are asked to submit using the digital registration service by default.
HMLR is moving towards a fully digital method of submission of Land Registry applications. The old method of submission (the document registration service) is still available until the new method has certain functionality and can accept all applications.
The Land Registry has had a backlog of applications for a significant period. These delays became longer during the Covid-19 pandemic and pending applications can delay subsequent transactions. If it becomes a problem, we can sometimes ask the Land Registry to expedite a pending transaction. The Land Registry says that the move to digital submissions will reduce their backlog.
Part 1 of this Act deals with a regulatory scheme to make consumer connectable products more secure against cyber-attack. Part 2 of this Act contains provisions to accelerate deployment and expansion of mobile, full fibre and gigabit capable networks across the UK. It makes some changes to the Electronic Communications Code to speed up negotiations for installation and maintenance of telecoms apparatus. It introduces an obligation for operators to consider using alternative dispute resolution (rather than the Court) to settle disputes and automatic rights to upgrade and share underground kit subject to certain requirements.
Most of the Act will be brought into force at a later date. Once in force, the provisions relating to Code rights and telecommunications apparatus may affect properties where there are telecoms sites as they impact the rights of telecoms operators.
Regulations made on 8 December 2022 brought sections 1 and 2 and the schedule to the Telecommunications Infrastructure (Leasehold Property) Act 2021 into force on 26 December 2022.
The Act introduces a new section 4A to the Electronic Communications Code 2017 allowing operators to apply to Court for interim Code rights in multiple dwelling properties if a tenant has requested a service from the operator and the landlord has failed to respond to formal notices asking for access. This new provision means the operator now has an alternative option for obtaining access if the landlord fails to respond.
In Sutton v Baines & Anor (2022) UKUT 342 (LC) (19 December 2022), the applicant wanted to build a second home on the large side garden of her home but was prevented by a restrictive covenant in a 1970 conveyance. She applied for discharge of the covenant. Her neighbours objected. Although the covenant secured a practical benefit (of preventing building close to the neighbouring property), the substantiality of value or advantage could not be assessed because there was no current planning permission. The request to discharge the covenant was refused.
Before applying for discharge of a restrictive covenant, consider (and take advice on) whether every aspect of the application can be established.
The Local Land Charges (Amendment) Rules 2022 implemented Part 7 of the Environment Act 2021 which deals with conservation covenants.
The rules give effect to conservation covenants, a new form of local land charge created by the Environment Act 2021. A conservation covenant is a private voluntary agreement between a landowner and responsible body (such as a conservation charity or public body) and is binding on the landowner and successors in title. The purpose of the conservation covenant must be conservation of the natural environment and resources of land and/or places of archaeological, architectural, artistic, cultural or historic interest. The agreement could cover many things including, for example, how land is managed to conserve habitats for rare species, specifying how future landowners manage and conserve land or payments for biodiversity net gain.
The government has published guidance on conservation covenants in England.
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.
The Government has set out new measures to strengthen the Levelling Up and Regeneration Bill.
Further changes have been proposed to the Bill to strengthen the government’s commitment to build enough homes where they are needed and to give local people a greater say on where new developments are located. Measures in the Bill aim to tackle slow build out by developers. The new proposals include financial penalties for companies which fail to deliver housing despite having planning approval.
The measures proposed will impact the building of new homes and should be reviewed as the Bill moves through Parliament.
In DB Symmetry Ltd and another (Respondents) v Swindon Borough Council (Appellant), the Supreme Court held that it was not lawful for a planning condition to require a landowner to dedicate land as public highway. Instead, this should be dealt with in a section 106 planning agreement or an agreement pursuant to the Highways Act 1980. In any event, the condition in this instance did not require the access roads to be dedicated as highway.
If any planning permissions for your properties include a condition which requires roads to be dedicated as public highway, you should take advice from a planning lawyer to consider the implications and whether it should be covered in a separate planning agreement or whether it could be used to your benefit.
The government has published the outcome of its environmental target consultation.
Each of the government’s long-term targets will be accompanied by non-statutory interim targets (up to 5 years) in the Environmental Improvement Plan which will be published by 31 January 2023.
Five draft statutory instruments were laid before parliament on 19 December to legally implement the final targets.
The Chancery Lane Project brings legal professionals together to develop contracts and model clauses to help fight climate change and achieve net zero emissions. Foot Anstey is involved with this work and has links with the Chancery Lane Project. The updated glossary includes 20 new terms.
This link here shows the climate clauses relating to the built environment lifecycle.
We can provide training to introduce you to the type of clauses which are available via the Chancery Lane Project and explain how these can be used to match your internal net zero strategy. We can also advise on the use of ‘green clauses’ in leases and construction documents.
In this recent Supreme Court decision, the court looked at the appropriate remedy where a son claimed he was entitled to the promised share in his parents’ farm following a disagreement which resulted in the father reneging on his promise.
A son relied to his detriment on his father’s promise that he would inherit the family farm. The Supreme Court held that as the son had to move out and work elsewhere; the parents could choose whether their son should receive his share of the farm as a reversionary interest under a trust with the parents having a life interest in the meantime or receive a discounted equivalent sum of money to reflect the accelerated receipt (since his parents were still alive).
Please view this link to our article which covers the issues to consider in a proprietary estoppel claim.
In Hush Brasseries Limited v. RLUKREF Nominees (UK) One Limited & Anor (2022), a tenant of a restaurant had an option to take a further lease on the same terms. Pandemic arrears accrued. The arrears were paid but not before the landlord – who had redevelopment plans – served notice to forfeit the option, but not the lease. The option allowed forfeiture for any breach of the lease. The tenant applied to court requesting relief from forfeiture. The High Court held that the option was a sufficient proprietary interest to allow the tenant to request relief. The forfeiture provision in the option intended to secure performance of the tenant covenants in the lease. Relief would have been given if the lease had been forfeited so on this basis the tenant was granted relief and the option was restored.
If an option agreement is forfeited for breach, it may be possible to apply for relief from forfeiture.
In Rail for London Ltd & Anor v London Borough of Hackney  EWHC 2929 (Ch) (12 December 2022), a 99-year plus one day headlease and a 99-year underlease were granted on the same day. The headlease rent is defined by reference to the rent under the underlease which in turn related to the net income received each year. The underlease was surrendered for a premium. The tenant claimed the rent was therefore zero.
The Court held that the headlease would lack commercial coherence without an implied term that if the underlease is determined, the rent would be ascertained in accordance with the underlease provisions with the necessary modifications.
Always consider what will happen in the event of termination if a lease by reference relies on the definition of rent in another lease which could be surrendered in future. Reassuringly the Court implied a term in this case, but this is based on the specific facts so is not a guaranteed outcome.
In Alma Property Management Ltd v Crompton & Anor  EWHC 2671 (Ch) (28 October 2022), the case concerned a claim for specific performance against the receivers of a building to perform the repairing covenant under the lease. The receivership had terminated in 2016 but the lease remained vested in the defendants.
The court held that it would be inappropriate to grant an order for specific performance to perform the repairing obligations in the lease after their appointment had ended.
The court also found that the freeholder had acted unreasonably in requiring an authorised guarantee agreement as a condition of consent for the receivers to assign the lease to a residents’ management company.
The case clarifies that a claim for enforcement of a covenant in a lease against a receiver must be brought during their appointment to be enforceable against them.
This case was a County Court judgement concerning a rent review clause in a lease for a retail unit. The issue was whether under s34 of the 1954 Act an adjustment was required due to the lack of a fitting out rent-free period in the original lease.
The judge considered that the correct approach was to analyse the comparables to assess what rent would have been paid if no rent-free period had been allowed, and then to use that to determine the s34 rent for the property.
Always consider the effect of a rent review clause when drafting and if the rent review is disputed.
Companies House has published a list of UK-regulated agents able to verify information for an overseas entity when registering them on the register of overseas entities at Companies House.
The Economic Crime (Transparency and Enforcement) Act 2022 came into force on 5 September. The impact is that any overseas entity which owns UK property must register at Companies House on the register of overseas entities by 31 January 2023. Failure to comply with the Act will be a criminal offence. The application to Companies House requires an agent to verify certain information and submit the registration. Companies House has now published a list of those agents who would like their names included on this page.
If a counter party in a transaction (for example, a seller) is an overseas entity then the provisions of this Act will be engaged and we would need to check their registration position and provide for it in the contract.
The Economic Crime and Corporate Transparency Bill is making its way through parliament and will make some amendments to the Register of Overseas Entities established by the Economic Crime (Transparency and Enforcement) Act 2022. The Bill proposes a requirement to include a list of all titles owned by an overseas entity when they submit their application for registration at Companies House on the overseas register and may require further steps to ensure compliance with Land Registry requirements.
The Building Safety Act 2022 will have far reaching effects for developers, but the Act is not yet fully in force.
There have been consultations on different aspects of the Act and currently the consultation on the Building Safety Levy is open until 7 February 2023. The outcome of the consultation on the higher-risk buildings (descriptions and supplementary provisions) regulations was published on 20 December 2022 and draft regulations have been laid before Parliament.
Certain provisions of the Building Safety Act 2022 relating to the building safety regulator functions came into force on 1 December as a result of the Building Safety Act 2022 (Commencement No 3 and Transitional Provision) Regulations 2022 (SI 2022/1210)
A pilot has been launched of the medium rise scheme funded by the building safety levy to fund mitigation schemes of unsafe external wall systems in buildings 11-18 metres high. The pilot targets a small number of prioritised buildings.
The Building Safety Act 2022 will widely impact residential and mixed use multi-let properties.
The Building Safety (Leaseholder Protections) (England) Regulations 2022 (legislation.gov.uk) sets out the prescribed information which landlords must provide to tenants at certain times including when remediation costs are demanded and how to value a lease for the purpose of determining the extent of leaseholder liability for remediation costs under the Act.
The following is a link to our article published after the Act had received Royal Assent.
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 Building Safety Act 2022. We are monitoring the anticipated changes in relation to the gateways and golden thread in relation to higher risk buildings. Please let us know if you would like to discuss.
For more information, read our Gateway in 2023 article at the link here.
The case, O G Thomas Amaethyddiaeth CYF v Turner (2022) is a reminder that a notice must be served on the correct entity to be effective.
The landlord of a lease, Mr Owen, served notice to quit on the tenant. He thought the tenant is Mr Thomas and so addressed the notice to him, but Mr Thomas had assigned to OG Thomas Agriculture Ltd. The Court decided the notice was not correctly served and could not be saved (on the basis that a reasonable person knowing the facts would understand the intention) because serving on the tenant was a formal condition of giving notice. The facts were unusual but if the notice had been addressed to “the tenant” then it would have been validly served.
You should ensure that formal legal notices are served by real estate disputes lawyers to be certain formalities are complied with.
In Hillside v Snowdonia National Park Authority (2022), the Supreme Court confirmed that a 1967 planning permission could no longer be implemented because development had been carried out under subsequent planning permissions which made the original development physically impossible.
This case has a potentially significant impact for developers dealing with multi-unit sites with multiple planning permissions and/or phases. The result is that if the development envisaged by the original planning permission is materially physically impossible due to development carried out pursuant to a subsequent planning permission, then the original planning permission cannot be implemented, and the developer will not be entitled to complete it.
In practice the impact of this case will need to be considered when buying or selling part of a wider development or applying for a variation or new planning permission over part of a site.
We recommend a review to check whether your sites may be affected by the decision.
For more information, read our article at the link here.
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