UK: English/Welsh Commercial Real Estate In 2018: The Magnificent Seven

Last Updated: 18 December 2018
Article by Emma Broad and Carla Revelo

2018 has been an interesting year for commercial real estate in England and Wales. Besides the endless speculation around the impact of Brexit on the market, there have been a number of important legal developments, of which the following are some of our top picks.

1. Recreational and sporting easements

In November 2018 the Supreme Court handed down its judgment in Regency Villas Title Ltd v. Diamond Resorts (Europe) Limited. The Supreme Court confirmed by a majority of four to one that the grant of purely recreational (including sporting) rights over land which genuinely accommodate adjacent land can constitute easements. On the facts of the case in question a valid easement had been granted for the owners of one plot of land to use facilities such as a swimming pool, croquet lawn, billiard room, golf course, restaurant and gardens on the neighbouring property. It helped that the use of the land with the benefit of the right was itself used for recreational purposes – namely as holiday timeshares.

Going forward it will be interesting to see what impact this decision will have on the use of easements. What is clear is that, while every case will turn on its own facts, it will still be necessary to demonstrate that the four well-established conditions for an easement are satisfied, namely:

  • there must be a dominant and servient tenement (so there must be a parcel of land with the benefit and one with the burden of the easement);
  • the easement must accommodate the land with the benefit;
  • the owner of the land with the benefit and the owner of the land with the burden must be different; and
  • the right must be capable of forming the subject-matter of a grant.

2. Ban on new lettings of sub-standard properties

Since 1 April 2018 landlords have been prohibited from granting new leases of certain premises with an energy performance rating of F or G. The ban was introduced via the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 and applies to both domestic and non-domestic private rented property. While a breach of the ban will not invalidate the underlying lease, a landlord in default could face substantial fines.

It is possible for landlords to register exemptions from the ban in certain circumstances (for example, where the landlord has made all relevant energy efficiency improvements that can be made and the property is still rated F or G). The Exemptions Register is now live although landlords should note that an exemption is not transferable – on any sale of the property the new landlord will have to apply for a new exemption.

For more information on the ban and minimum energy efficiency standards see our update.

3. Draft bill for the register of beneficial ownership of overseas entities

In July the Department for Business, Energy & Industrial Strategy published a draft Registration of Overseas Entities Bill. The Bill sets out a scheme for requiring overseas entities that own, let or dispose of land in the UK to register details of their beneficial owners. The draft confirms that, if implemented, the register will be kept by Companies House and will be open to inspection by the public. The Bill also provides that the key methods for enforcing any new requirements will be via a mixture of criminal liability and restrictions on title at the Land Registry.

As the government hopes to take the register live in 2021, overseas entities involved in UK land will want to pay close attention to the Bill and any future developments towards its implementation.

For more information on the draft Bill please see our previous update.

4. The new Electronic Communications Code

2018 saw the market adjusting to the new Electronic Communications Code, which grants telecommunications operators statutory rights to install and retain their equipment on private land.

The new Code came into effect on 28 December 2017 and arguably changed the balance of power between operators and landowners in the operators' favour. Under the Code operators benefit from automatic rights to assign, upgrade and share equipment while the compensation payable to landowners has been watered down by the incorporation of a "no scheme" valuation principle. The new statutory procedures for terminating Code rights and forcing the removal of equipment also work against landowners – it could now take in excess of two years to remove an operator from a site where its equipment benefits from Code protection.

At the end of October we also had judgment in the first substantial case on the new Code – Cornerstone Telecommunications Infrastructure Ltd v. University of London. That decision,  which was summarised in our update, confirmed that the right to survey a site is a Code right and that an operator can apply for interim Code rights without also having to apply simultaneously for permanent rights. It confirmed that the priority under the Code is the provision of a choice of high-quality electronic communication services to the public rather than the interest of individual landowners.

5. Welsh Land Transaction Tax (WLTT)

From 1 April 2018, Stamp Duty Land Tax (SDLT) was replaced by WLTT for land transactions involving property in Wales. The Welsh Revenue Authority rather than HM Revenue & Customs oversees the collection of WLTT.

While WLTT is broadly similar to SDLT there are some differences between the two. For example, there are differences in the rates of tax charged and also in the application and availability of various reliefs.

6. Plans for reform of residential leasehold

Among our clients one of the most talked-about developments this year has been the government's proposals to press ahead with a ban on the sale of new leasehold houses and to impose a £10 statutory cap on ground rents for residential long leases.

Many new and existing developments have a residential component therefore both developers and investors want to understand how things are going to change so that they can plan ahead. The problem is that, while the consultation given in October provided some idea of how these reforms will be implemented (for example, that the Land Registry will have a key role in ensuring compliance), a lot of the detail is still lacking. Will the cap on ground rents apply to leases of more than one unit? How can a seller be forced to deliver the freehold to a buyer if it only has a leasehold interest? What measures will be taken to help existing leaseholders?

This issue will continue to rumble into 2019 but for a more detailed review of the proposals put forward in October 2018 please see our update.

7. Grounds for opposing a renewal lease

The Supreme Court handed down an early Christmas present for tenants when it gave its decision in the case of S Franses Ltd v. Cavendish Hotel (London) Ltd.

The case concerned a landlord's attempt to oppose its tenant's request for a renewal lease pursuant to the Landlord and Tenant Act 1954 (the Act) on the basis of ground 30(1)(f). That statutory ground for opposing a renewal lease applies where the landlord can show, as at the date of the hearing, that it intends to demolish or reconstruct the premises or carry out substantial works of construction to the premises or part thereof and cannot do so without obtaining possession. The unusual feature of the case was that the landlord openly admitted that its intention to carry out the works was conditional on them being necessary to get the tenant out and it being generally accepted that the works were not being undertaken for any other commercial reason. This gave rise to the central issue in the case – is it open to a landlord to oppose the grant of a new tenancy if the works it intends to carry out have no purpose other than to get rid of the tenant and would not be undertaken if the tenant were to leave voluntarily?

The Supreme Court confirmed that while the landlord's motive is irrelevant it may still be material in determining whether or not the landlord has proven a firm and settled intention to carry out the works. Further, the landlord's intention to do the works must exist independently of the tenant's statutory claim to a new tenancy. On the facts of this case, the landlord's intention was conditional on the works being required in order to remove the tenant (and so was not independent of the tenant's statutory claim) and the landlord did not intend to do the works if the tenant left voluntarily. As such the necessary intention required by the Act had not been established.

This decision will therefore provide some protection to tenants against landlords that have the resources to construct schemes of works with the sole purpose of defeating the protection afforded by the Act. Going forward it will be interesting to see how this decision plays out in practice in 2019.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions