Affordable Housing: Back to Basics

Author: Charlotte Dyer, Senior Associate, Planning, Real Estate, London

“Affordable housing” – two words that those working in the property and planning world can hardly move without seeing flashed about everywhere. There is a wealth of information available on the subject. However, much of it is technical, highly detailed and assumes an existing level of knowledge that can make it hard for those who are new to the industry or who haven’t previously come across affordable housing to really get to grips with the subject.  This blog is the first in a series of blogs that we will be publishing over the coming weeks that will go back to basics to explain what is affordable housing in England, what are the different types, who is eligible for it, how is it implemented and what it means for private developers.

1. Where is affordable housing defined?

2. What are the different types of affordable housing?

3. The London Plan

 

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Commercial Service Charges – the RICS consults on proposed mandatory requirements

Authors: Matthew Bonye, Partner and Head of Real Estate Dispute Resolution and Judith Smyth, Associate, Real Estate Dispute Resolution, London

Commercial property practitioners and stakeholders have just under a week left to have their say on the draft text of the 4th edition of the RICS Code of Practice: Service Charges in Commercial Property (the “Code”), which is due to come into effect on 1 April 2018.  This professional statement will replace the 3rd edition of the Code, which is the RICS’s current best practice guidance.

In this blog post we look at what the proposed changes are and how landlords will be affected.

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Budget: Tax implications for real estate

Authors: Neil Warriner, Partner and Will Arrenberg, Partner, Real Estate Tax, London

Apart from a couple of pieces of good news, the Autumn Budget materials published earlier today contain a number of definite and potential changes to UK tax on real estate which could impact on pricing going forward.

The good news in the residential sector is undoubtedly the headline-grabbing reduction in SDLT for first-time buyers. The net effect of the proposal is that any first-time buyer will either have no SDLT to pay on purchases up to £300k, and less SDLT to pay on purchases up to £500k. This is worth up to £5k.

In the commercial sector, the good news is that the so-called ‘staircase tax’ is effectively being overridden by allowing businesses to ask the Valuation Office Agency to recalculate valuations by reinstating its previous practice in multi-occupancy buildings that applied for business rates purposes before the decision in Woolway (VO) v. Mazars (2015) UKSC 53. Also, no increases in SDLT rates were announced.

However, in the direct tax world, a number of changes are proposed (including changes that are the subject of a consultation announced today) that could have a significant impact, particularly as regards commercial property:

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Affordable housing viability calculations: Herbert Smith Freehills workshops on Mayor’s new guidance

Authors: Matthew White, Partner and Head of Planning and Catherine Howard, Partner, Planning, London

Herbert Smith Freehills are running workshops for property developers on housing and viability, with a focus on London and interpreting the Mayor’s recently adopted guidance on viability and affordable housing.  In our workshops we run through a case study with actual calculations showing how viability reviews work under the Mayor’s new formulae. Please contact us for more information on the workshops.

Background: proposals on a national and London-wide scale to address the housing crisis

Following the Government’s Housing White Paper (in February 2017), several recent publications by the Government and the Mayor of London set out proposed changes to planning legislation and policy, designed to address the housing crisis:

– The Mayor of London adopted his Affordable Housing and Viability Supplementary Planning Guidance (SPG) in August 2017. This SPG aims to improve transparency and trust in the planning process, with a focus on viability information, and aims to increase the expectation of actual delivery of affordable housing to at least 35% (and 50% on public land) for each new development scheme which proposes 10 or more new homes, with an overall long-term strategic aim of at least half of all new homes in London being affordable.  The method and explanations in the Mayor’s SPG are more detailed and rigorous than those in the Government’s national consultation (see below), and there have been industry calls for the Mayor’s methodology to be used nation-wide. Continue reading

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The Potential Pitfalls of Overage

Author: Kate Wilson, Professional Support Lawyer, Real Estate, London

Overage provisions can be complicated, and the recent case of Sparks v Biden [2017] EWHC 1994 (Ch), offers some useful reminders of the potential pitfalls that can arise when drafting overage agreements and the scope of the Court’s ability to imply terms into a contract.  In this article we examine the issues that can arise and suggest some practical points for consideration when negotiating an overage agreement.

In this case, the drafting did not expressly oblige the buyer to market newly built houses for sale once the development was completed, nor was there any mechanism for the payment of overage if the houses failed to sell within an appropriate time. The parties’ intentions were assumed – including that the buyer would want to sell the houses as soon as they were completed in order to realise his investment as quickly as possible.  However, this did not happen, and the agreement did not provide for such a turn of events, leaving the seller at a disadvantage.

  1. Facts of the case
  2. Decision of the court
  3. Points for practice

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CRC Reform – Energy usage to be reported in financial statements

Authors: Julie Vaughan, Senior Associate, Environment and Carol Shutkever, Partner, Corporate, London

News of what is to become of the CRC (formerly Carbon Reduction Commitment) Scheme post-2019 has finally arrived, in the form of a new Government consultation from the Department of Business, Energy and Industrial Strategy (BEIS) issued on 12th October 2017*:

  • the obligation to buy allowances to cover energy usage will cease and be replaced by an increase in the rate of the Climate Change Levy (CCL) – a longstanding tax on high energy usage;
  • instead of reporting to the Environment Agency, disclosure of energy usage is proposed to form part of a company’s financial statements.

Disclosure in the accounts is designed to bring to the attention of the Board (and other stakeholders such as potential investors) the potential for cost savings through implementation of energy efficiency measures and thereby to contribute to Government policy in the area of climate change and energy security.

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Communal living – flexible renting within a rigid planning system

Author: James Gibson, Associate (Scotland), Planning, Real Estate, London

Co-living is perhaps a concept traditionally associated with the shoestring lifestyle of students. But what about curated workspaces, well-equipped gyms or perhaps even a trip to the spa – all under the same roof?  New flexible living models have already started to spawn across London.  In this post, we look at how law and policy are playing catch up as these new products challenge traditional methods of defining land use.

The capital’s leading developers are taking notice of co-living. There is an unwavering desire amongst the world’s transient young population to work in London. However, traditional home ownership aspirations have been replaced by a realism around the cost of buying property in London. The market for new rental products, focussing on access to luxury facilities and large social networks, carries an obvious attraction.

So what happens when co-living models don’t fit within an existing land use category – where a property may be occupied by different types of users, some for only one night and others for perhaps several years? How should these applications be treated by the planning authority, particularly where they address an identified need?

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Corporate Real Estate: What’s Market?

Authors: Paul Chases, Partner and Head of Corporate Real Estate, Micky Yang, Senior Associate and Alex Wright, Associate, Real Estate, London

“Market” and “Off-market” are two phrases that are commonly used by commercial lawyers – but what do they really mean in the context of a corporate real estate deal?

In a series of articles recently published in the Estates Gazette, Paul Chases and his corporate real estate colleagues at Herbert Smith Freehills (including Micky Yang and Alex Wright) took a closer look at what is market in relation to:

(i) corporate real estate acquisitions and disposals;

(ii) warranty and indemnity insurance; and

(iii) corporate real estate joint ventures.

The article relating to joint ventures is particularly relevant to what is market in relation to a development joint venture. Please click on the links below to read the articles or otherwise contact us for further information:

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Connected and Autonomous Vehicles – the future?

The BBC and others are today reporting the Department for Transport’s news that the Government has announced funding for a “platooning” feasibility study. This will allow up to three heavy goods vehicles to travel in convoy on motorways with their acceleration, braking and steering kept in sync through wireless technology, although all lorries in the platoon will have a driver ready to take control at any time. The press release notes that the trial will be carried out in three phases, with the first focusing on the potential for platooning on the UK’s major roads on which trials are expected by the end of 2018. Similar trials have already been successfully carried out in Europe and the United States.

Vehicle automation has the potential to change not just the way that we transport goods but also ourselves.  It is anticipated that, ultimately, it will change the face of our towns and cities.  Conversations about the potential impact of this new technology are already taking place. On 18 July 2017, the Herbert Smith Freehills Connected and Autonomous Vehicles Group held a half-day client-facing conference at our London office discussing these very issues through a series of panel discussions on topics including the global regulatory and commercial landscape for CAV technology; product liability and class action risks; challenges and opportunities for the insurance industry; cybersecurity and data protection issues; smart cities; and the potential impact on infrastructure. Matthew White, Head of Planning, London was one of the panellists. Continue reading

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Increased scope of contractors’ design liability

Author: Michael Mendelblat, Professional Support Lawyer, Real Estate Construction and Engineering, London

The Supreme Court in E.ON v MT Hojgaard has held that apparently inconsistent provisions in a design and build contract relating to standard of skill and care as against the strict requirements of a technical output specification may both be enforced. This is likely to increase the scope of a contractor’s liability unless express provisions indicate otherwise. E.ON v MT Hojgaard could be the construction “case of the year”, as it will have an effect on the drafting of all construction contracts where the contractor (as often occurs) has a design role.

A brief note of the main points of the case are below. We plan to produce a more detailed briefing in due course. If you would like to receive a copy, please contact us. Continue reading

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