Are you GDPR ready?

It is unlikely to have gone unnoticed from the volume of emails asking individuals to “opt in” to future company mailing lists that tomorrow (Friday 25 May), the EU General Data Protection Regulation (GDPR) comes into effect in all EU countries and in the UK it will be supplemented by the Data Protection Act 2018. The stakes are high – if your company does not comply, it could be fined up to 4% of worldwide turnover or 20 million Euros, whichever is higher.  As the information being held by landlords and developers is likely to be varied and complex (and not just employee data), such industries are in a vulnerable position with regards to compliance.

So what do companies operating in the real estate sector need to do?

  • Read the rest of this blog post for a reminder of the types of personal data which you might be holding on your databases which will need to be GDPR compliant;
  • Check our HSF hub page on GDPR here; and
  • Contact us at HSF with any queries or for further information.

GDPR will affect anyone using, collecting, processing and storing personal data. Personal data covers the type of information which you would expect, for example contact name and details, but could also include information collected by landlords and developers on building management systems and databases (for example when an individual enters and exits a building, and see more examples below).

The property development industry appeared to be lagging behind other sectors in its preparation for GDPR so we have put together a brief reminder of the types of personal data which you might be holding on your company databases which will be subject to GDPR requirements. This could include:

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Court Interprets Obligation in a Standard Form Construction Contract to use all due diligence to obtain planning approvals

A commonly encountered provision in the standard form JCT Building Contract (2005 edition) was interpreted by the Court of Appeal to include an implied obligation on a developer to use “all due diligence” to obtain planning approvals. The phrase “all due diligence” was held not to require the developer to ensure that planning approvals were in fact granted, or that they were granted within sufficient time to prevent delays. At most it required the developer to make a timely application containing sufficient information and to co-operate with the Local Authority during the planning process.

The decision demonstrates the limits of the obligations commonly entered into by developers in the UK in relation to planning approvals.

1. Facts of the case

2. Developer responsible for Planning Approvals

3. Obligation to exercise “all due diligence”

4. Delays caused by Local Authority

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LANDOWNERS AND DEVELOPERS – BEWARE THE RIGHT OF FIRST REFUSAL

Are you a landlord or developer of property which includes residential flats?  Are you going to dispose of your interest in that property?  If so, you may be obliged to offer your residential tenants a right of first refusal before selling to anyone else. If you don’t, you could face serious consequences including criminal sanctions.

In this blog we go back to basics to explain when the statutory right of first refusal applies, what the consequences are when it does and how it is relevant in the context of mixed-use developments.

The Landlord and Tenant Act 1987 gives tenants this statutory right, however, the legislation was rushed through parliament in the run-up to the 1987 general election by a Conservative government who were under pressure to redress the balance of power between landlords and tenants in the residential sector. The result was a complex and defective piece of legislation which has been heavily criticised by the courts over the years.

1. When does the right of first refusal apply?

2. What are the consequences when the right of first refusal applies?

3. How is the right relevant to mixed-use developments?

 

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Supreme Court ruling on negligent property valuations: Tiuta International v De Villiers Surveyors [2017] UKSC 77

The Supreme Court judgement in the case of Tiuta International v De Villiers Surveyors was handed down at the end of last month. The case involves surveyors valuing a property development, and a lender granting a loan facility to a developer while relying on the valuation.

The Supreme Court held that where a lender, Tiuta, advanced money on the basis of an initial valuation of property by surveyors De Villiers, then Tiuta refinanced the facility on the basis of a second negligent valuation by De Villiers, the liability of De Villiers was limited to the ‘top up’ element of any additional lending.

This ruling has come at a time when valuation negligence is a hot topic in the courts. There is an increased frequency of claims, often being tied to the financial instability of the late 2000s and its effect on commercial real estate values.  In recent months, other important issues such as the width of the margin for error in valuation, have come under scrutiny.

For more information on this case please click on the link to the HSF insurance blog post, below:

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Communal living – flexible renting within a rigid planning system

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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Increased scope of contractors’ design liability

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

Residential leasehold – time for change?

At the end of July, hard on the heels of the Housing White Paper published in February, DCLG issued a Consultation Paper on “Tackling unfair practices in the leasehold market”. If you wish to make your voice heard prompt action is needed – the period for responses expires on 19 September.

The main points which are proposed to be covered in future legislation are:

  • Cutting back on the future sale of freestanding houses on a leasehold basis (unfair fees have been charged for extensions etc), save where there is good reason to protect local character or amenities.
  • Limiting the charging and increase of ground rents on new flat leases over 21 years in duration (recent publicity has focused on ten-year doubling of rents which, if not capped, can reduce the price or even make the flat unsaleable).
  • How can we make the (little-used) commonhold regime fit for purpose? Briefly, this combines ownership of a freehold unit with membership of a corporate body which manages the common parts. A commonhold community statement is an essential feature, much of which is standard.
  • What else should be done to tackle “abuse of leasehold” (to adopt DCLG’s wording)? This may include reform of existing leasehold terms and a review of the cost of acquiring the freehold (known as “enfranchisement”).

This Consultation is very much about protecting the interests of the consumer who was either not made fully aware of the true cost of buying a leasehold interest (on top of paying the original price) or who was sold the property on a “take it or leave it” basis, with no ability to negotiate the terms of sale. First-time buyers would have been particularly vulnerable to the latter practice and may not have been properly advised. Continue reading

What impact do overseas investors have on housing supply?

Planning Resource has published an on-line article by Matthew White, Head of Planning, London, discussing the conclusions of the May 2017 report by the London School of Economics concerning the impact of overseas buyers on housing supply. For the Planning Resource article, please see here or contact us.

The LSE report finds that London attracts a significant amount of institutional investment from lenders and business globally, bringing forward development on major development sites faster and with more homes than would otherwise have been the case. Despite a perception that new homes bought by overseas investors are kept empty, the LSE found that in fact this is generally not the case. The LSE report says:

Developers estimated occupancy rates for individual schemes were generally up to 95%. There was almost no evidence of units being left entirely empty – certainly less than 1%. Units bought to be let out appear to have very high occupancy rates and indeed some are ‘over-occupied’ eg by students. However for those units bought as second homes, occupancy could be as little as a few weeks a year. Many such second home sales are to UK residents, not overseas buyers.

This will be of interest to developers who rely on overseas buyers to de-risk their projects. The issue is likely to remain contentious in some areas of London, but this research will be useful evidence in response to such concerns.

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Revised Electronic Communications Code – Code Red for Landowners

A revised new Electronic Communications Code has been introduced as one element of the recent Digital Economy Act 2017 (see our TMT ebulletin of 22 May 2017). The existing Code has long been declared unfit for purpose, hopelessly out of date and badly drafted. Introduced in 1984 to deal with the privatisation of British Telecom, it was tweaked slightly by the Communications Act 2003 but failed to keep pace with advances in digital communications technology and the public’s relentless appetite for electronic services.

The government has comprehensively overhauled the Code and aims to help operators expand their networks and upgrade infrastructure by lowering the cost and simplifying the roll out of such infrastructure. This is driven in particular by operators seeking to improve the data rich services sought by both consumers (such as video, social media and gaming services) and businesses (such as cloud-based services and those in respect of connected devices) as a result of rapidly emerging digital technologies and handset capabilities. These applications consume increasingly higher bandwidths and will require faster broadband speeds if operators are to meet future capacity, quality and reliability expectations. Operators were given enhanced permitted development rights at the end of last year, to the same end.

The new Code has not been welcomed by landowners, but the government has stated that it is simply putting communications on the same footing as other essential utilities such as water and energy.

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Intellectual property issues for purchasers of development sites

Authors: Rachel Montagnon, Professional Support Consultant, Laura Deacon, Of Counsel, and Joanna Silver, Senior Associate, Intellectual Property, London

A recent case reminded us that a range of IP issues can sometimes be overlooked when purchasing development sites. Some relevant questions that purchasers may not immediately consider include:

  • Does the development have a distinctive name or logo?
  • Is there a website associated with the development?
  • Are there social media accounts that specifically relate to the development?
  • Do you have permission to use the architect’s drawings to promote the development?

If any of the above apply, intellectual property issues could cause problems if not identified early on.

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