Kate Wilson and Lucy Morton, lawyers in the Real Estate and Planning teams at HSF, provide a summary of the importance of marking documents with the words ‘subject to contract’ when entering a real estate transaction or joint venture arrangement, as discussed in the recent Court of Appeal case of Generator Developments v Lidl UK  EWCA Civ 396. Continue reading
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
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.
Author: Matthew White, Partner and Head of Planning, Real Estate, London
There are many briefings on what Brexit means for real estate and I don't intend to repeat them in this blog entry. There are only so many ways of saying that the outlook remains uncertain and some transactions are likely to be put on hold until the situation becomes clearer.
Instead, I want to consider some of the indirect implications of last Thursday's vote. I have spent the last week talking to clients and contacts about their concerns, many of which are less obvious than the headlines would suggest. It would be unfair to identify whom I have spoken to, but equally I cannot claim all the credit for these thoughts either.
UK limited partnerships are commonly used as real estate investment vehicles but can be a challenge to operate.
The Treasury has just published a consultation paper seeking views on certain proposed changes to the Limited Partnership Act 1907 (the principal legislation governing UK limited partnerships). The modernising amendments look like they may finally deal with the uncertainties and dated practices relating to UK limited partnership law. Such changes would directly benefit those investing in real estate assets through UK domiciled limited partnerships.