Looking back, looking forward
The property industry is never static, nor is the law which underpins it.
2023 was no exception, with various cases making their way to the Supreme Court, and various changes aimed at addressing the modern challenges the industry must meet.
Here, Matt Hutchinson and Paul Sagar from our Real Estate and Energy Teams at Blacks Solicitors, share the three key themes which surfaced in the property industry in 2023, and three which await us in 2024.
Looking Back…
A Shift to ADR?
The decision in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 confirmed the Court has discretion, in certain cases, to suspend proceedings to allow for a non-Court based process to take place, e.g. mediation or other forms of alternative dispute resolution (ADR).
This decision followed the introduction of fixed costs to more valuable and complex cases of up to £100k. Taken together, the message is clear: ADR may increasingly become an integral part of the litigation process.
The Building Safety Act
The Building Safety Act (2022) is a vast piece of legislation initially introduced as a response to the Grenfell disaster. 2023 saw the coming-into-force of various sections of the Act, specialist advice should be sought by developers, owners and occupiers in relation to this Act, to avoid being caught out by its requirements in future.
The Expansion of MEES
The property industry has a key role to play in the UK’s net-zero ambitions. One tool aimed at facilitating this is the Minimum Energy Efficiency Standards regulations (“MEES”). As of 01 April 2023, it became unlawful to continue to let certain non-domestic properties with an EPC rating below E, subject to various restrictions and exemptions. The further widening of MEES may depend on political will but previous consultations suggest more stringent requirements by 2027.
Looking Forward…
The role for AI
2023 was the year that AI, and particularly generative AI, hit the mainstream. It will be both fascinating and frightening to see how its use develops in 2024, especially in a year likely to see elections in the UK and the USA. Its ability to produce realistic but fake content will create significant regulatory challenges. In terms of the real estate market, it will be interesting to see whether the technology will start to have an impact.
Some believe that AI could impact upon diverse elements of the industry, such as market analysis, automated valuation models, predictive analytics for investment decisions and transaction management by providing more and better managed information and speeding up legal completions. Others are concerned by data privacy and ethical considerations alongside its propensity to ‘hallucinate’ fake responses and that it doesn’t yet have the ability to deliver on the claims made by vendors and producers.
Biodiversity Net Gain
The delayed Biodiversity Net Gain (BNG) provisions are expected to come into force for most planning applications in January 2024 and for small sites in April 2024.
It will create a mandatory BNG condition to all planning permissions granted in England (subject to exceptions) requiring a biodiversity gain plan to be submitted and approved by the Local Authority before development can lawfully commence. The BNG plan will need to contain an assessment of the value of natural habitats before development and after development and ensure that at least a 10% net gain is achieved.
Reform of the Landlord and Tenant Act (1954)
The Law Commission is expected to publish a consultation paper in 2024 reviewing the Landlord and Tenant Act 1954.
This review is likely to focus on several key areas, including the purpose and relevance of security of tenure under the Act, the procedure for contracting out of the Act’s security of tenure provisions, grounds of opposition, terms of renewal leases, and issues related to interim rent and the determination of rent on renewal.
The commission has promised that the review will seek to support the long-term resilience of high streets whilst considering other government priorities such as levelling up and achieving net zero. Modernisation of this important act feels overdue, and the recommendations of the review will be interesting for all real estate professionals. Hopefully a simpler, less bureaucratic, and more modern approach can be found.
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