What's coming up in the property world? Charlotte Nayler, Natalie Hunter and Isabel Emerson-Lich in our Property Litigation Group consider some of the key reforms and landmark cases expected across the commercial and residential property spheres this year.
Residential
The Renters Rights Bill has now passed through the House of Commons following the debate on 14 January. It had its first reading in the House of Lords on 15 January and the second reading is set for 4 February 2025. It is now thought that the bill will come into force as early as this spring. For more detail about the impact on landlords and investors, please see an article published by Property Litigation Partner Mark Reading. Read the full article on the CoStar website here (subscription required).
On 31 January 2025, the Leasehold and Freehold Reform Act 2024 (Commencement No 2 and Transitional Provision) Regulations 2025 (SI/2025/57) (the "Regulations") will come into force. Previously, leaseholders had to own their property for two years (known as the "qualifying period") before they could extend their lease or purchase the freehold of their property. The Regulations enacts section 27 of the Leasehold and Freehold Reform Act 2024, the effect of which is that the two-year ownership requirement no longer applies to claims for the freehold or new lease under the Leasehold Reform Act 1967 or claims for a new lease of a flat under the Leasehold Reform Housing and Urban Development Act 1993. The change applies retrospectively, meaning that it is not limited to leases granted after 31 January 2025. Housing Minister Matthew Pennycook has stated that this is an initial step towards the overhaul of the leasehold system and that the Labour government will continue to implement the measures set out in the Leasehold and Reform Act 2024.
Commercial
On 19 November 2024, the Law Commission published part one of a two part consultation on the Landlord and Tenant Act 1954 (the "1954 Act"). The 1954 Act is a cornerstone piece of legislation in the property world and affords business tenants a right to remain in occupation and seek a renewal tenancy at the end of the contractual term of their tenancy, also known as 'security of tenure'. At present, parties can agree to exclude security of tenure at the outset of the tenancy, a procedure known as 'contracting out'. The Act is considered by some to be outdated and unnecessarily complex and litigious.
Three alternative models have been considered for reform:
- abolish the Act (ie no security of tenure whatsoever)
- keep the Act but with contracting into the protection of the Act (rather than out) and;
- keep the Act but abolish contracting out (ie all tenancies would benefit from security of tenure).
There is a myriad of competing interests including property / party specific factors to be taken account of, which means there is no 'one size fits all' when it comes to identifying the 'best' model – a real conundrum for legislators and a matter that is likely to be the subject of heated commentary and debate in the coming months. Look out for a detailed discussion on this between Head of Property Litigation here at Mishcon de Reya, Daniel Levy, and leading counsel, Mark Sefton KC, of Falcon Chambers, in the next edition of PropLit Watch.
Part 10 of the Levelling-up and Regeneration Act 2023 was implemented on 2 December 2024, meaning local authorities may now order rental auctions of empty property on high streets. There are no reports as yet of councils taking steps to exercise this right but this is certainly one to watch for 2025.
Telecoms
The Upper Tribunal is no longer accepting new Code references (new claims). All Code references must now be commenced in the First Tier Tribunal.
Judgment was handed down by Fancourt J in APW v OTUK [2024] UKUT 263 on 18 December. The case dealt with the issue of whether an operator to whom the benefit of a subsisting Code agreement (i.e. an agreement entered into prior to 28 December 2017) has been assigned, is a party to that agreement and therefore subject to the Part 5 renewal and termination provisions. Fancourt J held that a lawful assignee of the benefit of the agreement, who has also assumed responsibility for performing the obligations in the agreement is deemed to be the operator who is party to the agreement. To be able to seek renewal of a subsisting agreement the operator must therefore show that there has been both a lawful assignment and a contractual agreement to obey the agreement obligations.
Construction
The implications of the Building Safety Act 2022 ("BSA 2022") continue to dominate in the construction sector. Phase two of the inquiry into the Grenfell Tower tragedy led the Government to announce plans to speed up the identification and remediation of unsafe cladding with the introduction of the Remediation Acceleration Plan ("RAP") in December 2024. The legislation is expected to impose timescales for remediation and assist parties in ascertaining ownership of buildings (and therefore responsibility for remediation). Additional funding is also expected to assist with enforcement and ongoing schemes like the Waking Watch Replacement Fund. The intention is that i) unsafe cladding on buildings with a height of 18 metres or more which benefits from Government-funding will have been remediated and ii) unsafe cladding on buildings 11 metres or more will have (as a minimum) a date for completion of remedial works.
The Supreme Court's decision on the appeal in URS Corp Ltd v BDW Trading Ltd [2023] EWCA Civ 772 is awaited and will deal with (of particular relevance for real estate practitioners) the effect of section 135 of the Building Safety Act 2022 which applies a retrospective 30 year limitation period for claims under the Defective Premises Act 1972. This will be a key decision and of significant interest to those facing historic liability for building defects.
The appeal in Triathlon Homes LLP v Stratford Village Development Partnership [2024] UKFTT 26 (PC) will be heard in the Spring of this year and will consider the question of whether costs incurred before 28 June 2022 (i.e. before the commencement of the BSA 2022) can be the subject of a remediation contribution order.