Amidst ongoing costof-living concerns and economic uncertainty, Gillian Moir, Partner at Swinburne Maddison LLP, delves into anticipated legal shifts affecting the UK's commercial property industry in 2024 and beyond.
Law Commission Consultation on the Landlord and Tenant Act 1954
The 2024 consultation, initially set for ‘as soon as possible,’ faces postponement until Autumn. This delay is perhaps a sign of the scale Law Commission’s challenge. The stagnant 1954 Act, untouched for two decades, awaits overhaul, with the extent of reform still uncertain.
Anticipated in the review are various facets of the 1954 Act, aiming to align them with contemporary commercial lease practices, including:
Extending commercial leases after the contract term ends, and a tenants right to a new lease (known as “security of tenure”).
The parties’ ability to contract the lease out of the security of tenure provisions of the 1954 Act;
Utilising commercial properties to rejuvenate town centres.
Landlord criteria for terminating commercial leases.
The Court’s procedure and considerations for determining new commercial lease terms, including duration and rent.
Building Safety Act 2022
The Building Safety Act (BSA) 2022, among the most significant legislation of recent times, applies to new developments of at least two dwellings, standing 11 meters or higher. This applies to some mixed-use development and residential blocks.
While media coverage has focused on dangerous cladding and leaseholder protections, building owners and management companies face increased safety responsibilities. Legal ramifications will evolve as courts interpret the Act, influencing standard drafting and due diligence.
Development agreements must now balance BSA requirements with construction documents, considering competency standards for developers and their teams.
Minimum Energy Efficiency Standards (MEES)
Most buildings require an Energy Performance Certificate (EPC), detailing energy efficiency and recommended improvements. Since 1st April 2023, commercial properties must meet an “E” rating to be let, with plans to increase to “C” by April 2027 and “B” by 2030.
Recent government announcements suggest a relaxed timeline for these changes.
Commercial property owners, especially landlords, should prioritise energy efficiency to future-proof their buildings.
Abolition of Stamp Duty Land Tax multiple dwellings relief
In its Spring 2024 budget, the government revealed plans to end Stamp Duty Land Tax (SDLT) multiple dwellings relief (MDR) from 1st June 2024.
MDR applies to linked property transactions meeting specific criteria, fixing the SDLT rate to the average consideration. After June 1, 2024, MDR will only apply if contracts were exchanged before 6th March 2024, without subsequent variations, or if substantial performance of the contract happens before June 1, 2024. Additionally, the government stated no changes to SDLT treatment for mixed property purchases (residential and non-residential).
Green Leases
The real estate industry demonstrates heightened environmental awareness. We anticipate a rise in “Green Leases” for commercial properties. Such agreements facilitate collaboration between landlords and tenants to minimise environmental impact.
As there’s no universal template, each “Green Lease” tailors to the parties’ objectives and property specifics. Clauses may include regular energy performance assessments or more stringent targets for energy efficiency.
For additional details or guidance on the topics discussed in this article, or for help with any commercial property issue, feel free to reach out to Partner Gillian Moir. You can contact her by phone at 0191 384 2441 or via email at gm@swinburnemaddison.co.uk