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Now that 2022 has come to a close, it's time to look ahead and consider what legal changes we can expect to see in 2023 in the property market. In this blog, we have detailed a number of the changes we expect to take place.
Building safety reforms
On 28th April 2022, the Building Safety Act 2022 (BSA 2022) gained royal assent. BSA 2022 contains measures intended to improve the safety of buildings. Whilst the BSA 2022 focuses particularly on "higher risk" buildings, it does have a much wider remit, with all of the measures being fully implemented by October 2023.
The BSA 2022 will affect the lifecycle of a building, but the following are of particular interest:
- The BSA 2022 implies building safety provisions into certain leases, allocates liability for the cost of building safety measures and remediation works and specifies building safety information that must be provided under the Landlord and Tenant Act 1987.
- It will provide a new building safety regime once higher-risk buildings are occupied.
- There will be a New Homes Ombudsman and a Code of Practice for new build homes that will apply to England and Wales.
- New build home warranties will be mandated to last for 15 years.
Economic crime and transparency
The Economic Crime (Transparency and Enforcement) Act 2022 (ECTEA 2022) aims to deter money laundering by making the identity known of those who own or control overseas entities. It is part of a wider legislative package to tackle the abuse of UK corporate structures and economic crime. The Economic Crime Transparency Bill 2022-2023 is expected to be passed in spring 2023.
The ECTEA 2022 states that overseas entities owning or leasing property or land in the UK must register with the register of overseas entities at Companies House. They must provide information on the beneficial owners or managing officers.
Land Registration changes came into effect on 5th September 2022, stating that overseas buyers must have obtained their overseas entity number before purchasing a property in the UK. If they do not have this, they cannot apply to HM Land Registry to register the property in their name. There is a transitional period until 31st January 2023 for existing overseas owners to obtain entity identification.
The Levelling-up and Regeneration Bill 2022-23 (LURB 2022-23) under Part 9 will introduce new measures in England and Wales. HM Land Registry will be entitled to information regarding the ownership and control of land and transactional information such as details of parties and people acting on behalf of transaction terms, professional advisors, source of funds and documents evidencing the transaction. Failure to comply will be an offence, and registrations will only be completed once the information has been provided.
Energy efficiency
It will be unlawful from 1st April 2023 for a landlord to continue to let a commercial property with an EPC rating of F or G. This is subject to any exemption applying and has been registered validly on the PRS Exemption Register.
If the property falls below the rating of E, then landlords must carry out the improvement works to bring the property up to standard.
However, landlords must remember that they do not have an automatic right to entry to carry out the improvement works. It will depend upon the terms of the lease. A landlord will require the tenant to consent if there is no right. If the tenant refuses to consent, then the landlord may be able to register a "consent exemption".
If a buyer purchases a tenanted commercial property with an energy rating lower than E from 1st April 2023, the buyer can register a temporary six-month exemption. This will allow the buyer to ensure the property meets the standards.
In 2021, there was a consultation to raise the minimum energy standards. However, the results are still awaited. It is also understood that the government is considering introducing a performance-based rating, which evaluates actual energy consumption and emissions, rather than the current EPC rating, which evaluates the fabric of the building and services. It does not reflect the use by the occupier.
Residential Renting in England
In June 2022, the government published a White Paper to propose changes to the private residential sector in England.
This paper proposes the abolition of no-fault evictions under section 21 of the Housing Act 1998. It will also reform the grounds for possession under section 8 available to landlords of assured shorthold tenancies.
The reforms may include the introduction of a legally binding Decent Homes Standard, which will apply to privately rented homes and a digital property portal that will be more comprehensive than the existing rogue landlord database. All landlords will be legally required to register their properties on this portal.
Due to the reforms, some private landlords may exit the market.
Residential Renting in Wales
On 1st December 2022, Wales implemented the Renting Homes (Wales) Act 2016 (RHWA 2016), which significantly reformed the law in Wales.
The RHWA 2016 introduces a new rental agreement known as an occupation contract subject to certain criteria being met.
This will replace assured shorthold tenancies as Wales's primary form of residential letting agreement.
Due to the new occupation contracts, there are new notice periods for termination.
Housing cases
The government has confirmed that setting up a new housing court is not cost-effective. Therefore, the government intends to introduce a range of reforms to address issues faced by the court and tribunal in housing cases.
The reforms will include launching an online process for possession claims through the HM Courts and Tribunal Service Possession Reform Programme.
Many believe this will not solve the problem of delays in the court, and larger reforms are required.
Telecommunications
The government still wants to improve telecommunication matters between landlords and telecom providers. The new Code in 2017 has yet to fill all the legislative gaps.
The Telecommunications Infrastructure (Leasehold Property) Act 2021 (TILPA 2021) came substantively into force on 26th December 2022, which imposes an agreement that enables operators to provide electronic communications apparatus to blocks of flats where the landlord is not responsive or uncooperative. The Code rights will be limited to 18 months.
On 6th December 2022, the Product Security and Telecommunications Infrastructure Act 2022 received Royal Assent. Key measures from the act include:
- A new duty to consider using Alternative Dispute Resolution to settle disputes before making a court application.
- Amendments to the Landlord and Tenant Act 1954 to align the procedures more closely with Part 5 of the Code.
- A new procedure for operators to quickly obtain Code rights over certain types of land where a landowner fails to respond to repeated requests for access.
- A new right for operators in sole occupation under a previously expired Code agreement to seek a new agreement under Part 4 of the Code.
- Limited rights for operators to upgrade and share equipment installed before the 2017 Code, provided there is no material impact on the owner or occupier of private land.
Charities
On 24th February 2022, the Charities Act (ChA 2022) received Royal Assent. It aims to reduce bureaucracy for charities in England and Wales, saving time and money, by amending the Charities Act 2011. This includes reform of the charity land disposal and mortgaging regime to make it less burdensome and to clarify the rules. All provisions will come into effect by autumn 2023.
In summary, there is much to look out for in 2023. We will keep you up to date throughout the year on any legal changes.