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As we welcome the new year, we are set for a busy twelve months ahead in the real estate industry.
The following article from our Property Litigation experts addresses several considerations and predictions for the property sector in 2024.
Renters (Reform) Bill
We have previously discussed the reforms set out by the Renters (Reform) Bill, which was outlined in the King's Speech in November 2023.
Although the proposed abolition of “no-fault evictions” (section 21 notices) was included, it is unlikely that we will see this change take place this year.
Not only would there be a wait for the Bill to be enforced and a subsequent transition period for current tenancies, but this reform has been delayed until the court process has first been enhanced.
We can still expect to see other changes introduced by the Bill, such as the creation of a new ground for possession to make it easier for landlords of student housing to ensure that they obtain possession every year for a new group of tenants.
Landlord and Tenant Act 1954 consultation
The beginning of 2023 saw the Law Commission declare a consultation on the Landlord and Tenant Act 1954, one of the most fundamental pieces of legislation relating to commercial properties.
One of the main questions is whether tenure security should still be provided to commercial tenants.
One school of thought is that if this is removed, the parties would still be able to contract to protect their positions.
This would seemingly work for those with a strong negotiating position, but for smaller tenants, this could be problematic and mean they lack the confidence to invest in certain properties.
Although the result of this consultation was set to be published last month, it is now expected to take place at the start of this year.
The consultation paper is expected to include a thorough review of the Act.
Residential long leasehold properties
We have previously discussed the Leasehold and Freehold Bill, which is intended to ‘reform the housing market by making it cheaper and easier for leaseholders to purchase their freehold and tackling the exploitation of millions of homeowners through punitive service charges’.
This piece of legislation is set to make it more affordable and less complicated for residential leaseholders to extend the lease to their property to buy their freehold.
It will alter the standard lease extension from 90 to 990 years and limit ground rent to £0.
In addition, leaseholders will no longer have to have owned their property for two years to be eligible.
Whilst this draft legislation is in its early stages, we are likely to see several developments during 2024.
Technology in the real estate industry
As always, a new year may see a rise in the use of technology. In relation to a landlord-tenant relationship, we may see an increased demand for a more user-friendly and convenient process for tenants to, for example, contact staff and pay rent.
This demand could be met via the use of an app for tenants that enables them to pay rent, issue a request for a repair, and ask questions, all within the same interface and without the need to make any telephone calls.
As with increasing the flexibility of a lease, this, too, could strengthen the landlord-tenant relationship.
Indeed, 2024 could also see a heightened use of artificial intelligence (AI) in real estate.
For example, more simple questions and processes may be dealt with via AI, reducing the time required to deal with such matters and, in turn, limiting delay for tenants.
Overall, 2024 is set to be a busy year for the real estate industry.
We can anticipate the introduction of new legislation, an increase in the flexibility of leases, combined with a change in tenants’ wants and demands, as well as a rise in the use of technology.