Geoffrey Caesar, Solicitor

The property law landscape is evolving rapidly, with new legislation, consultations and reviews underway. In this blog post, I address some fundamental legal issues to be aware of in English property law in 2024.

The Immediate Exchange Protocol

The code for signing and exchanging property contracts is likely changing in 2024, as The Law Society is introducing a code of practice to exchange property contracts to ensure digital transactions are made more accessible. The society is consulting conveyancers and solicitors on the code to ensure it is workable and will be widely used.

While the date and month of effect are currently unknown, the code is expected to modernise how commercial and residential property lawyers do business, save them time, and provide much-needed clarity to help them move towards exchanging digitally in a way that is fit for the 21st century. The code will cover both sales contracts and leases, and protocols on immediate exchange and release of contracts will be followed by solicitors who agree to adopt it.

Renters Reform Bill

The Queen’s Speech in 2022 committed to a Renters’ Reform Bill being passed in 2022-23. The Bill was delayed due to disruptions caused by the prime minister and cabinet changes, but it finally arrived in the House of Commons in May 2023 after the King’s Coronation. The government has described the wide-reaching reforms as a ‘once-in-a-generation overhaul’ of housing law, including a ban on no-fault evictions and improving the rights of tenants to have pets.

The Renters’ Reform Bill is currently in the Committee stages, with no official date yet confirmed by the government. However, it is estimated to come into law on 1 October 2024. Once it becomes law, the Bill will only affect new tenancies and pre-existing ones will be included 12 months later.

The Leasehold and Freehold Reform Bill

The Leasehold and Freehold Reform Bill was introduced to Parliament on Monday, 27 November 2023. It seeks to extend tenant rights regarding freehold enfranchisement and lease extensions by amending the existing legislation – the Leasehold Reform Act 1967 and the Leasehold Reform, Housing and Urban Development Act 1993.

The Bill makes it easier for leaseholders to purchase their freehold and tackle punitive service charges. Under the reform, the standard lease extension term will be increased from 90 years to 990 years for both houses and flats, with ground rent reduced to a peppercorn (£0). Requirements for a new leaseholder to have owned their house or flat for two years before they can extend their lease or buy their freehold will be eliminated.

Economic Crime and Transparency

Overseas entities

While high compliance rates have been reported, the first financial penalties have now been issued to overseas entities owning land in England and Wales that have failed to register the details of their beneficial owners on the Register of Overseas Entities. I expect Companies House to take a stricter enforcement approach to mop up those remaining entities that have yet to fulfil their legal duty to register.

Overseas entities must also be aware of their annual obligation to update the register one year and 14 days after the previous year’s filing (unless brought forward). Any failure to comply with this duty could result in the withdrawal of an entity’s status as a registered overseas entity, putting it in breach of the legislation and potentially subject to substantial fines, criminal sanctions and restrictions on dealing with their UK landholdings.

Overseas entities will also need to be aware of the changes to the registration rules introduced by Part 3 of the Economic Crime and Corporate Transparency Act 2023. These include tightening rules for trustee and nominee arrangements, disclosure of property ownership, removal from the register where an update is pending and revocation of registered status upon failure to provide information requested by the registrar under 1092A of the Companies Act 2006.

Trusts transparency

The government is currently consulting on improving transparency of land ownership involving trusts on the grounds of public interest to enhance housing sector issues and assist in tackling financial crime and corruption. The consultation considers what information should be reported and how to balance concerns around disclosing specific personal data (for example, where minors are involved). It mainly focuses on overseas entities but also considers domestic trust arrangements.

Biodiversity Net Gain

Biodiversity net gain is a new requirement for developers to ensure that their projects deliver an overall increase in biodiversity on or near the development site. It is part of the government’s 25-Year Environment Plan and the Environment Act 2021, of which the parts on biodiversity are expected to come into force in early 2024.

Biodiversity net gain will apply to most new developments that require planning permission, and developers will have to submit a biodiversity gain plan as part of their planning application, showing how they will achieve at least a 10% net gain in biodiversity value.

Developers will have to use a standardised metric to measure their site’s existing and proposed biodiversity value and demonstrate how they will avoid, minimise or mitigate any negative impacts on biodiversity. They will also have to provide long-term management and monitoring arrangements for the biodiversity gain they deliver. If they cannot achieve the required net gain on-site or nearby, they must pay a tariff to a local authority or a registered conservation body to deliver biodiversity gain elsewhere.

Biodiversity net gain will have significant implications for developers, as it will increase the costs and complexity of development projects and potentially affect the viability and feasibility of some schemes. Developers will have to factor in biodiversity net gain early in their project planning and engage with local authorities, statutory consultees and other stakeholders to ensure they comply with the new requirement.

Building Safety

The Building Safety Act 2022 aims to improve the safety and quality of buildings in England following the Grenfell Tower fire tragedy in 2017. The Act introduces a new regulatory regime for higher-risk buildings over 18 metres or six storeys high with at least two residential units.

The new regime applies throughout the lifecycle of higher-risk buildings, from design and construction to occupation and maintenance. It will impose new duties and obligations on developers, contractors, building owners, landlords and residents and create new roles and bodies to oversee and enforce the regime. The Act also introduces new rights for leaseholders to challenge unfair service charges and access building safety information.

The Building Safety Act 2022 significantly impacts the property sector, as it requires changes to how buildings are designed, constructed and managed. It also increases the costs and risks associated with higher-risk buildings, potentially affecting their value and marketability. Those in the property sector must familiarise themselves with the new regime and ensure they comply with their duties and obligations.

Conclusion

These are some of the critical legal issues that will affect English property law in 2024, but many more could arise as the year progresses. The property sector is undergoing rapid and significant changes driven by social, economic and environmental factors. Those involved in the property sector must keep up to date with the latest developments and adapt accordingly.

I regularly advise businesses and individuals on all aspects of property law. If you require any legal advice in relation to property law matters, please contact me using the enquiry form on gcaesar.com.