Emma Reed joins our Property team

Emma Reed joins our Property team

10th May 2023

Colman Coyle are pleased to welcome Emma Reed as an Associate Solicitor to our Property team.

Emma is a Solicitor with particular interest in commercial property law. Emma has experience acting for both landlords and tenants of commercial property, property developers, investors and lenders in the acquisition, along with finance and disposal of commercial property such as retail, industrial, offices and development sites.

Colman Coyle has considerable experience in Residential and Commercial Property, and if you would like to discuss a new matter, please contact our team on +44 (0)20 7354 3000 or enquiries@colmancoyle.com.

Emma Reed panoramic
Reforming the leasehold and commonhold systems

Reforming the leasehold and commonhold systems

29th March 2023

In January 2022, the UK Government launched a consultation on reforming the leasehold and commonhold systems in England and Wales, seeking views on the Law Commission recommendations made in July 2020.

The Leasehold Reform (Ground Rent) Act 2022, which abolished ground rents in the majority of new residential long leases, came into force on 30 June 2022, marking the “phase one” of the leasehold reform programme.

Aside from the ban on ground rents, there has been no clear statement from the Government on its timeline for leasehold reform or a formal response to the Law Commission’s detailed proposals.

A recent House of Commons debate on leasehold and freehold reform which took place in January 2023, confirmed that the Government is committed to deliver phase two of the leasehold reform programme.

Leasehold and commonhold reform remain on the Government’s agenda and developments are expected within this Parliament.

The Secretary of State at the Ministry of Housing, Communities and Local Government has recently confirmed that the Government wants to introduce legislation later this year to change the leasehold system. It has been suggested that the Government may remove the leasehold structure entirely, but there has been no mention of any alternative structure for the ownership of residential flats.

Commonhold has been in existence in England and Wales since 2004, but has not seen a significant take-up. The Law Commission recommended a greater move to commonhold as the alternative to the leasehold system, but there are a number of legal complexities that need to be considered.

The Government intends to make changes to the Enfranchisement, Right to Manage and Lease Extension procedures, including reducing the premiums payable for lease extensions under the Leasehold Reform, Housing and Urban Development Act 1993. However, the Government’s timeline for these changes has not been yet announced, and the legislation which the Government intends to introduce is still awaited.

Sayrha

Sayrha Elahi

Senior Associate

Beware of the Register of Overseas Entities deadline of 31 January 2023

Beware of the Register of Overseas Entities deadline of 31 January 2023

9th January 2023

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Overseas companies who own UK land or property have until 31 January 2023 to register with the UK Companies Registry, unless they are exempt.  If the deadline is missed you can face severe sanctions (including imprisonment) or be restricted from selling your UK property.

New legislation

Following Russia’s invasion of Ukraine, Parliament expedited the passing of the Economic Crime (Transparency and Enforcement) Act 2022 (the “Act”). The Act came into force on 1 August 2022 and introduced the Register of Overseas Entities (“RoE”). The idea of the RoE is to provide greater transparency on the beneficial ownership of overseas entities that hold property in the UK.  The idea is that the record of this information should bolster the country’s effort to combat money laundering.

Who needs to register?

Overseas entities that wish to acquire property in the UK must now register on the RoE.

The Act also applies retrospectively to overseas entities who acquired property on or after 1 January 1999. For these entities, it is necessary to register on the RoE by 31 January 2023.

Additionally, any overseas entities that disposed of property between 28 February 2022 and 31 January 2023, need to provide details to Companies House of that disposal. Again, this will only apply if the entity disposing of the property acquired it on or after 1 January 1999.

The Act also impacts overseas entities which are tenants of registrable leases lasting more than 7 years.

For those overseas entities who acquired a property in the UK before 1 January 1999, the need to register on the RoE will depend on the date the entity’s application was made to Land Registry to register as the proprietor.

What information must be provided?

Registrable overseas entities need to provide to the Companies House details of beneficial owners. Where a beneficial owner is an individual, their personal details will need to be disclosed to the Companies House, including their name, date of birth, nationality, residential address and a service address when registering the overseas entity, although the information in relation to the individual beneficial owner’s residential address and the exact date of birth will not be publicly displayed.  A statement of why they meet the conditions of being a beneficial owner is also required. This information must be verified by a ‘UK-regulated agent’, such as a legal professional, accountant or a tax advisor, before it is published on the RoE.

What are the consequences of failing to register?

The sanctions are severe. Any registrable overseas entity that has failed to register by 31 January 2023 will have a restriction entered on the title of their property, meaning that they cannot transfer/sell that property. Furthermore, it is a criminal offence not to register if registration is required. Those in default will face a fine, as well as possible imprisonment.

The deadline to register is fast-approaching. If you need help to register or have any queries regarding your obligation to register, please contact our Company Commercial or Property Team on +44 20 7354 3000 or enquiries@colmancoyle.com 

 

Oksana Howard

Oksana Howard

Partner

An update on the 11 – 18 meter Cladding Remediation Fund

An update on the 11 – 18 meter Cladding Remediation Fund

7th December 2022

On 10 January 2022 the Government announced an intention to provide a “fully funded plan of action including remediating unsafe cladding on 11 – 18m buildings”.

Since this announcement, the Building Safety Act 2022 and subsequent Regulations have been enacted which have completely changed the way in which cladding and non-cladding remedial costs are to be recovered and from whom. Despite this and a great deal of interest for more information from leaseholders, management companies and freeholders alike, there was a distinct lack of any update regarding this proposed 11 – 18 meter fund. This has now changed with the Government’s announcement on 30 November 2022 of the “Medium Rise Scheme” (“MRS”). A summary of the MRS is as follows:

1. At present the Government is only running a pilot of the MRS. This applies to a pre-selected number of buildings across England (namely 60 in number) where the developer “cannot be traced or held responsible – for instance because they have gone out of business”;

2. The full MRS will come into force during 2023, although the exact date, eligibility criteria and application process has yet to be announced. Nevertheless:
a. The announcement does say that once the pilot has concluded, the Responsible Person (i.e. the entity with the contractual obligation to undertake remedial works) can make an application to the MRS;
b. The MRS appears to be targeted at buildings where there are unsafe external wall systems only. This means it will not apply to internal compartmentation issues within a building; and
c. As stated for the pilot, the MRS only covers costs where the Developer cannot be traced or held responsible;

3. The value of the MRS appears to be £3 billion; and

4. The Government is encouraging leaseholders and Responsible Person’s persons to complete this form to help determine how many buildings may be eligible for the scheme – https://www.gov.uk/guidance/tell-us-about-life-safety-fire-risks-on-the-external-wall-system-of-your-building.

Whilst this is positive news, uncertainty remains. For example, would the MRS apply if a Developer can be traced but is unwilling to pay? Would the MRS apply if the Developer can be traced but the freeholder (who has the statutory obligation to pay for remedial costs but not to undertake the remedial works) cannot afford to do so and is unwilling or unable to bring proceedings against the non-associated Developer? Finally will any Government fund be made available for the equally as common internal compartmentation defects found within high rise buildings?

For a full summary of the MRS, the Government has provided the following leaseholder fact sheet – https://www.gov.uk/guidance/medium-rise-scheme-mrs-pilot-opening-leaseholder-factsheet.

Colman Coyle has and continues to act for and advise leaseholders, management companies, freeholders and developers in respect of cladding and other fire safety defects.

Ross Wilson

Ross Wilson

Senior Associate

Fire safety issue in residential blocks of flats

Fire safety issue in residential blocks of flats

20th September 2022

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Howard Colman and Ross Wilson of Colman Coyle are pleased to have acted for a large group of private flat owners and a housing charity in a claim in respect of various fire safety construction issues relating to two blocks of flats in North London.

The blocks were built by a major house builder, Bellway Homes, in or around 2011 and were sold with the benefit of NHBC insurance cover.

It became apparent that there were a number of problems with the construction, in particular compartmentation issues which posed a threat to the physical health and safety of the occupants and additionally meant that it was almost impossible for the owners to sell or remortgage their properties until the remedial works had been carried out.

Proceedings were commenced in the High Court against NHBC claiming the costs of the remedial work and damages.  NHBC joined Bellway into the proceedings.

The parties subsequently agreed to participate in a mediation which was held in London where they were able to reach an amicable settlement of the dispute.

Colman Coyle are currently instructed on a number of fire safety related matters. The law in this area is complex and subject to legislative and other changes.

If you are unfortunately affected by these sorts of issues, whether as freeholder, management company or lessee we will be happy to provide advice and assistance and you can contact Ross Wilson at ross.wilson@colmancoyle.com or Howard Colman at howard.colman@colmancoyle.com.

The Leasehold Reform (Ground Rent) Act 2022 – What Landlords Need To Know

The Leasehold Reform (Ground Rent) Act 2022 – What Landlords Need To Know

21st June 2022

Following widespread calls for change, the Leasehold Reform (Ground Rent) Act 2022 will finally come into force at the end of this month on 30 June 2022, the exception being retirement properties which will not be affected until 1 April 2023.

The Act will limit ground rent in most new long residential leases to one peppercorn per annum, effectively abolishing rental income returns available to landlords and developers.

Whilst there have been concerns about escalating ground rent provisions in existing leases, the Act will not have retrospective effect. Should an existing lease be surrendered and re-granted however, it may very well be caught by the provisions of the Act.

The Act will apply to ‘regulated leases’, which means long leases granted for a term of more than 21 years of a single dwelling in exchange for a premium, on or after 30 June 2022.

There are exceptions and the Act will not apply if a lease is granted after 30 June 2022 pursuant to a prior agreement. Thus, if contracts have exchanged before 30 June 2022 and the grant of a new lease takes place after 30 June 2022, the lease will not fall within the scope of the Act and a ground rent above a peppercorn may be charged. If exchange and completion take place after 30 June 2022 however, the Act applies in full and only a peppercorn ground rent is chargeable.

Business leases, statutory lease extensions of houses and flats, community housing leases, and home finance plan leases are excluded.

Where a voluntary lease extension of a house or a flat is granted after 30 June 2022, the ground rent specified in the existing lease will continue to be payable for the remainder of the original term of the lease and a peppercorn rent will then be payable for the extended term.

There are serious sanctions for non-compliance with the Act and Landlords may face fines ranging from £500 to £30,000 per lease.

The abolishment of ground rents in new leases is part of a package of lease reforms which the Government intends to implement, including substantial changes to the calculation of premiums and procedures for lease extensions and collective enfranchisement. 

Simon Tennant

Sayrha Elahi

Senior Associate Solicitor

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