UK Real Estate Sector: Legal Update for In-House Lawyers

In this session of our UK Real Estate Sector webinar series for in-house lawyers, experts from across our firm and practice areas provided an overview of key changes following the Autumn Budget update, along with other important developments impacting the sector. Paul Jayson, Partner and Head of the UK Real Estate Sector, chaired the discussion which covered a variety of topics, a summary of which can be found below.

Key topics of discussion:

• Gemma Grunewald, a Legal Director in the Tax team, provided an overview of the tax changes announced in the Autumn Budget, which were far more restrained than predicted (with no general increases in corporation tax, NI contributions, VAT, income tax or wealth tax, nor any major overhaul of stamp duty or capital gains tax for property transactions). Gemma discussed a summary of the key changes that were made, namely: a new Property Income Tax; anti-fraud measures for the Construction Industry Scheme; Mansion Tax; and a restriction on NICs Relief on Pension Contributions.
• Kate Poole, a Partner in the Real Estate Litigation team, provided an overview of the main changes to residential lettings being introduced by the Renters’ Rights Act. Receiving Royal Assent last month, the changes are of particular concern to those dealing in the Build to Rent or PBSA sectors. Kate outlined the most relevant changes, as well as the Government “roadmap” for implementation and the key issues that will likely arise from the changes.
• Rob Shaw, a Partner in the Real Estate Litigation team, explored the proposed ban on upward-only rent reviews, explaining the background to the ban (citing the English Devolution and Community Empowerment Bill), an overview of how the ban will work in practice, and the commercial impact.
• Jonathan Clarke, a Partner in the Corporate team, discussed the trends we are seeing in real estate transactions in relation to Warranty & Indemnity insurance. His update covered market economics, coverage trends, product development, the claims environment and how Warranty & Indemnity experts might add value on the buy/sell side.
• Bethan Odey, a Legal Director in the Employment team, set out the key aspects of the Employment Rights Bill (currently going through Parliament) which are most relevant for those operating in the Real Estate sector. Bethan covered topics such as trade unions, working hours and shift patterns, alongside key actions for employers to ensure compliance with this significant piece of legislation.
• Claire Turnbull, a Legal Director in the Construction team, explored the crucial issue of protections against contractor insolvency, covering protections that can be implemented both during and post construction. Amongst other areas, Claire discussed performance bonds, parent company guarantee and sub-contractor collateral warranties.
• Andrew Smith, Partner, and Sam Gokarn-Millington, Senior Associate, both in the Litigation team, highlighted the importance of the enforceability of penalties clauses in circumstances of breaches of contract. The discussion focused on the critical Aviation Holdings case of this year, outlining the fundamental principles that the courts use to determine enforceability of penalties clauses, as well as their recommendations for drafting penalties clauses.
• Conor McEneany, a Legal Director in the IPT team, explored recent case law developments in liability clauses, which are frequently a point of negotiation amongst parties. Conor explained the background to the case, the reasons for the decision, as well as key learnings and drafting suggestions to avoid common pitfalls associated with liability clauses.
• Chloe Barker, a Partner in the Financial Services & Regulatory team, discussed the latest developments in the area of sanctions. The discussion covered a number of important themes, including Russian and Iran sanctions, OFSI reporting requirements for UK commercial and residential letting agents, the UK financial penalty, and the OFSI Property Services Threat Assessment.