On the horizon: general election, multiple dwellings and the Building Safety Act

In this quarterly column, Bill Chandler previews some of the most significant legal developments expected in the coming weeks and months. Calm before the storm The combination of summer and an impending general election means the real estate sector can probably expect fewer new legal developments than usual this quarter. With the election now set for 4 July and parliament dissolved, there is an uncertain future for proposals contained in Bills that were passing through parliament and the implementation of recently passed legislation. The Leasehold and Freehold Reform Act 2024 was one of the last Acts to secure royal assent during the pre-dissolution “wash-up” on 24 May. The Act was introduced to ban the sale of new houses on a leasehold basis, increase statutory lease extensions for houses and flats to 990 years and make it easier for residential leaseholders to enfranchise and to challenge service charges. However, the Renters (Reform) Bill did not make it through wash-up. It had cleared the House of Commons and the coming weeks were expected to see its detailed examination by the House of Lords during the committee stage. It was already looking unlikely that the ban on no-fault eviction would actually be implemented before the election. The recent consultation on how to deal with ground rents in existing long residential leases proposed that the eventual decision would be enacted through this Bill. The word on the street was that ground rents in existing leases would be capped at £250 per annum and phased out over 20 years. But the ground rent issue looks set to be another casualty of the election being called earlier than expected. We were also expecting considerable activity around high street rental auctions. The government had announced on 14 May that this part of the Levelling-up and Regeneration Act 2023 would be brought into force in mid-2024, preceded by detailed guidance. The accompanying press release promised the first auctions in September, with the first units occupied in October. That timetable was always optimistic, but we will obviously not now be seeing any rental auctions before the election. Multiple dwellings Multiple dwellings relief from stamp duty land tax is due to be abolished on 1 June, as announced in the Spring Budget. This is even though the Finance (No 2) Bill is still progressing through parliament at the time of writing – and notwithstanding an appeal from the British Property Federation and others to retain MDR in some form for large-scale residential property acquisitions, in order to support housebuilding.  Transitional rules will preserve MDR for transactions where contracts were exchanged on or before 6 March, or where the contract was substantially performed before 1 June. We wait to see whether Wales will follow suit. Since 2018, land transactions in Wales have been subject to land transaction tax rather than SDLT. A recent Welsh government consultation proposed the abolition of MDR for LTT from 1 June (or as soon as possible thereafter), along with the extension of an existing LTT relief to Welsh local authorities when purchasing property for social housing purposes. Interestingly, the Welsh government consultation also invites views on the possible abolition of the separate but related rule that the acquisition of six or more dwellings in a single transaction is taxed as non-residential property rather than at residential rates. In England, the equivalent rule for SDLT predated the introduction of MDR in 2011 and will survive its impending demise. The Building Safety Act 2022 The coming months should provide greater insight into how the courts will apply the “just and equitable” test that applies to both remediation contribution orders and building liability orders under the Building Safety Act 2022. Triathlon Homes LLP v Stratford Village Development Partnership and others [2024] UKFTT 26 (PC); [2024] PLSCS 16 is now making its way to the Court of Appeal. This is the case in which remediation contribution orders worth almost £18m were granted in respect of the former Olympic Village in Stratford, east London, notwithstanding that this includes costs incurred before commencement of the 2022 Act, that ownership of the respondents had changed and that Triathlon might have alternative remedies elsewhere. Assuming we get that far, a decision of the appellate courts will be extremely welcome. Further cases in the pipeline will explore the “just and equitable” test in different contexts. We can expect further consideration of the extent to which associated companies will be made liable. There will also be some interesting scenarios where the choice is between two unconnected corporates, rather than between the developer and the public purse. Beyond the horizon The imminence of the election makes the horizon feel closer than ever. Once that is over and the dust has settled, we will hopefully get a much better idea of the direction of travel on a number of fronts. Outstanding issues include the uncertain future trajectory of minimum energy efficiency standards for commercial property and the initiatives to increase the transparency of land ownership (following the recent consultations on contractual controls over land and on ownership structures involving trusts). Elsewhere, we can expect to hear further from the Law Society on its proposed new code for signing and exchanging property contracts, and with sector-specific guidance on climate change risk. The autumn also promises the long-awaited Law Commission consultation paper on business tenancies. Bill Chandler is a professional support lawyer at Hill Dickinson LLP Photo © Kellie Churchman/Pexels