2013 looks set to be full of legal developments relating to property, from AIFMD to MCZ and all the letters in between. Here are brief details of some of the most significant.
AIFMD: The Alternative Investment Fund Managers Directive, which will establish an EU-wide regulatory and supervisory framework for alternative investment fund managers, must be implemented by 22 July 2013. Fund managers will have a year from that date to apply for authorisation under the new rules. In December 2012, the Commission published the draft level 2 delegated Regulation, which will implement the Directive. It is subject to scrutiny by the European Parliament and the Council of the EU and, once in force, will be directly applicable in all member states. Consultations on implementation in the UK are expected from the FSA in February 2013 and from the Treasury by March. Guidelines on key concepts and regulatory technical standards are expected to be published in the first half of 2013 following current consultations by the ESMA.
Budget: The Chancellor will deliver the Budget on 20 March 2013.
CRC: The registration period for Phase 2 of the Carbon Reduction Commitment Energy Efficiency Scheme will begin on 1 April 2013. Measures to simplify the scheme are expected to come into force on 1 June 2013. In particular, the performance league table will be scrapped, the scheme will apply only to electricity and gas used for heating, there will be two fixed price sales of allowances each year in Phase 2, the deadline for surrendering allowances will be extended from the end of July to the end of October and it will be possible to “bank” allowances for use in a later year of a Phase. Also, as from Phase 2, for leases of 30 years or more containing tenant’s construction obligations, the tenant, rather than the landlord, will be responsible for complying with the scheme.
Distress: The landlord’s remedy of distress is to be replaced by a new procedure called commercial rent arrears recovery. Implementation of the new regime has been postponed for several years but it is possible it could go ahead in 2013.
Energy performance certificates: As from 9 January 2013, new regulations require property advertisements to include the energy performance rating where available and in buildings with a gross floor area over 500 sq m which are frequently visited by the public if an EPC has been obtained it must be displayed in a prominent place clearly visible to members of the public who visit the building.
Flood insurance: In June 2013 the current arrangements which ensure that insurance against flooding is available for most residential premises and small businesses (based on a statement of principles agreed by the Association of British Insurers) will come to an end. So far, attempts to agree a replacement arrangement have not succeeded. If agreement cannot be reached, large numbers of properties could become uninsurable with a consequent significant loss of value.
Green Deal: From 28 January 2013 it will be possible to use the Green Deal scheme to carry out energy efficiency improvements without paying any up-front costs. Finance will be available from accredited Green Deal providers and will be repaid through energy bills with the liability attaching to the property (or, more accurately, the person responsible for paying energy bills at the property), rather than the person who obtained the finance. The transfer or lease of a property which has had Green Deal finance must contain an acknowledgement in prescribed form that the buyer or tenant understands that they are bound by the Green Deal plan and are liable to pay the charge.
Homes over £2m: From 1 April 2013 the Annual Residential Property Tax will be payable on residential property valued at over £2m owned by certain “non-natural persons”, subject to various reliefs for genuine property businesses. Also, capital gains accruing after April 2013 on the disposal of UK residential property by non-UK resident non-natural persons will be subject to capital gains tax. See the article by Daniel Hawthorne in this edition of Real World for more details.
Charitable Incorporated Organisations: As from 3 January 2013 it is possible for new charities to be registered with the Charity Commission as a charitable incorporated organisation, which is a new corporate structure available only to charities and subject to less onerous reporting and accounting requirements than those applying to companies registered under the Companies Act. The opportunity for existing charities to convert to CIO status will be phased throughout 2013 and 2014, starting with unincorporated charities with the highest annual income in March 2013.
Judicial review: The current consultation on reforms to the system of judicial review closes on 24 January 2013, so the changes could be in place before the end of the year. Under the proposals, applications relating to planning decisions would have to be made within six weeks, there would be no right to an oral hearing of the application for permission in certain cases and oral hearings which did go ahead would be subject to a fee. See Justin True’s article in this edition of Real World for more information.
Part K: Changes to Part K (and Parts B, M and P) of the Building Regulations will come into effect on 6 April 2013.
Light: The Law Commission’s report into the acquisition and enforcement of rights of light is expected in early 2013.
Measurement: The RICS New Rules of Measurement – Detailed Measurement for Building Works replace the Standard Method of Measurement for Building Works from 1 January 2013.
NPPF: On 26 March 2013 the transitional period relating to the introduction of the National Planning Policy Framework expires. After that date, the weight which may be given to development plan policies will depend on the degree to which they are consistent with the NPPF.
Overriding interests: On 13 October 2013 certain interests in land, including chancel repair liability and various other obscure rights, such as franchises and manorial rights, will cease to be categorised as “overriding interests”. That means that, if they have not been noted on the register of the property at the Land Registry by that date, although they will continue to be binding on existing owners, they will not be enforceable against anyone buying the property after that date.
Planning: As from 31 January 2013 outline planning applications will no longer need to include details of approximate layout and scale where they are reserved matters and from 31 July 2013 general requirements for planning applications will be limited to those set out on a local list. A number of other measures are also expected to come into force during 2013 aimed at speeding up the planning system and encouraging growth. They include the ability to make planning applications direct to the Planning Inspectorate where the local planning authority is designated as poorly performing, a right to apply for the modification or discharge of an affordable housing requirement in a s.106 planning obligation in England which makes development economically unviable, limiting the information that may be required in support of a planning application, changes to the appeals procedure to speed up the process and, for three years only, an increase in the size limits for extensions which can be built in England without having to apply for planning permission.
Equator Principles: The third version of the Equator Principles is expected to be launched in 2013. They are a set of social and environmental guidelines which many banks and other financial institutions have agreed to be bound by.
Rent deposits: Changes to the rules on the registration of charges at Companies House are expected to mean that from 6 April 2013 it will no longer be necessary to register charges created by rent deposit deeds.
SDLT: Finance Bill 2013 will make several changes relating to stamp duty land tax. The rules relating to sub-sales will be changed to prevent them being abused where the parties are connected or the transaction is not at arm’s length. Some of the more complex rules relating to leases will be simplified – where the lease continues after the expiry of a fixed term and where an agreement for lease is substantially performed before the lease is granted. The rules on abnormal rent increases will be abolished.
Town and village greens: Measures intended to limit the ability to apply for land to be registered as a town or village green are expected to come into force in the summer of 2013. Landowners will be able to deposit a statement and map with the commons registration authority which will stop the required 20 year period of recreational use running. It will also not be possible to apply for registration of a town or village green in England where an application for planning permission has been made in respect of the land or where it is included in development proposals in a local or neighbourhood development plan. See the article by Scott Curtis in this edition of Real World for more information.
UK REITs: Finance Bill 2013 will include provisions to enable the income of a UK REIT from investing in another UK REIT to be treated as income of the investing REIT’s property rental business.
Assets of Community Value: Regulations came into force in September 2012 requiring local authorities to compile lists of local assets of community value which will be subject to a moratorium on disposal to allow community groups an opportunity to bid for them, but without any right to have their bid accepted. During 2013 we are likely see the process start to be used.
Welsh Planning Bill: There will be increasing divergence between the planning systems in England and Wales. The Welsh Government is currently gathering evidence to enable it to publish a Planning White Paper during 2013 before introducing a Planning Bill to help improve the planning system in Wales.
EXemption from business rates: New commercial property completed between 1 October 2013 and 30 September 2016 will be exempt from empty property business rates for the first 18 months after completion of construction.
Year of the Snake: 10 February 2013 is the beginning of the Chinese year of the snake and during 2013 Chinese and other Asian investors are likely to continue to invest heavily in the London commercial property market, which is seen as a safe haven amid economic and political unrest elsewhere. In particular, Chinese insurance companies are expected to invest following a regulatory change which will permit them to invest up to 15 per cent of their funds in overseas property.
Marine Conservation Zones: The first group of Marine Conservation Zones will be designated by DEFRA following the closure of a consultation in March 2013. The designation will not in itself impose any restrictions on the use of the sites but it imposes duties on public bodies to exercise their functions in a manner which will best further the conservation objectives of the zone.