Published: April 2017Contents
i) What are the hot topics?
The UK’s vote to leave the European Union is the dominant political, economic and legal topic. The Prime Minister has indicated that she will trigger Article 50 ‘no later than the end of March’ this year and the UK is expected to leave the EU by 2019. The impact of the vote to leave on the property industry is not yet fully clear. The inevitable initial uncertainty has been offset by the opportunities afforded to overseas investors by the weakness of the pound. In the longer term, the UK real estate market will be affected by the UK’s future relationships with Europe and the rest of the world, including the potential relocation of multinational occupiers and the free movement of labour. The ongoing housing crisis and the need to build new homes remains a key issue and the government has introduced a number of measures to encourage house building and to improve affordability. Investment in the UK’s infrastructure is another vital issue. In addition to the expansion of airport capacity, other key infrastructure projects include Crossrail 2 and the extension of HS2.
ii) Tell us about any key legal developments – recent or pending – and their international impact.
It is difficult to get away from the impact of Brexit and the implementation of the UK’s departure from the EU. Although land law in the UK has remained almost entirely unaffected by the UK’s membership of the EU, European legislation governs the vast majority of the UK’s environmental and climate change law and policy. In turn, this impacts the environmental aspects of the planning system. A ‘Great Repeal Bill’ will be introduced in the next Queen’s Speech, and will initially transpose all EU laws into domestic law. Away from Brexit, the Law Commission is considering updating the land registration system to reflect developments in law and practice, and plans for the privatisation of the Land Registry have been put on hold. Other key legal developments include the introduction of a new Electronic Communications Code to regulate the installation and maintenance of electronic communication networks and proposals to reform the law in relation to rights to light.
iii) What are the biggest opportunities and challenges for practitioners and clients?
Again, it is hard to see beyond Brexit as creating the biggest challenges, and also creating the biggest opportunities for clients and their legal and other advisers. The challenge is to ensure that the UK retains its position as a key part of the global real estate market. Concerns about the outcome of the referendum have been offset by the devaluation of the pound, political stability afforded by the new Prime Minister, historically low interest rates, falling unemployment and other positive economic news. In particular, many overseas investors are taking advantage of the buying opportunities afforded by very favourable exchange rates. London’s position as a true world city remains undiminished, and it attracts a disproportionate share of investment capital. However, there has also been significant interest from overseas investors in key regional development and investment opportunities. We have also seen significant inflows of investment capital into alternative real estate assets. The most popular target has been the private rented sector, while student accommodation, hotels, care homes, retirement villages, data centres, logistics and infrastructure have all attracted buyers.