Insights Commercial Property Law – Key Considerations (March 2021)

Our March 2021 summary of the latest developments in Property law and practice is as follows:

HMRC has said that, following discussions with businesses and advisors, it is applying VAT treatment of exit payment payments under leases (break premiums, etc.) from an unspecified future date (thought to be 1 February 2021). Of particular interest will be the position adopted by HMRC in relation to payments made by a tenant in respect of dilapidations. It seems that HMRC regards these payments as part of what the tenant has contracted to pay or provide under the lease, given that the tenant has contractually committed to returning the property to the landlord in a state of repair. If this is the case, this will have a major impact on a tenant’s plans for terminal liabilities (e.g. does the tenant carry out the repairs itself to ensure VAT recovery on costs, or pay to the landlord a sum which might include irrecoverable VAT if the landlord has not opted to tax?) We await clarity from HMRC on this point.

The Stamp Duty Land Tax (Administration) (Amendment) Regulations 2021 (SI 2021/13) paves the way for the introduction of a new 2% SDLT surcharge applicable from 1 April 2021 on the acquisition of residential property in England and Northern Ireland by non-UK residents.

The Company Law Committee of the Law Society has published on the Law Society’s website some questions and answers on “how to use electronic signatures and complete virtual executions”. The questions and answers are intended to assist in the practicalities of using an electronic signature in England and Wales, including Mercury signings.

The Department for Digital, Culture, Media & Sport has published a consultation paper on proposed changes to the Electronic Communications Code titled Access to land: consultation on changes to the Electronic Communications Code. The consultation paper focuses on three main problem areas. These are: (1) issues relating to obtaining and using Code agreements, including the need to speed up the making of agreements and the lack of flexibility in completed agreements; (2) rights to upgrade and share, including adjusting the conditions in which the freedom to upgrade apparatus or share apparatus with another operator apply; and (3) difficulties specifically relating to the renewal of expired agreements and problems. The consultation runs until 24 March 2021.

The Ministry of Housing, Communities and Local Government has published an open consultation on the regeneration of unused or underused publicly owned land. The new right to regenerate would enlarge the right to contest which has existed since 1980 under The Local Government, Planning and Land Act 1980 under which the public can request that the Government considers whether certain publicly owned land is unused or underused, and if so direct that it be sold.

The UK Government has announced an intention to make significant reforms affecting residential leasehold property. This is the latest in a series of announcements by the Government over the last few years proposing reforms in the sector to remove some of the imbalances of current legislation for residential leaseholders. Reforms now proposed include: (1) providing residential leaseholders with a statutory right to extend existing leases by a maximum term of 990 years at a zero ground rent; (2) Changes to the method by which the costs of enfranchising are calculated; (3) Provision of an online calculator to enable tenants to assess the cost of buying the freehold or extend its lease; and (4) Restricting ground rents to zero for new leases, including on new retirement leasehold property.