Our March 2023 summary of the latest developments in Property law and practice is as follows:

The Economic Crime (Transparency and Enforcement) Act 2022 introduced disclosure requirements for foreign companies who hold property interests in the UK. It requires an overseas entity that owns or wishes to own property in the UK to identify its beneficial owner(s) and to register them at Companies House.

Under the Act, overseas entities were permitted a 6-months transitional period from the Act coming into force, allowing them time to become registered as an overseas entity at Companies House. This transitional period came to an end on 31 January 2023 and as such, any entity that is not yet registered may be committing a criminal offence.

From 1 February 2023 no transfer, lease for a term of more than seven years, or legal charge by an overseas entity is to be registered at the Land Registry unless one of the following provisions apply:

• The entity is a registered overseas entity, or an exempt overseas entity at the time of the disposition;
• The disposition is made pursuant to a statutory obligation, court order or is made by operation of law;
• The disposition is made pursuant to a contract entered into before the restriction was entered in the register;
• The disposition is made under a power of sale or by an insolvency practitioner; or
• Consent of the Secretary of State is obtained.

With much attention being paid to the Government’s stated aim of raising the minimum required energy rating for let non-domestic premises to ‘B’ by the end of the decade, it might easily be overlooked that a hugely significant trigger point is arriving next month.

From 1 April 2023, it becomes unlawful for a landlord to “continue to let” a sub-standard (meaning a property with a valid Energy Performance Certificate below band ‘E’) non-domestic property, unless an exemption applies. These exemptions fall into four cases and include:

• No further relevant improvements. Where a landlord of a sub-standard non-domestic property has made all the “relevant energy efficiency improvements” there are for the property, or where there are no relevant energy efficiency improvements that can be made to the property, and still the minimum required standard cannot be reached.
• Inability to obtain consent. A landlord may register the benefit of exemption if, despite reasonable efforts, it has not been able to obtain the consent of the tenant, a superior landlord, or a mortgagee, or to obtain planning or listed building consent to the making of relevant improvements within the last 5 years.
• Devaluing effects. A landlord has the benefit of an exemption if, within the last 5 years, the landlord has not increased the energy performance indicator for the building because it has obtained a report prepared by an independent surveyor which states that the making of that relevant energy efficiency improvement would result in a reduction of more than 5% in the market value of the property, or of the building of which it forms part.
• Landlords becoming subject in exceptional circumstances. In certain circumstances (e.g. exercise of an option to renew, grant of a replacement lease to a tenant’s guarantor or a grant by operation of law on a deemed surrender and re-grant etc.) the landlord is able to use a temporary exemption giving the landlord 6 months from the date upon which it becomes the landlord to comply with minimum standards.

In addition to the exemptions, where a landlord becomes a landlord who “continues to let” by virtue of an acquisition, the landlord is able to use a temporary exemption. This will give the landlord 6 months from the acquisition to comply with minimum standards.

It is important therefore for an owner of sub-standard property that is currently let to consider its position carefully and, if necessary, seek to register an exemption under the MEES Regulations. However, note that exemptions will not apply automatically.

A landlord who is in breach is liable to a civil penalty including financial penalties which can be imposed to an amount not exceeding £150,000 for non-domestic property.