Commercial property update
The UK property industry is undergoing significant changes with the introduction of the Building Safety Act 2022, Energy Performance Certificate updates and a Bill proposing high street rental auctions.
These changes aim to promote growth and increase the long-term value of these areas.
Building safety reforms
The Building Safety Act 2022 (BSA 2022) gained Royal Assent on 28 April 2022. This is an important change and update for all who are involved in property management, planning, construction, residential development, and health and safety. The BSA is hoped to contain measures that improve the safety of buildings. While it has a particular focus on “higher risk” buildings, its reach is much wider.
The intention is to bring into force several of the BSA 2022’s measures by April 2023 and the remainder between April and October 2023, so that it will be fully implemented by the end of October 2023.
To understand the new changes the focus will be on the roles the new Act will create and how they work together with its impact on the building control regime.
A few key points to note:
- allocates liability for the cost of taking building safety measures and remediation works, and specifies building safety information that must be provided under the Landlord and Tenant Act 1987.
- New building safety management once higher-risk buildings are occupied.
- Introduces a New Homes Ombudsman and a Code of Practice for new build homes that will apply to both England and Wales.
- Mandates that developers procure new build home warranties that must last for 15 years.
Energy Performance Certificates
From 1 April 2023, it will be unlawful for a landlord to continue to let a commercial property with an EPC rating of F or G, unless an exemption applies.
This of course means that Landlords should take a careful look at their properties and must carry out energy improvement works to bring the EPC rating up to at least an E or register an exemption.
However, be aware that Landlords do not have an automatic right to enter the property in order to carry out any work required. Whether they have a right of entry will depend on the drafting of the lease. If there is no right, landlords will need the tenant’s consent and one would consider an improvement to the property to save energy costs would not be a contentious issue.
For commercial property, a buyer of a rented commercial property with a rating below E will be able to register a temporary six-month exemption to enable the buyer to get the property up to the required standard or register a longer-term exemption. This needs to be planned carefully for any buyer and again tenant engagement will be the best way forward.
The government is also considering the introduction of a performance-based rating that evaluates the actual energy consumption and associated emissions rather than the current EPC rating.
High street rental auctions
Part 8 of the Levelling-up and Regeneration Bill 2022-2023, which applies in England only, has put forward the ability to have high street rental auctions.
The intention is to give power to the local authorities to conduct a compulsory rental auction of vacant shops in designated high streets or town centres. To be able to conduct such a rental auction the shop premises must meet a set of criteria which include suitability for high street use, vacant possession and to be of local benefit.
Before an authority can conduct a rental auction, there is a two-stage notice procedure with a landlord’s right of appeal. The auction process will be controlled, and regulations of the conduct will be set out. Local authorities will effectively set into the shoes of the landlord. The letting can also place an obligation upon the Landlord to conduct remedial works to the property to enable safe letting. The lettings will be for a minimum of one year and a maximum of five years.
To ensure the lettings are limited the security of tenure under the LTA 1954 will not apply. To overcome a superior landlord and/or lender the Council will have deemed consent from any superior landlords and/or lenders.
It is hoped that Landlords, generally, do not want to see their properties empty and not generating an income. The better the uptake in empty shops the better the chance of creating growth and increasing the long-term value of the area.
If you would like any more information relating to this article then please feel free to contact me: Telephone – 020 8221 8057, email me here, or visit my profile: Tony Chauhan.
This is not legal advice; it is intended to provide information of general interest about current legal issues.
