Trowers' property litigation weekly update
In this week's bulletin we look at two developments which will have significant impact on the property market. The first is The Economic Crime (Transparency and Enforcement) Bill, which is highly topical. The second is the Government's response to the HBF's proposals concerning fire cladding remedial works, and again is something to keep an eye on. All this along with the usual positive news, insights from across the firm and the weekly quiz.
The Economic Crime (Transparency and Enforcement) Bill – a bid to clamp down on illicit financing of UK property transactions with a register of overseas owners
Following the invasion of Ukraine and the subsequent disquiet around illicit Russian money in the UK, the Government is accelerating the introduction of the long-awaited Economic Crime (Transparency and Enforcement) Bill which will create a register of the beneficial owners of UK property.
Any overseas legal entity purchasing property in the UK will be required to register its beneficial owner details with Companies House and will then have to update that information annually. Furthermore, an overseas entity will not be able to sell or otherwise dispose of property unless it has complied with its beneficial owner reporting obligations.
The obligations will also apply to any property acquired by an overseas entity since 1999. There will be a short transitional period (currently expected to be 6 months) in which the owner must register its beneficial owner details. Failure to declare the beneficial ownership could result in fines of up to £500 per day and custodial sentences of up to five years.
The Bill is currently at its second reading in the House of Lords, and it is expected to be passed into law around May of this year. Questions remain as to the effectiveness of such legislation given the limited resources for enforcement in this area.
Economic Crime (Transparency and Enforcement) Bill 2022: overarching documents - GOV.UK (www.gov.uk)
Government responds to the Home Builders Federation's proposals to pay for building safety remedial works
Earlier this week, by letter on 7 March 2022 Michael Gove – the Secretary of State for the Department for Levelling Up, Housing & Communities – responded to the Home Builders Federation's proposals on building safety.
The HBF has been engaging with the Government since Mr Gove announced plans to compel developers to pay for the remediation of cladding on buildings between 11 and 18 metres if they do not cooperate. Since the announcement, the Government has threatened non-cooperating developers with measures, such as preventing them from receiving planning permissions to cajole them into action.
On 25 February 2022 the HBF sent Mr Gove a letter with proposals to remediate buildings dating back to 2000. The HBF stated its members would commit to resolve "critical" fire safety concerns on all of their buildings taller than 11 metres, taking a proportionate and risk-based approach. The letter further proposed that the HBF members would withdraw from the Building Safety Fund, meaning that where a building has secured money via the BSF members would be prepared to reimburse the BSF for "reasonable" fire safety remediation costs.
Although Mr Gove welcomed the commitment that developers will fund the remediation of fire safety defects in buildings above 11 metres that they had a role in developing, his response states that the HBF's proposals fall short of what he expects; that is, that all developers must commit to full self- remediation of unsafe buildings without qualification.
Mr Gove's letter maintains the threat – ominously for developers – that if agreement is not reached by the end of March, the Government will impose a solution in law and reiterates that they have already taken powers to impose this solution through the Building Safety Bill.
A copy of Mr Gove's full response can be found here.
Insights from around the firm
- The future of leadership roundtable
- A Trowers levelling up publication: Is "levelling up" using LGPS funds just a romantic notion?
- Airbnb is doing its part to help with the humanitarian crisis in Ukraine by offering free or discounted stays in its accommodation across Europe. This is a continuation of its ongoing work to support refugees and other displaced people around the world. See how you can help here.
- Germany has brought forward its target date for decarbonising its energy supply by 15 years following Russia's invasion of Ukraine. It has pledged to get 100% of its energy from renewables by 2035. The previous target was 2050. It is thought that other countries may follow. Read more here.
- Research undertaken at Boston University has found that trees and soils on the outermost edges of forests and city parks play a greater part in fighting climate change than previously thought. It is thought that 30% of fossil fuel emissions are eliminated by forests absorbing them and that the outermost edges of forests and city parks store more CO2 than they release. Read more here.