UK Trends and Developments Contributed by: Colin Rodrigues and Harminder Sandhu, Hawkins Hatton Corporate Lawyers Ltd
Global Elections 2024 is described as a global election year, with more than half the global population taking to the polls. Inevitably, investors across the world will postpone significant investment decisions pend - ing the outcome of the elections. As we live in a widely interconnected world, domestic polices alone no longer influence our economy; hence the focus will be on the outcome of global elec - tions and, closer to home, on a possible change in government, which could bring a different tax regime for investors. Sustainability Certain types of properties that are more costly or complicated to upgrade will see a fall in asset value. The Minimum Energy Efficiency Stand - ards (MEES) have applied to all new leases and renewals since April 2018. However, from April 2023, a landlord will be considered in breach if they let commercial property that has an EPC rating below E. The minimum standard was expected to be raised to a rating of B by 2030, but this may now occur at a slower rate than announced as consultations continue, with fur - ther legislation in 2024 to implement government policy. Investors, lenders and business owners are setting their sights on energy-efficient prop - erties to meet their own environmental, social and governance (ESG) strategies. Legislation While the Building Safety Act 2022 continues its far-reaching impact, the real estate sector faces further reform in 2024. Whether it be the Renters’ Reform Bill (introduced to reform the private rental sector, including the abolition of Section 21 “no fault” evictions) or the Leasehold and Freehold Reform Bill (the objective of which is to reform home ownership in the UK, includ - ing making it easier for existing leaseholders to extend their leases or buy the freehold), it is
clear that a whole array of legislation in 2024 will impact on the residential sector. Additionally, development has been affected by biodiversity net gain (BNG) since 12 February 2024, whereby all developers must deliver a net gain of at least 10% more than there was before the development in terms of improving natural habitats. There is even reform on the horizon for commercial leases, with the Law Commission announcing a review of the commercial leasing rules, including (most importantly) the Landlord and Tenant Act 1954. Last but by no means least are the significant reforms proposed by the Lev - elling-up and Regeneration Act 2023, including powers to local authorities to implement rental auctions for vacant high-street properties. Outlook 2024 will see unprecedented change, whether that be in domestic legislative reforms, global politics, global stability or a change of UK gov - ernment. These vast changes will directly impact on the UK economy, consumer spending and investor appetite for risk. Despite this, 2024 is forecast to see the real estate sector start climb - ing back from the downturn in 2023, when the UK marginally escaped a recession. All indications are that 2025 will then build on the growth in 2024, and will see the UK economy rebound. As regards which real estate sectors will see the most activity, these will likely include the industrial and residential sectors, as there is potential for rental growth, while the office and retail sectors continue to decline. CBRE Group reported that office investment in 2023 was at its lowest level in 20 years, with only GBP6.5 billion invested in the first three quarters of 2023. With the emphasis on environmentally sustainable buildings, office space in good locations with outdoor space is likely to see rental growth due
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