As we find ourselves settling into the new year, it’s time for us all to turn our attention to the new real estate rules and regulations coming into effect across the globe over the next 12 months. Impacting key stakeholders including owners, occupiers and investors, we’ll be sure to track these regulations throughout the year to keep you in the know.

Upcoming UK regulations

Energy efficiency: next MEES milestone for commercial properties

From 01 April 2023, buildings with an EPC rating below an ‘E’ must not be let even where there is an existing tenancy, unless they have:

  • Carried out all possible ‘cost-effective’ energy efficiency improvement works as set out in the MEES regulations and the property remains sub-standard, or
  • Registered one of the permitted exemptions on the PRS Exemptions Register

Any landlord letting a property which falls below an ‘E’ rating must act urgently to make and complete the appropriate EPC improvements by April or be at risk of fines of up to 20% of the rateable value to a maximum of £150,000.

The Building Safety Act (BSA) 2022

The BSA, the government’s main legislative response to the Grenfell tragedy passed in April last year, introduced fundamental changes to building safety for residential properties, in particular higher-risk buildings of at least 18 metres or seven storeys high.

The BSA is being implemented in stages with several key measures focusing on remediation of fire safety defects and extending the limitation period of liability for these already in force. The government is still consulting on wider-reaching measures which will be brought into force between April and October of this year. The key changes and focal points for the industry to consider during this period are:

  • Gateways 2 and 3 which expand building control measures for the construction of new higher risk buildings before work begins, and the final certificate phase which applies on competition of construction.
  • New management duties and responsibilities for owners of higher risk buildings which introduces the concept of an ‘accountable person’ who will have ongoing responsibility for assessing and managing building safety risks.
  • Powers for the secretary of state to set up a new Building Industry Scheme and to prohibit non-members from undertaking development work.
  • The Building Safety Levy on new residential buildings requiring building control approval payable in addition to the existing residential property developer tax introduced in April last year.
  • A new procedure for the exchange of landlord certificate and leaseholder certificates to establish whether the statutory limits apply. Landlords and managing agents need to be across the new procedural requirements and statutory control on recovery of building safety costs and investors acquiring properties subject to residential leases should carry out due diligence on service charge liability relating to building safety measures.
  • The ‘golden thread’ which requires duty holders to put measures in place to ensure that current information and documents relating to the design, build and management of the building are held in one centrally held digital record that is easily accessible throughout its lifetime.

Fire Safety (England) Regulations 2022

As of 23 January 2023, the Fire Safety (England) Regulations 2022 will implement many of the recommendations made following the Grenfell Tower Inquiry. Presenting practical and cost-effective improvements that look to provide increased fire safety for blocks of flats, the regulations make it a legal requirement for responsible persons to assist the Fire and Rescue Service.

The key regulations state that for high-rise multi-occupancy residential buildings over 18 metres in height, responsible persons must provide both electronic and hard copy building plans for their local FRS. This is in addition to a single page building plan identifying key firefighting equipment, in a secure information box on site. Depending on the height of the building requirements will vary, with most applying to buildings over 18 metres.

The Levelling Up and Regeneration Bill

Introduced to parliament in May last year, the Levelling Up and Regeneration Bill brings in wide-ranging changes to the current system of local government, planning, developer contributions and regeneration.

Commercial landlords need to be aware that under the bill, taking effect from Spring this year, local authorities have the power to force them to let empty premises such as shops, offices, restaurants and pubs in town centres and on high streets by instigating compulsory rent auctions.

Furthermore, in an effort to increase the transparency in land ownership and control, the Land Registry will be entitled to demand transactional information about the ownership and control of land, which could also be made public. Failure to comply will be an offence.

Upcoming international regulations

International Property Measurement Standards (IPMS) All Buildings

The long-awaited IPMS All Buildings standard replaces the previous asset-specific standards, making it more user-friendly enabling easier comparison between buildings.

The overarching standard for all buildings is a culmination of work by the IPMS Coalition (IPMSC) over the past ten years, bringing together built environment organisations from around the world, including our own Director Tom Pugh, to help align measurement practices in a global investment environment.

Measurement is a starting point for understanding the way a building is used and how well it performs, particularly when considering energy efficiency. It is expected that the new standard will show the value of sharing good practice and encouraging adoption both locally and globally.

Timing on its release is still to be confirmed, but watch this space as to how the RICS implements the standard when published.

The Economic Crime (Transparency and Enforcement) Act

With a looming deadline of 31 January, all overseas companies or entities who currently own or are purchasing UK property must list their details in the Register of Overseas Entities. Failure to do so means any overseas entity owning property in the UK will commit a criminal offence and will effectively be unable to sell, lease or charge its registered property.

With these and other changes set to hit our industry, it is important to be prepared and consider the implications. Here to help, our team has the in-house expertise to provide a one-stop-shop for clients looking to make sense of upcoming regulations and mitigate risks in real estate investing, ownership and development. If you would like further information about any of the upcoming legislations mentioned above, please get in touch.