Some important topics to keep track of in the residential property sector in 2023

By Nicola Muir.

What with pandemics, wars, and a high turnover of prime ministers, 2022 was a busy year. There’s been little parliamentary time for the muchheralded prospect of leasehold reform, but there are plenty of other changes in property law to look out for in 2023.

The Building Safety Act 2022

The big news for 2023 is the Building Safety Act 2022. The Act received Royal Assent on 28th April and contains 171 sections, 11 schedules and six parts, not to mention the proposed raft of secondary legislation. Landlords need to get ready.

The First-tier Tribunal has already been granted the power to make “remediation orders” requiring defects causing a risk of fire or building collapse to be remedied. In addition, it can make remediation contribution orders requiring a landlord or developer or any “person associated with” them to contribute to the cost of works. Restrictions on service charges recoverable from leaseholders for works to remedy fire safety defects/risk of collapse have also been imposed for buildings which are at least 11m high or at least five storeys. The measures include removing the leaseholders’ liability for removal/remediation of unsafe external cladding and associated fees. The FTT is braced for an influx of new cases.

In addition, the limitation period to bring a claim under the Defective Premises Act 1972 has been extended from six years to a maximum of 30 years for works completed before 28 June 2022. The scope of the work for which claims can be made under the 1972 Act has also been extended to include works to an existing dwelling which causes it to become unfit for human habitation. It seems likely that 2023 will see an increase in claims for historical building defects.

The bulk of the other new provisions are expected to come into force during 2023. One particular area to watch is the introduction of the “accountable person” who will be responsible for ensuring that fire and structural safety is properly managed in high-risk blocks – buildings more than 18m in height or at least seven storeys and which contain two or more dwellings. All buildings caught by the Act will need to be registered with the Building Safety Regulator, with registrations expected at any time between April 2023 and October 2023.

Reform on the agenda

It’s now two and a half years since the Law Commission published its recommendations for a complete overhaul of the leasehold system, with plans for extensive amendments to the law of enfranchisement, right to manage and a new invigorated commonhold tenure. So far, the government’s response has been a rather short press release in January 2021 and the Leasehold Reform (Ground Rent) Act 2022. The momentum seems to have stalled – my guess is 2023 will not be a year of leasehold revolution.

The cost of living crisis and increasing interest rates may mean a greater political pressure to help renters. A Renters Reform Bill is set to be introduced in 2023. The proposals include ending nofault evictions and improving conditions and rights in the private and socially rented sector. In Wales, parts of the Renting Homes (Wales) Act 2016 finally came into force in December. It extends the notice period for no-fault evictions from two to six months and also requires landlords to make sure properties are safe to live in. If not, no rent will be payable for any period while the home is not deemed fit for human habitation.

In the meantime, rents in the UK continue to soar as a result of rising mortgage costs and issues of supply and demand. The Scottish government has brought in a temporary rent freeze and eviction ban until March 2023 to give tenants a reprieve over the winter months. Calls for a similar rent freeze in England championed by London mayor Sadiq Khan and others have so far gone unheard. However, the old debate as to whether rent controls work or simply exacerbate the problem by reducing supply has been reignited. Rent controls introduced in Berlin in 2020 proved disastrous and were quickly scrapped, but all eyes will be on Scotland in 2023.

The Courts

The government is not the only institution ‘getting behind’. The Supreme Court heard the overlooking case of Fearn and others v Board of Trustees of the Tate Gallery [2020] EWCA Civ 104; [2020] EGLR 14 over a year ago and there is still no sign of a judgment. The Supreme Court was asked whether the law of nuisance is capable of providing a remedy against viewing from neighbouring land – surely we will find out in 2023. In December, the Supreme Court heard the case of Williams and others v Aviva Investors Ground Rent GP Ltd and another [2021] EWCA Civ 27; [2021] EGLR 13, which concerns apportionment of service charges. Where the tenant is liable for a fixed percentage “or such part as the landlord may otherwise reasonably determine” of the service expenditure, is the landlord stuck with the fixed percentage or can the FTT substitute an alternative? There are also important questions for the Court of Appeal to deal with in 2023. Dell and another v 89 Holland Park (Management) Ltd [2022] UKUT 169 (LC); [2022] PLSCS 113 will consider whether “sweeper” provisions and general words in service charge clauses are wide enough to allow a landlord to recover the £430,000 legal costs of a dispute with the next-door neighbour regarding breach of a restrictive covenant. Avon Ground Rents Ltd v Canary Gateway (Block A) RTM Co Ltd and another [2020] UKUT 358 (LC); [2020] PLSCS 235 will revisit the issue of whether shared ownership leaseholders have a right to participate in a right to manage (or an enfranchisement) claim before they have staircased to 100%.  The High Court will consider whether the court has power to grant relief from forfeiture of the benefit of a contract for the purchase of property where the effect of the forfeiture amounts to a penalty. The appellant purchaser paid a 30% deposit of £400,000 but failed to complete – Hamilton (as Trustee for Civil Recovery and Tax) v Katung.

It’s full steam ahead for another busy year.

This article appeared in the Estates Gazette on 7th January 2023.