The office property market is going strong with new developments underway. Hedge fund involvement has been observed in the City with joint ventures between British property developers with those in the Far East such as Singapore. The total amount of offices being built is at a record high.
The Leasehold and Freehold Reform Act 2024 received Royal Assent last Friday the 24th May 2024.
It is an act to prohibit the grant or assignment of certain new long residential leases of houses, to amend the rights of tenants under long residential leases to acquire the freeholds of their houses, to extend the leases of their houses or flats, and to collectively enfranchise or manage the buildings containing their flats, to regulate the relationship between residential landlords and tenants, to regulate residential estate management, to regulate rent charges and to amend the Building Safety Act 2022 in connection with the remediation of building defects and the insolvency of persons who have repairing obligations relating to certain kinds of buildings.
Which parts are in force? This is determined by section 123 of the Act which provides:-
Commencement (1) This Part comes into force on the day on which this Act is passed. (2) The following provisions come into force at the end of the period of two months beginning with the day on which this Act is passed— (a) section 112 (regulation of remedies for rent charge arrears); (b) section 116 (recovery of legal costs etc through service charge); (c) section 117 (repeal of section 125 of the BSA 2022); (d) section 118 (higher-risk and relevant buildings: notifications in connection with insolvency). (3) The other provisions of this Act come into force on such day or days as the Secretary of State may by regulations appoint. (4) The Secretary of State may by regulations make transitional or saving provision in connection with the coming into force of any provision of this Act. (5) The power to make regulations under this section includes power to make different provision for different purposes.(6) Regulations under this section are to be made by statutory instrument.
The fall in the number of construction contracts has been evidenced by a 25% insolvency increase in building firms since the pandemic.
Escalating inflation, delays in significant infrastructure projects, a drop in the construction of new homes and the cost increments of materials are the chief culprits here.
Flat sales in London are up nearly a quarter compared to pre-pandemic conditions and house sales are showing a smaller yet still significant increase. In prime central London renters are being forced to pay more as there are fewer deals on offer, with particular demand in up to two bed properties. Suburban rents have increased even more so.
New leases and renewals are being reported by some of the commercial property mega corporations with rents holding firm even though foot fall remains slightly subdued due to hybrid working. Recent builds especially are of interest.