It is apparent, even from a cursory glance at the other articles in this report, that the property market in Kent remains buoyant – Kent is still something of a regeneration hotspot with significant progress being made on major projects particularly in the Thames Gateway, Ashford and Maidstone.
As ever, the challenge to the property market is to ensure that it matches the steady demand for high quality office, retail, leisure and residential property with an appropriate supply, whilst working within the constrains of the legal and regulatory framework.
How have the changes in law assisted the process in bringing supply and demand together?
Recent legal developments have been even-handed in their approach to the property market. On the one hand legislation has been introduced with the intention of encouraging business expansion by way of the take up of commercial property. We have seen the re-launch of initiatives such as the latest Code for Commercial Leases. This is designed to encourage fairness between landlords and tenants in the negotiation of commercial leases. It aims to redress the historic imbalance in the strength of bargaining power between landlord and tenant. The RICS code for service charges is another example of how legislation is trying to level the landlord and tenant playing field by establishing benchmarks of good industry practice in the levying and operation of service charges.
The courts have been even more interventionist in this area. Recent cases have seen landlords finding it impossible to circumvent the effect of the tenant’s service charge cap. In mixed use developments, case law has determined that legislation traditionally used to protect purely residential tenants (namely the tenant’s ability to refer certain service charge matters to the Lands Tribunal) may also now apply to commercial properties in mixed use developments.
On the other hand, new fire regulations, and the continuing impact of the Disability Discrimination Act have increased the regulatory and administrative burden on business occupiers of premises and on the providers of commercial space.
|
Perhaps the single biggest concern is a long shadow cast by the Planning Gains Supplement, (PGS), not least because of the uncertainty surrounding it.
If implemented, PGS will be imposed on development by taxing the financial gain resulting from the grant of planning permission. It is intended that the money raised from PGS will be ploughed back into the provision of infrastructure such as roads and drains. It is envisaged that the current system of planning obligations (imposed under the provisions of Section 106 Agreements) will continue but will only be applied to issues which relate specifically to a particular development, such as the provision of play equipment, with all infrastructure requirements being met through PGS.
There is no exact timescale for the introduction of PGS or indication of what the rate will be, but it is almost certain to have an adverse effect on the amount of land coming forward for development, at least in the initial stages. Until this uncertainty is resolved, the best advice is to obtain permission, even if only in outline form, as soon as possible.
The previously popular buy-to-let investment vehicle may also suffer from legal intervention. Increased regulation in the form of the new tenancy deposit scheme and tightening of regulations on houses in multiple occupation together with the possible introduction of legislation requiring private landlords to be members of regulatory associations may well reduce the attractiveness of the buy-to-let investment.
But it’s not all doom and gloom – the very fact that Government intervention is needed in this area is evidence of the robust performance of property as an investment vehicle – and although the exact shape and form of PGS remains to be finalised, the Government has at least given developers plenty of time to factor the impact of the new tax into their development proposals.
Kent is, and is likely to remain, a strong market for investment and take up of commercial property.
Provided by Brachers Solicitors
|
