Biodiversity Net Gain – opportunities and obligations for developers and landowners alike

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With the ink still wet on some of the policies and agreements to come out of COP26, sustainable development is high on the political agenda.  Improving biodiversity is a major issue for landowners, developers and planning authorities and biodiversity net gain is a method utilised to improve a site's value – the higher the biodiversity net gain, the potentially higher the value, and who doesn’t want that?

What is meant by biodiversity?

The biodiversity of an area is the variety of plant and animal life in a particular habitat.  A high level of biodiversity is considered to be desirable and important.

What is biodiversity net gain?

The act requires, amongst other things, that all development schemes in England must deliver a mandatory minimum 10% biodiversity netgain which must be maintained for a period of at least 30 years.   

Biodiversity Net Gain follows a mitigation hierarchy – four steps designed to result in a win- win situation. Wins for the environment and wins for the developer. 

The four steps 

Avoidance – avoiding any impact completely such as changing the location of development 

Minimisation – reducing the time, extent, impact, intensity of the development. 

Onsite restoration – measures taken to restore the habitat involved.  This step is particularly necessary if avoidance and minimisation were not possible in the first instance. 

Offset - measures taken to compensate for the adverse impacts after the previous three have been explored in full. 

What does this mean for land developers?

Local planning authorities have required similar mitigation measures from developers via the local plan system for a number of years. However, the new Act will bring the existing requirements of the planning system into statute, giving some form of certainty in terms of what is required. The preference is for mitigation measures to be provided on-site, but where this is not possible, the developer should aim to provide and secure mitigation measures in terms of local habitats.

The key for developers with this new law is to ensure that any proposals are brought forward with BNG in mind. Measures should be factored in and accommodated from an early stage, to avoid pitfalls further down the line. Creative thinking and additional planning throughout the process will prevent pitfalls further down the line. Engaging with the local planning authority during the process will also demonstrate that the BNG process has been thoroughly engaged with.

What does this mean for landowners?

By 2028 the farm subsidy, known as the Basic Payment Scheme will be eradicated and in its place (to a degree) the new Environmental Land Management Scheme (ELMS), set under the Agriculture Act 2020, will be fully integrated. The ELMS is based on the philosophy of “public money for public goods”, and biodiversity (along with all natural capital considerations) will play a huge role within the various schemes planned.  What we don’t know at this stage is how the private sector contracts between developers and landowners will sit with the ELMS and whether there will be the ability to benefit from both. (‘Stacking’ is the issue of whether the same land can ‘stack’ one payment upon another).

It would appear that there is an opportunity for landowners and farmers to take advantage of developers offsetting their BNG requirements, by adding a new revenue stream for any farm business or landed estate, which may be more lucrative than what the ELMS have to offer. However, a word of caution. All businesses will need to consider their own carbon footprint before embarking on entering into any offset BNG contracts, to ensure they can reach their own net zero carbon target.

Furthermore, as this is still a new concept, values need to be carefully considered. With land needing to be set aside for BNG for a minimum of 30 years (with the Secretary of State having powers to increase this as it sees fit), it might have the negative effect of reducing the capital value of the land. This needs to be compensated by the offset contracts between landowners and developers. Tax planning for future generations also needs to be considered for landowners.

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Anna has 15 years’ experience advising on all aspects of planning, compulsory purchase and highways law, acting for a variety of public and private sector clients throughout her career including landowners, promoters, developers, local authorities, central government agencies, regional development agencies, and various NHS Trusts.

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The new Commercial Rent Arrears bill - not the end to landlords’ woes

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The Commercial Rent (Coronavirus) Bill finally received Royal Assent on 24 March 2022 and has established a legally-binding arbitration process for landlords and tenants to settle certain outstanding debts arising from the national lockdown period between 21 March 2020 and 18 July 2021.

What is the bill?

The bill has been introduced to coincide with the end of multiple restrictions that have been placed on landlords since late March 2020 – preventing them from recovering pandemic-induced rent arrears from their tenants.

It aims to encourage collaboration, keep disputes out of court, and avoid the time and costs of litigation.

For rent debts to be considered for the arbitration process, they must be attributable to 21 March 2020 and 18 July 2021, and the tenant must have been mandated to close by reason of coronavirus during that period.

Any rent debts outside of these dates won’t be subject to such restrictions which means landlords can sue and forfeit leases for rent arrears incurred by tenants who weren’t forced to close during Covid – such as essential retail and pharmacies.

Some sectors – such as non-essential retail and hospitality – were able to reopen before the above stated period due to restrictions being lifted. It is important to bear in mind that rent debts will not apply to those certain time periods for these industries.

The arbitration process

Either landlords or tenants can start the arbitration process. Currently, they have a six-month period from now to refer these protected debts to arbitration.

There are three stages of the process:

Pre-arbitration, which must be commenced within six months of 25 March, although this is likely to be kept under review. Prior to a referral, either the landlord or tenant needs to notify the other party of their intention of doing so.

Within 14 days of receiving this notification, the other party can respond, which will then allow for another 14 days before the formal referral can be made. As the process is currently only for six months, the pre-notification period should be started no later than five months in to allow for this period.

After this, the arbitrator must determine whether the criteria for the process has been met. This includes checking whether the tenant was adversely affected by COVID, if the tenant’s business is viable or would be viable if given relief, whether the debt relates to the protected period.

The arbitrator will then consider what relief should be granted to relation to the owed debts. They will determine how much the tenant can afford to pay and how quickly, as well as take the landlord’s position into consideration and whether any relief will jeopardise their solvency.

Any award the arbitrator makes has a payment deadline of 24 months from the day the decision is handed down.

How will this bill affect landlord and tenants?

The criteria for arbitrators to consider when making their decisions seems, for tenants, to be quite flexible in terms of assessment of their viability, whereas for landlords, these are pretty limited. The act says in assessing the solvency of landlords, the arbitrator must have regard to their assets and liabilities, including any other tenancies to which they are party, and any other information relating to the financial position of the landlord the arbitrator considers appropriate.

While the analysis of assets and liabilities might be familiar territory for landlords and their advisers, the reality is that the bill offers limited protections for landlords in this regard. The bill would appear to simply wish to avoid tipping landlords into insolvency by granting concessions to tenants, rather than positively seeking to improve the position of landlords.

However, it is important to remember that some landlords may be suffering considerably as a result of Covid and unpaid rent, leaving them unable to meet their loan repayments or pay their staff for example.

Within the jurisdiction granted, we would expect arbitrators to not only look at tenants’ viability in isolation and make sure they are seriously considering landlords’ positions during the process to ensure they are not being adversely affected.”

Considerations

Two major cases – brought by BNY Mellon and the London Trocadero – in relation to pandemic-induced rental arrears are currently making their way through the courts, with a decision in the Court of Appeal expected in June 2022.

Should these cases succeed, there is the potential for relevant rent arrears not to qualify as protected debts. And if there is no protected rent debt, arbitrators must dismiss any such referrals.

This means many tenants may not have a strong incentive to refer cases to the arbitration process immediately. Some may hold off doing so until those decisions have been made so an arbitrator doesn’t order them to pay something when they may end up having to pay nothing.

Given the uncertainties and the background, references to an arbitrator may get off to a slow start.

Preparing now

The introduction of this new arbitration legislation will play a crucial part in continuing to help landlords and tenants resolve outstanding rent arrears.

The key thing for landlords is to carry out an analysis of the arrears they are owed – look at the periods they relate to and check whether tenants qualify. Then, speak to a professional to work out what action can be taken in relation to both protected and unprotected debts.

It is also strongly advised that commercial landlords seek early legal advice on their position and strategy to maximise recovery. Advice may also be required throughout the negotiation process.  This can be important in continuing to protect their capital value and maintain bank interest covenants.

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James works with clients and colleagues to find effective solutions to property disputes and problems.

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Property team help Godwin Developments secure prime commercial site in Staffordshire

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Godwin developments secure new site

Our associate Ben Darlow has worked with developer Godwin on another significant land purchase in Uttoxeter. 

Godwin Developments have secured a prime site in Uttoxeter which it intends to transform into a brand-new commercial development for the Staffordshire market town. Godwin Developments are an experienced national property developer with a focus on residential, commercial and mixed-use schemes, in partnership with the public and private sectors 

The Brookside Road site they have acquired is opposite Uttoxeter railway station which is used by over 165,000 people every year. With an estimated population of 20,000 also living within a three-mile radius and a high daily traffic count, the development will be well-placed to serve the local community, as well as commuters from the wider West Midlands region. 

The land - located near a brand-new 22,873 sq. ft. Lidl supermarket in Town Meadows Way that opened in October 2021 - is very well suited to a range of coffee, food-to-go and fast food operators and has the potential to create new jobs locally as well as deliver additional choice to residents, shoppers and passing traffic. Demand for takeaways and drive-thru restaurants has rapidly increased and was the fastest growing sector in the first half of 2021, providing convenience to consumers to access their favourite offerings. 

Nikesh Solanki, Development Manager at Godwin Developments, said: “We are thrilled to have secured this prominent site in Uttoxeter and we are looking forward to transforming it into a new commercial development.  

“Sitting opposite Uttoxeter railway station and near the A518 – which connects Uttoxeter to Telford, in Shropshire, via Stafford and Newport – the site benefits from a busy and highly visible location, providing the perfect spot for a commercial operator to reach not just local customers but also those from further afield.” 

Our property team provided legal advice on the deal. 

Ben Darlow said: “We’ve been working with the Godwin Development team for more than five years and have seen them grow their portfolio with great success during this time. Commercial space used for food and drink is definitely on the up and demand from consumers and operators is growing. We look forward to seeing the project come to fruition.” 

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Ben advises on sales, purchases, leases, developments, property finance and investments, and everything else in between. If it is unusual or complex, get Ben involved.

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The Modern Method of Auction - A New Trend?

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Modern Method of Auction

Selling or buying a property in a traditional property auction can be a hair raising affair sometimes with nerves of steel involved. It is not for the faint hearted. But the auction arena is changing and another method of buying property and land is becoming increasingly popular - the Modern Method of Auction or the Conditional Auction and there are definite advantages for both the buyer and the seller.

How does a traditional property / land auction work?

Many different types of properties and land are bought and sold by a traditional auction method – often properties such as repossessed properties, uninhabitable properties, unmortgageable properties and land for development,

Under the traditional method the buyer is committed to the purchase and a completion date regardless of any potential issues they may then subsequently discover on the property. A 10% non refundable deposit is required and contracts are exchanged on the same day. Due to the immediate timescales buyers need to have their finances in place prior to attending the auction.

Completion must happen within 28 days.

How does the modern method of auction work?

Modern auctions take place on line.

With the modern method of auction the buyer pays a non-refundable reservation fee or reservation deposit within 48 hours of the auction ending which does not form part payment of the final selling price. The buyer is required to formally exchange and complete within 56 days of their solicitor receiving the draft contract from the seller’s solicitor. This is the reservation period.

After securing the property at the modern method of auction the buyer will need to carry out the usual searches, check the title and the information pack.

The auctioneer prepares the buyer’s information pack under the modern method of auction in the same way as they would have done under the traditional method.

The buyer’s information pack includes the title register and plan, property information questionnaire, water and drainage search and the local search.

The modern method of auction allows buyers time to check the property and to raise funds but the deposit will be lost if the sale does not proceed. It is definitely advisable to ensure the funding is in place and the title is checked prior to making the bid at the auction and entering into the reservation agreement.

The seller or buyer cannot terminate the reservation during the exclusivity period of 56 days which gives some buyers a grace period and limits the possibility of being gazumped. The reservation can be terminated at the discretion of the auctioneer.

The seller can also terminate if the buyer is in breach of its conditions.

The seller can reoffer the property for sale at the end of the reservation period should formal exchange and completion of contracts not have taken place.

What are the advantages and disadvantages of the modern auction?

There is more time for buyers - 56 days over 28 days in the traditional auction, giving some flexibility around raising finances, carry out searches etc.

Buyers are not committed to buying, although they will lose a hefty deposit, usually 10% of the purchase price, if the sale does not complete.

From a sellers perspective, this is probably not the route to take if attempting to sell difficult to sell properties or land, as the buyer is not committed to buy.

What are the advantages and disadvantages of a traditional auction?

Once the hammer is down, the 10% deposit paid and contracts exchanged, the buyer has entered into a legal commitment to buy and cannot pull out, which gives security to the seller.

For sellers, this is the best route to dispose of difficult to sell properties/land and often attracts cash buyers. This also means that sales are achieved much more quickly.

For buyers willing to take a calculated risk, there are good deals to be had.

The modern method of auction is one of the fastest-growing sectors in property, but there are distinct advantages and disadvantages and it remains to be seen whether this will trend will continue. As a buyer or a seller it’s important to investigate the detail of both options carefully.

For further information on using either of these routes to buying or selling, contact Caroline Irvine in our property team or Tom Ansell in the residential conveyancing team.

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Caroline advises clients on landlord and tenant work and supports companies when they are buying and selling properties.

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Commercial real estate: is the office market getting 'back to business'?

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Commercial real estate

In earlier blogs we considered the impact of Lockdown 2.0 and Lockdown 3.0 on the commercial real estate market. 

One of the trends anticipated was expecting businesses to adapt by further trimming back their space requirements which were likely to be matched by a greater move to businesses taking short term flexible agreements, and a shift to serviced office space which can often be handed back at short notice. We expect these trends to continue well into 2021 and beyond.   

There is no doubt that this year has seen, various flexible alternative types of space being made available by savvy landlords and taken up by increasingly agile tenants. Tenants renting hot desks, private offices, serviced offices, and even taking space at so-called managed offices is also on the rise.  

So will the office market soon be back to “business as usual”?

As we emerge from restrictions, with more employees starting to return to the office, our city centres will become busier, but there is no doubt that the hybrid working model is here to stay.

Many businesses have seen the benefits of allowing staff to work from home both in financial terms and work / life balance. This means that there will likely not be such demand for traditional office space and the trends noted above will continue as the market consolidates.

This can only mean that there are many opportunities for both landlords and tenants to overhaul and continue to modernise their working spaces and there is real merit in exploring the market and seeking to seize those opportunities. 

What else can we expect?

We can also expect further disruption in the market following the Government’s announcement that it will bring in a binding arbitration scheme concerning arrears built up in the pandemic.

Essentially, this which will force landlords and tenants impacted by closures during the pandemic to agree terms on outstanding rental arrears, or have terms imposed by an arbitrator. It remains unclear as to whether this will be sector specific or have wider applicability.

We await further detail on how this is intended to work in practice and principles which will underpin the arbitration scheme. What it does mean is that the effect of the pandemic on landlord and tenant relationships will continue to reverberate well into next year. 

Innovative use of space is the future

It is not just traditional landlords and tenants who are seeking to leverage their property interests more effectively.  

The John Lewis Partnership, for example, has confirmed it is set to enter the landlord market by, in large part, making innovative use of its existing land. We understand that it is set to build circa 10,000 new houses / flats. They are in particular looking at sites above Waitrose supermarkets and land next to their distribution centres. By building upwards in this way, we can see that value of the foot print ought to increase, without having to buy additional land. 

We can expect other businesses to follow this lead and look harder at their existing property interests to see if they can be put to more profitable uses. 

For further information on issues discussed here, contact James Fownes or another member of the real estate disputes team in your local office. 

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James specialises in advising on and resolving all aspects of commercial landlord and tenant disputes, regularly involving dilapidations, forfeiture, the contentious aspects of lease renewals, service charge issues and the operation of break clauses.

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Shakespeare Martineau advises on purchase on Britain's 'most expensive street'

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Luxury residential real estate purchase deal

London and Monaco real estate company REDD has purchased One Palace Green in Kensington Palace Gardens, London, to convert into a £100m luxury residential scheme, with the support of law firm Shakespeare Martineau.

The grade II*-listed 17,000 sq ft mansion, which backs onto Kensington Palace and dates back to 1870, will be sensitively restored and converted into a number of luxury homes following significant investment.

The deal saw REDD purchase the property via a complex multi-jurisdictional deal.

Simon Robinson, partner at Shakespeare Martineau advised REDD on the transaction, he said: “It is rare that high value investment and development real estate deals are simple, even when they look so initially. We always knew there would be complexities in this multi-jurisdictional matter but over the course of the year that we sat alongside REDD and the Marzocco family office we worked through a plethora of technical, legal and commercial challenges that were embedded this real estate purchase. 

Working under considerable pressure throughout the stages of the deal the importance of working as a connected team across our specialist departments - almost entirely virtual - was vital. From a personal perspective, the communication within the Shakespeare Martineau team enhanced our project management role and allowed me to interact regularly and as clearly as possible with the client and their wider team. This was highlighted as we worked with Counsel in across four separate offshore jurisdictions, dealing with a prestigious and sensitive listed property which is part of the Crown Estate.

Working closely with the Royal Borough of Kensington & Chelsea, The Crown Estate, local stakeholders and heritage groups to design the restoration, it’s anticipated REDD will submit a planning application later this year with construction planned for summer 2022. Completion is scheduled for 2024.

Russell Smithers, managing director of REDD, said: “One Palace Green is a landmark acquisition for REDD and will create one of the top-tier luxury residential developments in London. We will utilise our in-house development management expertise, with our team of extremely experienced individuals in the fields of heritage restoration and luxury design, to deliver the finest new residences on Kensington Palace Gardens. We are currently working on initial ideas and look forward to speaking to the local community shortly.

Shakespeare Martineau assisted with all legal aspects of the purchase including real estate, corporate, finance and tax. Working alongside Simon Robinson was Danielle Cooper, Lucy Saddington, Catherine Moss, Georgia Keogh, Christopher von Strandmann, Oliver Gutman, Joshua Hartle, Paul Wakefield and Jayne Meakin.

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Deal

Northern Trust acquires Tamworth Industrial Estate

Northern Trust has completed the acquisition of a 31,000 square foot industrial estate in Tamworth, with the support of law firm Shakespeare Martineau.   

The Tame Valley Industrial Estate comprises of six fully occupied units and brings Northern Trust’s Midlands portfolio to more than 1.3 million square feet, across 31 sites.   

The acquisition forms part of the property investors’ ongoing strategy to acquire and develop multi-let industrial assets to support the SME business community, with the entire portfolio supporting more than 20,000 jobs across the UK.  

Midlands firm Shakespeare Martineau supported on the deal by providing full due diligence on the estate, legal support for funding and all legal aspects of the site purchase.     

Samantha Vaughan, associate at Shakespeare Martineau who led the deal, said: “We have a long standing relationship with Northern Trust, and as well as acquisitions we support lettings across estates in the Midlands.  

“Property remains a solid investment and we’re seeing a lot of activity in this market. It’s also great to see investments in the West Midlands continue to grow as it remains a key site for light industrial, manufacturing and employment.”  

Director Tom Parkinson said: "We have been expanding our industrial portfolio through new acquisitions and developments; and this latest acquisition offers good quality industrial space which will complement our existing estates in the Midlands.”  

The Tamworth site follows recent acquisitions in Scotland and the North East.  

Shakespeare Martineau team also included partner James Gooch. 

 

 

 

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Making sense of a deemed contract as a commercial landlord

During the pandemic, many thousands of tenants have chosen to delay payments of their rent. This is adversely effecting cash flow for landlords, who still have outgoings to pay.

As tenants vacate premises in the future, either through choice at the end of the lease, or being forced due to insolvency, the predicament of landlords will worsen as they are faced with vacant premises.

One of the many considerations for the landlord is the cost of the utilities being supplied to the vacant premises.

If there is no contract for supply in place, gas and electricity will be supplied by way of a deemed contract.

What is a deemed contract?

In the context of electricity, a deemed contract is created by the Electricity Act 1989, which states that “where electricity is supplied otherwise than in pursuance of a contract, the supplier shall be deemed to have contacted with the occupier (or the owner if the premises are unoccupied) for the supply of electricity.”

There are similar provisions in relation to gas in the Gas Act 1986.

It follows that where a property is vacant there is a deemed contract between the supplier and the landlord.

A landlord may try to argue that the lease has not been disclaimed and as it is still in place, the deemed contract is with the tenant.

However, as can be seen from above, the legislation imposes a liability on the occupier of the premises and if the premises are unoccupied, the owner.  It does not on the face of it impose a liability upon a tenant who no longer occupies a premises, irrespective of whether the lease remains in place.

Why are deemed contracts important?

They’re important because deemed contracts are legal and enforceable by energy suppliers in many cases.

And even though the premises are vacant, it is still likely that some electricity will be being consumed, by the alarm system or the security system.  Such charges on a deemed contract basis are likely to be higher than on a fixed term contract basis.

There will also be standing charges and other charges which could potentially be substantial. These may include a capacity charge, which is a fee to ensure that there is enough electricity in the system.  Such a charge may be based upon historic consumption and not reflect the current requirements.

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What can landlords do?

The best advice for landlords is therefore, as soon as a property becomes vacant or looks like it is becoming vacant, find out who is supplying the utilities to the property and contact them as soon as possible. It may be possible to agree a fixed term contract with the supplier on significantly lower rates than deemed contract rates.

The landlord may also wish to reduce the capacity available to the property helping to reduce the overall cost. The key point is that this should be done as soon as possible. The longer it takes to reach an agreement with the supplier, the higher the overall likely liability under the deemed contract will be.

How can Shakespeare Martineau help?

We can help landlords review their situation and provide advice in relation to vacant properties.  We can also help energy supply companies review their portfolio and take appropriate recovery action.  Contact Tim Speed or another member of our energy sector team in your local office.

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

Get In Contact

Tim advises clients on a broad range of commercial disputes with an emphasis on insolvency disputes, disputes within the energy sector, and corporate and banking litigation.

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Our property development lawyers have a reputation for delivering fast, focused and cost-effective legal and commercial advice. Even when working on the most complex of real estate projects, we propose commercially sound strategies that deliver results for our clients and address any issues that arise quickly.

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Marrons Planning launches urban design with new associate director hire

Midlands planning consultancy Marrons Planning has extended its portfolio of services with the appointment of architect and urban design expert Alex Craggs.

Specialising in bespoke residential projects and master planning urban design schemes, RIBA chartered architect Alex will take the role of associate director and be heading up the new Marrons Urban Design service, which will complement the consultancy’s existing planning services: including planning applications and appeals as well as promoting developments and planning strategy.

With more than 10 years’ experience working with a range of clients from strategic land promoters and developers to private clients and home owners, Alex will be responsible for setting up the new service line and growing the team in the future.

Andy Gore, Partner at Marrons Planning, said: “This is a really exciting new venture for Marrons Planning and one that will allow us to provide illustrative layouts, design and access statements, promotion documents, concept plans and more.

“We’re well known for providing planning advice that helps inform our clients’ decision making process, driving projects forward and using our close working relationships with Local Planning Authorities to help unlock strategic sites; but now we will also be able to provide our clients with brilliant designs that are underpinned by a deep understanding of commercial complexities, local authority requirements and planning strategy.

“We’re thrilled to have Alex join our team.

Alex has experience working in a variety of sectors including residential, conservation, mixed-use, commercial and leisure, taking projects from inception through to completion.

Alex, who was previously associate director for BHB Architects said: “I was attracted to Marrons Planning because of their enthusiasm and track record in gaining successful outcomes for their clients. I’m excited to bring design expertise to Marrons Planning to allow them to offer their clients a high quality design offering in conjunction with their established planning services.

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Blog

Building a renewable future for housing

COP 26

With COP26 very nearly upon us - we’ve taken the opportunity to republish some of the content we produced earlier this year.

Climate change and the UK, and the world’s response to it, is one of the most pressing issues of our time. Bringing together global powerhouses to agree to collaborate on the four main goals of COP26 has never been more important.

Our content provides food for thought, challenges the government’s rhetoric and provides opportunities for practical action.

Members of our energy team will be at COP26 and we look forward to catching up with clients and contacts who also plan to be there. Drop us a line and let’s see if we can connect.

To reach the UK’s ambitious target of becoming net zero by 2050, renewables must become an integral part of housebuilding efforts.

Green housing has been put in the spotlight by the Energy White Paper, published in December 2020, and housebuilders will have to find alternative energy sources quickly to meet the country’s environmental goals. For example, the Future Homes Standard requires new homes to be built without fossil fuel heating by 2025, leaving developers with little time to find viable alternatives.

Past mistakes

Eco upgrades were rolled out on a home-by-home basis in the past, with solar panels and small wind turbines incorporated into new houses. However, many of these systems were owned by energy companies making the most of government subsidies on offer at the time and, once they ran out, many homeowners faced complications with mortgages and resale.

Although initially appealing, properties where panels were installed and owned by the residents themselves were only a short-lived success, as homeowners became unable to keep up with maintenance costs. Lacking long-term viability, this approach failed to provide the level of change needed.

Adopting a broader approach

By considering developments as a collective, and introducing green energy sources that benefit all residents, a more permanent solution could be found. For example:

  • Anaerobic digestion plants – Heating is the primary concern for housebuilders at present, so biomass boilers, heat recovery and green gas are all major focuses. One source of green gas is anaerobic digestion plants, which can be built on site. Non-disruptive and able to use the existing gas infrastructure network, these plants use micro-organisms to break down feedstock into clean gas. Food waste from residents could also be used as part of the process.
  • Solar farms – By making use of readily available solar technology, entire developments can benefit from cleanly generated electricity. Collaborating with private developers would remove the need for homeowners to maintain the solar panels themselves, making these farms a longer-term prospect than individual properties supporting their own panels.
  • Vehicle to grid (V2G) charging infrastructure - Electric vehicles (EVs) are growing in popularity and new homes will have to be built with charging points installed to reflect this. This charging infrastructure can also be used to power homes, via V2G, enabling people save money by storing energy in their EV batteries and discharging it back into their homes and the national grid during peak times.

Each option has its own advantages and disadvantages, but all will have to overcome challenges regarding implementation and infrastructure. Planning hurdles will also have to be jumped, with many local authorities having particular requirements for public open space and housing. Compromises will have to be made if the UK is to achieve its net zero goals.

Government support

Largescale projects, such as offshore wind farms, are the government’s priority at present. However, the smaller-scale subsidies that have been offered in the past could be expanded to include entire developments. Doing this could lead to both housebuilders and local authorities being encouraged to implement more green facilities.

We’re here to help

Eco-friendly choices are becoming increasingly important to the UK’s population, and housebuilders should be working to meet these new needs. In order to achieve environmental targets, changes will have to be made soon rather than later.

For further information, contact Peter Dilks or Neil Gosling.

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National Design Code: What is ‘beautiful’?

With new priorities for both the government and homeowners triggered by the pandemic, the planning sector has had to adapt. To meet these changes, the government has issued a 10-point plan to improve living standards, named the National Design Code. This forms part of the Planning Practice Guidance. It aims to help developers reach higher liveability standards and create ‘beautiful’ homes in thriving communities.

The Design Guide illustrates how well designed places that are beautiful, greener, enduring and successful can be achieved in practice. However, what does ‘beautiful’ really mean, and what are the advantages and disadvantages of this new code?

What is the National Design Code?

The National Design Code outlines 10 points for developers to follow when designing a home. The two main focuses are quality and sustainable building. However, it also highlights the need to keep properties in tune with local communities as well as create homes that meet peoples’ evolving needs.

Each of the 10 principles shows what the government’s goals are for properties in the coming years. They are:

 

  • Lifespan – Creating homes that are made to last.
  • Context – Enhancing the location and taking advantage of local characteristics.
  • Identity – Making every home attractive and distinctive.
  • Built form – Considering surroundings to create a coherent development.
  • Movement – Making accessibility a key feature.
  • Nature – Enhancing nature and green spaces.
  • Public spaces – Creating a place with the community at its heart, offering a range of social areas.
  • Uses – Mixed use of the land.
  • Homes and building – Building for tomorrow, with functionality and sustainability in mind.
  • Resources – Using resources efficiently to maximise their uses.
Beauty is in the eye of the beholder

The ambitious framework discusses ‘beautiful’ places. Beauty is, of course,  a subjective quality. However, according to the government’s chief architect, a beautiful home will be one that perfectly addresses the 10-points outlined.

Beauty may be subjective, but quality is not. Perhaps using the Code as a base to design on will be the best use of the framework, giving projects direction without forcing designers to lose their flair.

What are the pros and cons?

The major pros of the proposed National Design Code include the emphasis on the role that local authorities and communities play in the design of places, and the clear framework that it provides to house designers.

On the other hand, the emphasis on local culture could be a difficult goal to achieve. Councils will have varying aspects they would like to focus on and different resources available, so it may be a challenge for developers to reach a finalised plan that ticks every box.

There’s also the possibility that the framework could force developers to ‘design by numbers’, creating housing developments with little personality.

Although the National Design Code provides developers with a great foundation, it’s important for designers to bear in mind that ‘beauty’ is subjective. However, by building on the 10 points and working closely with local authorities, developers will be able to achieve the results desired by both the government and homeowners.

Watch our free webinar, with an expert guest panel, on whether the proposed changes will make a positive impact.

Contact us

For any further information contact Richard Cooke or David Pendle in our dedicated planning consultancy team, Marrons Planning.

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Guides & Advice

How to handle construction disputes effectively

The delays and disruption caused by both COVID-19 and Brexit have left construction businesses concerned about the disputes that could arise as a result.

With an increase in disputes expected over 2021, companies need to know how best to manage them, including how to avoid unnecessary escalation.

Read more about what the construction sector could look like in 2021.

Keeping delays and disruption to a minimum

New levels of administration have had to be introduced on all construction sites, including the implementation of social distancing and a switch to digital methods of communication.

These changes were inevitably going to cause delay and disruption, and when Brexit was added into the mix, complications only grew. To mitigate any delay and / or disruption, areas for concern should be identified and monitored, with a solution or alternative option ready, if needed.

Common disputes for construction businesses

There are three common types of disputes that are emerging at present, these include:

  • Delay claims – The need for social distancing, and difficulties sourcing materials, has meant some contractors are struggling to finish projects on time. As such, issues surrounding whether employers are entitled to liquidated damages or whether contractors are entitled to extensions of time and loss and expense associated with the delay, are surfacing regularly.
  • Claims for payment – An increasing number of companies are facing financial difficulties. Contractors and sub-contractors in financial distress are more likely to make potentially inflated applications for payment. If the employer does not want to pay the amount applied for, they must issue a valid payment / pay less notice. If they don’t, they leave themselves open to a smash and grab adjudication.
  • Defects claims – Site inspections have been more limited over the past year meaning defects may be more likely. Plus, legacy claims relating to defects in works that were completed many years ago have also begun to emerge. If a construction company hasn’t kept records of these projects, then it will be difficult to deal with these claims.
Stopping disputes from escalating

Early prevention is always better than a late cure, so it is essential to address any issues as soon as possible. Effective communication is key to this, including keeping those upstream (whether employer or main contractor) updated as to any potential delays or disruptions.

Flexibility is also important, with contract renegotiations often being a productive way forward. However, any changes that are agreed must be documented to avoid satellite disputes occurring later on.

What are the types of dispute resolution?

Sometimes, disputes cannot be resolved through communication alone. When this happens, there are a number of routes that can be followed to reach a settlement. Adjudication is the most common form of dispute resolution in the construction industry, but although it is efficient (usually taking little more than a month from start to end), it does come with time and at least some financial cost implications.

If adjudication isn’t the best option for you, there are two alternative options that can be just as effective:

  • Mediation - Issues are discussed with a professional mediator who acts as a neutral voice assisting the parties in reaching a negotiated resolution via a process known as ‘shuttle diplomacy’ (which just means the mediator ‘shuttles’ from a discussion with one party to a further discussion with the other party in trying to bridge the gap). In order to have a productive / meaningful settlement discussion, mediation must be done at the right time, when the rights and wrongs of both parties are clear with all the key issues having been distilled.
  • Early neutral evaluation – A third-party decision maker is appointed who hears each party’s submissions and then offers their view on the likely outcome of the trial. This usually has no binding effect but can be an effective way to start meaningful negotiations (particularly if one party has a misguided view of the merits of its position acting as a ‘sense check’).
We can help you manage, avoid and resolve contractual issues

All aspects of the construction industry have had to face a host of challenges during the pandemic, with delay and disruption being a common theme. However, the disputes that do arise from this don’t have to unduly strain or breakdown working relationships. Keeping clear channels of communication open, following the correct contractual processes and being open to flexibility can help the industry to thrive once more.

If you would like advice on how to handle and resolve a construction dispute then our specialist construction law team can help – contact Kate Onions for guidance and support.

Our construction team is ranked as a Leading Firm in the Legal 500 2021 edition.

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.   

Our free legal helpline offers bespoke guidance on a range of subjects, from employment and general business matters through to director’s responsibilities, insolvency, restructuring, funding and disputes. We also have a team of experts on hand for any queries on family and private matters too. Available from 10am-12pm Monday to Friday, call 0800 689 4064.   

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Commercial Real Estate Continues to Transition | Lockdown 3.0

In an earlier blog, we considered the impact of Lockdown 2.0 on the commercial real estate market.

One of the trends we anticipated was expecting businesses to adapt by further trimming back their space requirements which were likely to be matched by a greater move to businesses taking short term flexible agreements, and a shift to serviced office space which can often be handed back at short notice.

Lockdown 3.0 - What now?

It is expected these trends will continue well into 2021 and beyond due, at least in part, to the uncertainty created by the further, possibly more open-ended lockdown 3.0. We’re already seeing, various flexible alternative types of space being made available by savvy landlords and taken up by increasingly agile tenants.

These flexible arrangements can take different forms. At one end of the spectrum, tenants are taking virtual desks (where companies may pay to have their registered office and post sent to etc) without a particular physical footprint. This is enabling companies to benefit from being registered at prestigious postcodes/locations without the hefty prime office rents. We see many commercial landlords offering this service. Universities are also offering their flexible working spaces and conference facilities adapting to the market and seeking to take advantage of the benefits of co-working spaces.

Moving along the range of options to actually taking physical space, this can involve renting hot desks, private offices, serviced offices.

We are also now seeing the rise of so called “managed offices”. This is taking the concept of serviced offices one step further and can include landlords working with landlords actively working with tenants to create and provide bespoke fully fitted out offices/collaboration space as specifically required by the tenants in return for monthly payments. This goes beyond simply providing a “plug and play” service. In addition, these providers, including a number of new entrants to the market, are competing to provide ever greater facilities ranging from cafes/bars to gyms and roof terrace relaxation space.

In short, there are many opportunities for both landlords and tenants to overhaul and modernise their working spaces and there is real merit in exploring the market now and seeking to seize those opportunities.

What else can we expect?

The Government has announced that a review of the commercial landlord and tenant legislation will be launched this year. It seems that there is a growing acknowledgement that the longstanding legislation does not always reflect or work as well as it should do in the current environment.

This review will consider potential changes to how commercial leases are governed with a view to helping ensure our high streets and town centres survive and thrive after the pandemic, as well as looking at how commercial landlords and tenants can collaborate more effectively and efficiently to “keep their finances stable, protect jobs and build back better”, according to Business Secretary, Alok Sharma

We will have to wait and see as to whether any proposed changes will be beneficial (and to whom) but for now the review does create more uncertainty in the market, not least as security of tenure of business tenants will be up for consideration. We will be monitoring this closely.

Contact us

For further advice on the options available to you as a landlord or as a tenant, please contact James Fownes or another real estate team in your local office.

How can we help?

Our expert lawyers are ready to help you with a wide range of legal services, use the search below or call us on: 0330 024 0333

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Real Estate & Planning

The rationale for rationalising housing stock – post-pandemic

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Guides & Advice

Webinar roundup: Guidance for landowners and developers

Even with the pandemic taking over many aspects of our lives, developments are going ahead, and that means landowners and developers will still be in need of support.

Below you can find a summary from a number of helpful webinars, offering guidance on a range of issues, including obtaining vacant possession and land promotion.

Obtaining vacant possession and the impact on land development

In real estate, it is not uncommon to hear the term ‘vacant possession’ used. Simply put, it means the purchaser has the right to exclusive use of the property on completion of the sale. However, when land is bought for the purposes of redevelopment, how to obtain vacant possession must be considered.

In our vacant possession webinar, we look at when to consider vacant possession in long term land promotion, what impacts the land and the ability to give vacant possession and the timescales involved.

View the 15 minute webinar on obtaining vacant possessions on SHMA® ON DEMAND >>

Land promotion from a landowner perspective

Although we are living in uncertain times, there are still opportunities out there for strategic development. In fact, the pandemic has forced landowners to find new ways of thinking and collaborating, potentially making the future of developments a more positive one.

However, it is clear that more development is needed, and there’s no time like the present to start planning. Our land promotion webinar covers everything from the perspective of the landowner, looking at:

  • The legal and planning framework
  • The importance of common interest
  • The different stages of the process
  • The considerations for promoting land
  • How best to protect your interests

View the 20 minute webinar on land promotion (from a landowner perspective) on SHMA® ON DEMAND >>

Land promotion from a promoter/ developer's perspective

We also have a second land promotion webinar - this time discussing things from the promoter or developer’s perspective.

As well as covering the legal planning framework, the importance of common interest and the different stages of the process, they also explore the obligations on promoters and developers, the consideration of risk, and strategies for planning success.

View the 20 minute webinar on land promotion (from a promoter/developer’s perspective) on SHMA® ON DEMAND >>

 

VAT and Stamp Duty Land Tax issues

The pandemic has caused one question to come to the forefront of developers, house builders and landowners’ minds: ‘To let or to sell?’. With the current environment constantly changing, strategies are having to alter to fit demand, but the VAT and stamp duty implications of doing so must be considered.

Our VAT and SDLT webinar discusses the tax structures and VAT issues that developers and landowners must put thought to, both in terms of long and short-term lettings, as well as sale and land promotion agreements.

View the 25 minute webinar on VAT and Stamp Duty Land Tax issues on SHMA® ON DEMAND >>

If you’re a developer, read our blog on how to tackle tax during COVID-19 >>

SHMA® ON DEMAND

Register for all of our upcoming webinars and live events at SHMA® ON DEMAND. From inspirational SHMA Talks to informative webinars, we have lots of educational and entertaining content for life and business.

Our free legal helpline offers bespoke guidance on a range of subjects, from employment and general business matters through to director’s responsibilities, insolvency, restructuring, funding and disputes. We also have a team of experts on hand for any queries on family and private matters too. Available from 10am-12pm Monday to Friday, call 0800 689 4064.

SHMA® ON DEMAND

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Teachers’ Pension Scheme – strategic issues independent schools need to think about

20 Jul

Esther Maxwell, Legal Director | Emma Glazzard, Solicitor
Teachers’ Pension Scheme – strategic issues independent schools need to think about

Webinar Teachers’ Pension Scheme – strategic issues independent schools need to think about In […]

How is Nutrient Neutrality impacting developments and housing supply?

23 Jun

Andrew Gore, Partner
How is Nutrient Neutrality impacting developments and housing supply?

On 16 March 2022, the Government announced that an additional 27 catchment areas, affecting […]

Keeping court bundles safe from the dark web

26 May

Clive Read, Partner & Head of Birmingham
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It is vital that chambers and their barristers have strong cyber security measures in […]

Charities Act 2022 – revolution or evolution?

24 May

Andrew Wilkinson, Partner
Charities Act 2022 – revolution or evolution?

On 24 February 2022, the long-anticipated Charities Bill received Royal Assent becoming the Charities […]

Our thoughts

All the latest views and insights on current topics.

Abbey Healthcare (Mill Hill) Ltd v Simply Construct (UK) Llp

29 Jun

Education

Abbey Healthcare (Mill Hill) Ltd v Simply Construct (UK) Llp

The recent decision made by the Court of Appeal in Abbey Healthcare (Mill Hill) […]

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Don’t waste money on space you don’t use! Re-gear

29 Jun

Real Estate & Planning

Don’t waste money on space you don’t use! Re-gear

With many companies now operating a hybrid working model following the work from home […]

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The Building Safety Act 2022 – how it will affect house builders

19 May

Real Estate & Planning

The Building Safety Act 2022 – how it will affect house builders

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Biodiversity Net Gain – opportunities and obligations for developers and landowners alike

11 Apr

Real Estate & Planning

Biodiversity Net Gain – opportunities and obligations for developers and landowners alike

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The rationale for rationalising housing stock – post-pandemic

8 Apr

Real Estate & Planning

The rationale for rationalising housing stock – post-pandemic

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Nutrient neutrality – how might it affect development

4 Apr

Real Estate & Planning

Nutrient neutrality – how might it affect development

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The nationally significant infrastructure project regime and development consent orders – how to have your say

3 Apr

Real Estate & Planning

The nationally significant infrastructure project regime and development consent orders – how to have your say

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Guides & Advice

Closing the door on ‘smash and grab’ adjudications

Closing the door on ‘smash and grab’ adjudications

Employers and main contractors have been trying to get around ‘smash and grab’ adjudications for a while now, but it seems that they are here to stay.

To avoid being on the wrong end of this sort of adjudication, employers must ensure that the correct payment and pay less notices are issued in line with the terms of a contract. If not, and a ‘smash and grab’ adjudication begins, it can considerably impact cash flow.

What is a ‘smash and grab’ adjudication?

The term is used to describe an adjudication started by a party looking to claim the whole amount of the payment applied for on the basis that no payment / pay less notice was issued. This form of action is also known as a ‘technical knockout’ adjudication.

It involves an employer having to ‘pay now and argue later’, meaning they must pay the amount the adjudicator has decided before a second adjudication takes place in respect of the true amount payable.

Avoiding the ‘pay now, argue later’ approach

Although this principle is a matter of settled law, employers and main contractors are – unsurprisingly – trying to find ways to circumvent the approach. The most recent attempt is the case of J & B Hopkins Limited v Trant Engineering Limited [2020] EWHC 1305 (TCC).

Recent case involving ‘smash and grab’ adjudication

Trant Engineering Limited, as main contractor (Trant), engaged J & B Hopkins Limited, as sub-contractor (J & B), to carry out M&E works at a new recycling plant on the Isle of Wight under a sub-contract dated 20 April 2018.

J & B submitted its interim application number 26 on 30 July 2019 for £812,484.94 plus VAT. J & B commenced a ‘smash and grab’ adjudication for the sum applied for on the basis that it said that Trant hadn’t issued a valid payment/pay less notice.

Trant’s position was that J & B’s claim should fail on the basis that:

  1. it had issued a valid payment and pay less notice; and
  2. J & B’s interim application was not substantiated properly and so not a valid application in any event.

The Adjudicator decided in J & B’s favour and that the sum of £812,484.94 plus VAT together with interest was payable to J & B immediately in full and without deduction.

The next stage

Trant didn’t comply with the adjudicator’s decision. As such, J & B commenced proceedings in the Technology & Construction Court (TCC) seeking to enforce the adjudicator’s decision. Trant sought to defend the enforcement proceedings and requested a stay of execution because of manifest injustice.

The TCC hearing took place on 4 May 2020. Trant argued that by the time the adjudication was commenced, J & B was no longer entitled to be paid the sum stated in application 26 because any entitlement under application 26 had been superseded by subsequent interim payment cycles. Those later payment cycles were all subject to valid payment notices (Trant having clearly learnt its lesson the hard way), which provided that no further sums were due to J & B. On this basis, Trant’s position was that “to enforce the decision would be inconsistent with, and undermine, the correction principle” i.e. the principle that interim payments can be corrected in the next interim payment cycle.

A failed defence

The judge rejected Trant’s position deciding that the existence of later payment cycles does not mean the prior sum was not due at all. A party cannot withhold payment of an adjudication decision in relation to an earlier payment cycle simply because subsequent payment cycles have reduced, or nil rated the amount of payment due.

The judge noted that “there is a danger in considering a stay where the Claimant has a valid Adjudicator’s Decision of using the concept of manifest injustice as a wider examination of the supposed “merits” of the underlying dispute. If that were to occur, it would frustrate the purposes of the Act and it would frustrate the intention of Parliament.”

In short, the enforcement proceedings were successful; J & B were entitled to be paid.

Why it’s important for employers and main contractors to comply fully with their payment obligations

The outcome of this case isn’t surprising and is consistent with the general approach of the TCC that unless there is a genuine reason not to do so, it will seek to give effect to adjudicator’s decisions.

What the facts emphasise is just how important it is for employers and main contractors to comply fully with their payment obligations. The consequences of failing to issue valid and timely payment/ pay less notices opens the door to unwelcome ‘smash and grab’ adjudications. Attempts to defend smash and grab adjudications can often be futile, simply incurring additional costs.

With the benefit of hindsight, there can be little doubt that Trant would have wanted to turn back the hands of time so that it could issue water-tight payment and pay less notices.

How to avoid a ‘smash and grab’ adjudication

For now, ‘smash and grab’ adjudications remain a risk. As such, employers and main contractors need to ensure they follow the payment terms in construction contracts to the letter. This is the only way to completely avoid a ‘smash and grab’ adjudication, and the extra costs that come with it.

Contact us

If you’re concerned about the risk to your business then please contact our head of construction disputes, Kate Onions on 07890 569 554.

We have launched our guide to recovery and resilience, helping to support businesses and individuals unlock their potential, navigate their way out of lockdown and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

Our free legal helpline offers bespoke guidance on a range of subjects, from employment and general business matters through to director’s responsibilities, insolvency, restructuring, funding and disputes. We also have a team of experts on hand for any queries on family and private matters too. Available from 10am-12pm Monday to Friday, call 0800 689 4064.

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Our thoughts

All the latest views and insights on current topics.

A return to “hybrid working”? – What would this mean for staff wellbeing?

2 Feb

Employment

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What will working arrangements look like in a post-pandemic future?

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Products & Propositions

Getting construction sites back on track after lockdown

Getting construction sites back on track after lockdown

Are you a developer reopening your site following lockdown? We’re here to help you get your sites back on track as quickly as possible.

With the added pressure of worldwide disruption to supply chains, getting sites going again is going to throw up some significant challenges you may not have faced before.

  • Suppliers: It is likely that developers will face long delays as suppliers further up the chain will struggle with manufacturing and sourcing building materials – there will be a long lead-in time to get their production re-started again.
  • Cash: It’s also likely that prices will spike as demand quickly rises and supply needs time to catch up.
  • People/workforce: you may face problems in getting employees back onto sites, and will need to meet requirements for social distancing when you do.

As you will likely have relationships, agreements and contracts in place with your supply chain already – the best thing you can do now is to consider your current position.

Are there barriers to re-opening your sites?

Tell us about them on a free 30-minute video call with our specialist team or register for our webinar where we will discuss the position with employment contracts and workforces, contracts and supply chains and a practical look at how you can get your site back up and running.

Things to consider

  • Talk through issues with experts in employment, construction and development as well as commercial law
  • Find out options available to enable you to get back into business as quickly and efficiently as possible, minimising the impact of any delays
  • Discover routes to protecting yourself against a turbulent market and unpredictable supply chain
  • Consider potential new risks following lockdown and how your sites and staff can be prepared for them

Fill out our enquiry form or click below to request a call-back.

Coronavirus resources
In response to COVID-19, we created our coronavirus hub which includes advice, guidance and insight to help you navigate through these uncertain times. As we all begin to adapt and prepare for the future, our hub will evolve to provide you with further help and resources for surviving, reviving and beginning to thrive in life and business, throughout the challenging times ahead.

We have launched our guide to recovery and resilience, helping to support businesses and individuals unlock their potential, navigate their way out of lockdown and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.

From inspirational SHMA Talks to informative webinars, we have lots of educational and entertaining content for life and business visit SHMA® ON DEMAND.

Want to get your construction site re-opened as quickly and as safely as possible?

Fill out the form below to request a free 30-minute consultation.

Related services

Meet the team

Missed our recent webinar on getting construction sites back on track after lockdown? Catch up here >>

Your guides to recovery & resilience

As the UK takes tentative steps towards an increase in economic activity and recovery, it is vital that businesses are prepared in every aspect. From financial considerations, employees, leadership and premises, to supply chain implications, health and safety and protecting your private wealth, our guide highlights what organisations and individuals should consider when moving from survival mode towards one where you recover and thrive.

We are here to help in your business and personal life - contact us today to find out more.

Your guide to recovery & resilience | Compliance – Health & Safety

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Your guide to recovery & resilience | Compliance – Health & Safety

This guide looks in more detail at what Employers need to do manage and control workplace risks from the risk of COVID-19 in the workplace.

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Your guide to recovery & resilience | Suppliers and supply chain

Whilst the impact of the COVID-19 pandemic is unprecedented in modern times now is the time to review your supplier network. You need to ensure that your supply chain will hold up and allow you to get the products, parts and raw materials that you need to continue to trade and deliver revenue.

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Your guide to recovery & resilience | Buildings, workspaces and leases

As the economy and the world moves forward, owners and investors of real estate as well as occupying tenants, will have to consider the adjustments they now need to make whilst the restrictions around social distancing continue.

Your guide to recovery & resiliance | Employees

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Your guide to recovery & resiliance | Employees

Managing a workforce of any size can have its challenges, let alone one that is recovering

SHMA® ON DEMAND

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Our thoughts

All the latest views and insights on current topics.

A return to “hybrid working”? – What would this mean for staff wellbeing?

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Employment

A return to “hybrid working”? – What would this mean for staff wellbeing?

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How can we help?

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The new offices will be situated in Dock II of Pioneer Park and occupied by Leicester City Council. Comprising of a 26,400 sq. ft. building designed as a hub for businesses in the science and technology sectors, these offices form part of Leicester’s ambitious regeneration plans. With construction due to start in May 2020, it is hoped that the space will be complete by early 2021.

Brackley Property Developments Ltd. – which has been involved in several projects in and around Leicester – was advised by our real estate team on all legal aspects of the deal, including the development and funding agreements with Leicester City Council.

Peter Dilks, a partner at the firm and real estate specialist at said: “Regeneration is a vital part of any city, and Pioneer Park will give Leicester City Council a modern new building to enable more high-tech SMEs to locate to this innovative technology park. Brackley Property Developments Ltd. is a highly knowledgeable business, and it has been great to work with them on yet another high-quality development opportunity. We look forward to assisting Brackley Property Developments as the Dock II scheme progresses.”

Stephen Pedrick-Moyle, managing director of Brackley Property Developments Ltd., said: “We are thrilled to have been selected by Leicester City Council to develop this exciting scheme which we hope will attract new businesses and allow existing businesses in the area to expand within this key regeneration scheme.

“In line with current Government advice to the construction industry, our contractor Stepnell will be operating the site under strict guidelines and procedures published by the Construction Leadership Council.  These align with the latest guidance from Public Health England and will be under continual review.”

Contact us

Find out more about what our real estate team can do for you.

Shakespeare Martineau has launched a free legal helpline offering bespoke guidance on a range of subjects from employment and general business matters, through to director’s responsibilities, insolvency, restructuring, funding and disputes. We also have a team of experts on hand for any queries on family and private matters too. Available from 10am-12pm Monday to Friday, call 0800 689 4064.

General advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.

All the latest views and insights on COVID-19 (coronavirus)

However, there are certain things that must be taken into account when considering this option.

Double taxation

When landowners group land together, without creating a trust, they may liable to pay both Capital Gains Tax (CGT) and Income Tax if the land is sold in parcels (not as a whole). The owner of the land sold must pay CGT, calculated according to the value increase of the land sold, and the other landowners must then pay income tax on their share of the profits. This double taxation can be a costly issue.

Land pooling trusts

In simple terms, a land pooling trust involves the creation of one entity made up of individual land packets. The trustees can then sell the land as a collective, with each person having an interest in the entirety of the land. This can be a tax-efficient approach, especially if the land is due to be developed, as only CGT must be paid.

Collaboration agreements

Although land pooling trusts bring tax benefits, they aren’t always the right choice for every landowner. For a trust to work successfully, the landowners must be able to make important decisions without conflict getting in the way. As such, for those who don’t see eye-to-eye with their fellow landowners, a land pooling trust might not be the most suitable option.

An alternative is a detailed collaboration agreement, tied in with prior approval from HMRC. This is not a quick alternative as all the landowners have to agree to the terms (which may not solve any inter-landowner issues) and HMRC have to be consulted but it is solely a contractual arrangement, not bringing the parties into a trust.   Those involved keep interest in their land alone, meaning the land isn’t sold collectively and both CGT and income tax must be paid. However, if HMRC approve the collaboration agreement in advance of any land sales, then the double taxation element could be removed.

Structuring a land sale in the most tax efficient manner is not as simple as choosing the most popular route at the time. Over the years, there have been a variety of alternatives, ranging from option agreements to restrictive covenants; it is an ever-changing landscape.

By seeking advice from experts such as our property development experts, landowners can pick the right approach for them based on their individual needs.

Contact Louise Ingram on 0116 257 4452 to find out more about how we can help you.

For advice or guidance on any other commercial or legal issue, a member of our team can walk you through everything. Click here to discuss.

It’s no secret that the construction industry has a significant impact on the environment, with it being said to account for 60% of all materials used, a third of all waste and for generating 45% of all CO2 emissions in the process. As a result, construction companies are always looking for new and innovative ways to deliver high quality results whilst also helping to protect the environment.

In a world first, scientists in Scotland have recently developed a brick, known as the K-Briq, which is made from 90% recycled construction and demolition waste. The K-Briq slashes the CO2 emissions of a traditional fired brick, using less than a tenth of the energy in its manufacture, and can be made in any colour. The product, which is stronger and lighter than traditional kiln-fired bricks, is now commercially available and it is hoped that the brick could soon be used more widely across the construction industry.

Whilst the K-Briq could provide a sustainable alternative for developers and contractors in the future, the carbon footprint of the construction industry has already started to improve with the increasing popularity of modular construction.

What is modular construction and why is it so popular?

Modular construction involves the design and construction of individual sections of a building away from the site which are then transported and assembled at the site to create the final structure. This pre-fabricated approach is seemingly more effective than many traditional methods, helping to reduce not only the build cost and build time on projects but also proving to be a more sustainable and eco-friendly alternative to traditional methods.

Using modular construction as opposed to traditional construction methods is said to reduce emissions from jobsite travel, use less raw material waste during construction and have less harmful environmental impact on site.

Due to the techniques involved, modular construction is perhaps more suitable for use during large projects, particularly where flexibility and scalability is key.  These environmental benefits, together with the potential costs, quality and programme benefits, have resulted in modular construction techniques being used across a range of sectors, including the education sector.

The contractual difficulties that modular construction techniques can cause

Owing to the rise in popularity of using modular construction techniques, there is an increasing demand for express contractual provisions dealing with the use of these techniques to be incorporated into traditional construction contracts. Traditional contracts were not necessarily drafted with modular construction in mind and therefore often need to be amended to suit the commercial needs of the parties. This however can present its own problems as was recently seen in the case of Bennett (Construction) Ltd v CIMC MBS Ltd (formerly Verbus Systems Ltd).¹

Bennett were engaged as the main contractor for the construction of a new hotel and had contracted Verbus to carry out the design, supply and installation of 78 pre-fabricated bedroom units for the hotel.
Due to the use of modular construction techniques, the contract between the parties was a heavily amended JCT contract, whereby the provisions relating to interim payments had been deleted in their entirety and replaced by five “milestones”. Milestones 2, 3 and 4 provided for payments on “sign-off” by the contractor.

An  issue  arose as  the parties disputed the meaning of “sign-off” and therefore when payment became due. Verbus obtained a judgment that milestones 2 and 3 did not comply with the Construction Act as it was not an adequate payment mechanism.   As a result Verbus claimed that the payment mechanism in the contract should be replaced with the Scheme for Construction Contracts, meaning that Bennett would have to make interim payments by reference to the value of the work carried out. The decision was appealed by Bennett.

On appeal, it was decided that the milestone payments contained within the contract were compliant with the Construction Act and that an objective interpretation of “sign-off” meant that the units were complete when they were in a condition where they could be signed off.  This was, therefore, the time that the payment mechanism was triggered.

The impact of Bennett on modular construction contracts

This case demonstrates that the courts will seek to honour the terms of the original contract between the parties as far as possible.  This underlines the freedom of the parties when negotiating contracts –  the court will only replace part of a defective payment mechanism should it fall foul of the requirements of the Construction Act.

It is therefore up to the parties to agree the most appropriate payment terms where modular construction is used.  Monthly interim payments may not commercially be the most appropriate payment mechanism where modular techniques are used. If stage payment are to be used instead, the contract terms should be crystal clear as to when the stage payment is triggered.

For advice or guidance on any other commercial or legal issues, a member of our team can take you through everything. Click here to discuss.

¹ [2019] EWCA Civ 1515

What is co-living?

Co-living offers residents an affordable place to live with communal spaces and a range of perks, such as networking evenings and even cinema screens. The model is built on community, flexibility and amenity. Co-living can appeal to everyone from graduates to entrepreneurs.

Where has the most co-living spaces?

London
Birmingham
Bristol
Glasgow
Manchester
Several European cities

What are the benefits?

For the consumer, Co-living adds an attractive choice to the range of housing on offer.

The concept of co-living highlights that cities are not only places to work, but places where people can live too. This allows urban areas to retain and attract essential talent, ensuring the city continues to grow and thrive.

Co-living holds the potential to free up larger homes, giving families the chance to stay within the city. As an example of “good density”, it is also valuable from a sustainability perspective.

What are the challenges?

Currently, there is a lack of policy guidance relating to co-living, causing the approach to vary between local authorities. In fact, the Draft London Plan is the only policy to define this new form of shared living.

Creating a sui generis planning use class, which exempts co-living developments from the historic planning rules but enforces appropriate new space and amenity standards, would encourage more schemes to come to the market.

Economic viability is essential to the success of co-living. As a result, developers must:

Balance operational risk and responsibility
Pitch an offer that is affordable for the marketplace
Maintain high standards
Keep wifi and other tech constantly up to date
Make a decent return

However, this is not as easy as it may sound. There operational management can be intense (akin to a hotel), as the large numbers of people sharing the same spaces require any issues to  be dealt with rapidly.

For now, it appears that co-living will work best in areas where the market is in need of an alternative offering. This may be because of an increase in people looking for quality accommodation, rising rental costs or new arrivals seeking a circle of friends in a large new city.. The objective of co-living is to complement the private rented and build-to-rent sector by providing social and affordable living, while easing the pressure on other areas of the housing market.

Contact Adrian Bland on 0121 214 1245 to seek advice on co-living.

Find out more about our commercial real estate team, or for advice and guidance on any other issues, a member of our team can walk you through everything. Click here to discuss.

These include:

  1. Can the site be sold?

At an early stage, the seller should offer proof of ownership of the site, or a right to acquire it. The ideal scenario would be that the site is registered at the Land Registry and the title register confirms all relevant information, such as:

If the seller is not the owner, they must be able to provide evidence that they are entitled to transfer the site. Should there be any red flags (such as poor class of title, charges or adverse rights) clarification must be gained from the seller.

  1. Can the site be accessed?

Access to infrastructure is a vital part of any development site, particularly when it comes to roads and sewerage.  If the seller’s land does not adjoin public infrastructure this will mean that express rights will need to be granted to the RP.  Should these rights be over a third party’s land they must also be evidenced and checked to prove that they are sufficient and capable of being utilized by the RP.

Maintenance liabilities and costs for private accesses and drains are another consideration for RPs. Relevant authorities should also be contacted before taking on any liability to identify whether the site is to be adopted. If adoption is unlikely, it may be wise to bring a management company on board.

  1. Can the site be used as proposed?

Future use – RPs need to check the type of planning permission that is in place. Ideally, it should be full planning permissions, but outline planning consent can also be acceptable if it is conditional upon suitable planning being gained. Section 106 agreement costs and Community Infrastructure Levy (CIL) liability must also be assessed.

If the site has no planning permission, RPs should find out the stage the planning process is at.

Current use – Some sites can be open to members of the public. If this is the case, RPs should research whether the land is Common Land or has a public right of way over it, as either could seriously hinder or even stop development.

Past use – Certain past uses can lead to contamination of a site, leaving RPs with potential liability for clean-up. If a site is thought to be contaminated, surveys must be carried out prior to the exchange of contracts and any issues found reflected in the price.

Failing to complete these checks can cause future issues for RPs, whether that be not being able to sell units or having to take on additional statutory liabilities. To avoid this and increase the chances of maximising their returns, RPs should seek legal advice early on in the process.

Learn more about our social housing team.

For advice or guidance on any other commercial or legal issue, a member of our team can walk you through everything. Click here to discuss.

A simple rebrand is not enough – we’ve seen this from past attempts. Instead, creativity and innovation must be pushed to the forefront, with support from retailers, landowners, landlords and the Government itself.

Keeping things ‘human’

The high street’s ‘human’ element is something that online retail lacks, however, it is difficult to get this right. To be successful, landlords and tenants must build and maintain lasting relationships, creating a high street that is both harmonious and cost-effective. Of course, this is challenging, but it can be done.

Making the most of technology

Until recently, technological advancements appear to have passed the retail sector by. Similar to smart motorways, shops could use technology to accurately measure footfall. This would be a great indicator of which spots are most profitable, providing tenants with the opportunity to re-negotiate rental payments.

Making tax fairer

The tax disparities between small and large shops must be addressed. The playing field cannot be truly leveled until a fairer way to levy tax from retailers is created. Without this change, smaller operators will continue to struggle to compete with the big players.

Building to rent

Increasing numbers of build to rent developers has led to a rise in mixed-use B1 Class units. A mixed-use high street creates a variety of offerings including residential, shopping and leisure units. Introducing a WeWork-style franchise model could also change the functionality and use of the high street. Flexibility should be the focus.

Creating a simple lease template

To generate the support needed for the high street, partnerships and deal-making between landlords and tenants are vital. In these unstable times, tenants are often put off entering into contracts due to the lack of a standard form of lease. Therefore, a one-size-fits-all lease and rental template could help to regenerate the sector.

Reintroducing turnover rents

The reintroduction of turnover rents may be something that tenants would welcome. They used to be fairly commonplace in the UK and worked by linking payments directly to the financial performance of tenants. As a result, it was a fairer way to share the burden, no matter the economic situation.

It is clear that for the high street to survive, it must modernise and adapt. Although creativity is part of the solution, financial incentives must also be brought in that convince retailers to stay on the high street instead of moving online.

Learn more about our real estate team.

However, the recent case of TFS Stores Limited v BMG (Ashford) Limited et al¹ shines a light on the importance of carefully complying with the contracting out procedure – or being at risk of unintended and significant consequences.

Facts

In this case, the tenant, TFS Stores Limited (trading as The Fragrance Shop) (TFS) sought to argue that a number of contracted out leases at various properties across the UK had not been properly excluded from the provisions of the Act.

TFS raised this argument in response to the landlord confirming that it did not wish to renew their leases. However, TFS wanted to remain in the premises and therefore brought a claim against the landlord arguing that their leases were protected by the Act because:

1) TFS’ solicitors did not have authority to receive the warning notices seeking to exclude the Act;
2) The TFS representative (its Retail Director) who signed the tenant declaration had no authority to do so; and
3) The tenant declaration signed by TFS was invalid because it failed to specify a commencement date of the term of the new tenancy.

Judgment

The court rejected TFL’s arguments and was not impressed by TFL’s attempt to side-step the contracting out process. In response to each of the above, the court held:

1) TFS’ solicitors had actual authority to accept the warning notices –  they were instructed by TFS to complete the lease in accordance with the Heads of Terms. The Heads of Terms expressly provided that the leases were being contracted out of the Act;
2) The Retail Director had actual authority to sign the tenant declarations – there was nothing to suggest that the signatory’s authority was somehow limited. The Retail Director was also heavily involved in the negotiation of the new leases; and
3) The failure to include a fixed term commencement date in the declarations did not invalidate them, as it is often not possible to know when the term will commence. It was enough that the new lease in question could be identified so that the tenant understood that the new lease would be excluded from the Act.

Practical points

Estates teams are likely to sigh in relief at the court’s judgment, but some practical points to take away are a) serve contracting-out notices on the tenant direct and send a copy to their solicitors and b) for corporate tenants, ensure that directors or someone who has authority to complete new lettings on a “contracted out” basis sign the declarations.

¹ [2019] EWHC 1363 (Ch)

Arcadia had already secured the backing of the Pension Protection Fund, various landlords and many of its suppliers although one landlord, the shopping centre operator Intu, was not willing to support the deal. As one of Arcadia’s largest creditors, this resistance placed any potential CVA into jeopardy.

Eventually, after a five-hour discussion, sufficient numbers of Arcadia’s landlords agreed to rent cuts, 23 store closures and 520 job losses, with more to come once the CVA is in operation.

Sean Moran, our insolvency partner, discusses what the Arcadia CVA means for the High Street:

Although it provides a solution for now (subject to any legal challenge a creditor could bring within 28 days of the approval of the CVA) it does not mean Arcadia is necessarily safe and sound. The Group’s portfolio of stores will be significantly reduced, leading to further vacant units on the High Street.

CVAs have been challenged for the way different classes of creditor, and different landlords, are treated. Landlords are increasingly keen to negotiate with businesses by connecting future rents to turnover. Arrangements such as these create a shared interest in the financial success of the company between landlords and tenants, yet they are not straightforward to implement with the effect of online sales being just one variable that has to be considered in the calculation of a store’s turnover.

As a further reaction to recent developments other high profile retailers are seeking rent cuts from their landlords, as they feel CVAs have handed their competitors a commercial advantage.

Although store closures are causing a huge strain on the High Street, it is unlikely that the Government will offer to help the situation, in order to avoid interfering with market forces.

Until the High Street changes the way it functions to keep up with the popularity of online shopping retailers will continue to struggle. There are however still successful bricks and mortar operators out there, who provide an example of how to thrive on the High Street.

For more information on our insolvency team, follow this.

Enhanced security

A fully encrypted board portal eliminates potential security risks associated with producing and distributing traditional hard copy board packs. Physical copies do not need to be sent to board directors via email or courier; they can simply log on, view and print the documents directly from the portal. As some directors still enjoy the familiarity of a hard copy pack, a portal can provide the best of both worlds. However, in this digital age, most directors have access to iPads and surface tablets so they may find a transition to paperless meetings is the way-forward.

Company secretaries and administrators can easily add or remove directors at any time and can restrict individual access to specific documents. This feature is particularly helpful when there are possible conflicts of interest.

Better access to information

Storing current and previous board packs and important information within an online portal allows directors to access documents from previous meetings, such as minutes, strategic plans and audit reports, all with a click of a button. Other useful company information such as committee terms of reference and policy manuals can be also be stored. The added search function allows directors to easily search previous packs or projects for relevant information.

Most, if not all, board portals work on all major operating systems and can be viewed on most tablets, PCs and mobile phones. The interface from device to device usually remains consistent, allowing directors to easily navigate board packs regardless of what device they are used to using.

Increased board engagement

Using a portal doesn’t just restrict board engagement to the boardroom; instead of having to wait for the next meeting, online board management software allows directors to discuss and share ideas, notes and annotations in real-time, when it’s convenient for them. This not only increases the efficiency of the board itself, but it may also reduce the frequency and length of the meetings. As previously highlighted, any notes directors make on the portal are secure and are can be restricted to specific individuals they are willing to share that information with.

Non-executive directors (NEDs) often serve on several boards and the utilisation of an online portal across organisations may help ensure they don’t miss vital communications. Board packs will always be available on the portal and reminder emails can be sent to NEDs to notify them that new documentation is available.

This also applies to directors that are required to travel and usually their use travel time as an opportunity to catch up on company issues; they may previously have had to carry numerous hard copy board packs with them but using an online portal eradicates this problem.

Modernised board administration

Online portals significantly reduces the meeting preparation time from hours to minutes by cutting down the number of manual hours involved.

Replacing documents in already produced hard copy packs has always been an issue – most directors have attended a meeting at some point where the wrong version of a document has been circulated. An online portal allows secretaries and administrators to quickly replace and share updated documents instantly.

By using a portal as a task management tool, secretaries and administrators can set tasks for those directors they are expecting papers from and grant them specific access to upload their own documents.

Cost-effective and good for the environment

Every year, companies spend a large amount of time and money on the printing, assembly and distribution of board packs.  With increasing pressures on organisations to work towards green initiatives and implement enhanced corporate social responsibility processes, using an online portal reduces the reliance on paper, the impact on the environment and sends a positive message to key stakeholders.

In conclusion

The market for board portals is expanding. As the benefits of board management software are highlighted, more and more organisations are ‘going digital’ in a bid to be more efficient and reduce costs. With robust security permissions and tight version control, using a portal ensure their directors can access real-time confidential information wherever they are, whether this be in the office, on the move or at home.

How can we help?

We have partnered up with a dedicated secure solution for the provision of a board portal. For more information contact Ben Harber.