In answering this question, this post – the latest in our series of ‘no-deal’ Brexit Notes – will consider the impact of a no-deal departure from the EU on the legislative framework governing property ownership and transactions, as well as taking a brief look at the commercial impact on the property market.
Impact on the Legislative Framework
There has been minimal intervention from the European Union on the laws which govern how property is held in England and Wales. In short, leaving the EU will have little impact upon the legislation governing property ownership and transactions in England and Wales.
Some EU law does impact upon the way in which property is held in England and Wales, most notably the Energy Performance of Buildings Directive 2010 and the Energy Performance of Buildings (England and Wales) Regulations 2012 (EPB regulations), which implemented the EU Directive on the energy performance of buildings.
There will be a review of legislation which implements EU directives following our departure from the EU. It is unclear to what extent the UK government will depart from the EPB regulations and it is arguable whether indeed any change will be made to these regulations after Brexit. If any change is made it is unlikely to be made for some time whilst the UK Government addresses other more complex issues following Brexit.
One other aspect that sellers or landlords need to be aware of, is whether Brexit is a ground upon which a buyer or tenant can argue frustration of a contract. If a contract is frustrated, it is incapable of being performed due to unforeseen events and consequently becomes void. A party to that contract would have to argue that at the time the lease or contract was signed, they had no idea that the UK would leave the EU and that the whole basis of their business and the contract was based upon the UK being an EU Member State.
There may be several reasons why a contract and/or lease cannot be performed as a result of Brexit. This could be for regulatory, staffing, and/or financial reasons.
Individuals may also seek to get out of assured shorthold tenancies (ASTs) on the grounds of Brexit if, for example, their jobs cease to exist.
Commercial Impact on the Property Market
It is hard to predict what the impact will be on the real estate market due to the ongoing uncertainty of what Brexit will look like and the terms of our departure, which are to be agreed with Europe. There is likely to be some volatility. There is also a risk that a potential relocation of businesses from the UK to other countries is likely to affect supply and demand, which will impact upon pricing, and the property market will surely be affected by how the wider economy fares following our departure from the EU.
In summary, until there is some certainty as to the what the terms of Brexit will actually be, the impact upon the property market remains to be seen. There will be little impact upon the legislation governing property ownership and transactions in England and Wales, save for any regulations implementing EU directives, such as the EPB Regulations. What, if any, changes will be made to these regulations remains to be seen.
Are you a landlord or estate agent? Perhaps you are concerned about the potential impact of a no-deal Brexit on your commercial property? How are you preparing for Brexit? Your comments are, as ever, welcome!