Boodle Hatfield Property Insights, Dec 2023 - Flipbook - Page 4
Boodle Hat昀椀eld
Property Insights
If an application is made within the 30 months that
does not follow the new guidance the developer will
have 18 months for construction to get underway
in earnest (i.e. the pouring of concrete for either the
permanent placement of trench, pad or raft foundations
or for the permanent placement of piling). If it does
not, they will have to resubmit under the new guidance.
Accordingly, if a project has already obtained planning
permission with one staircase it has some time to get
construction underway and the development will not
need to immediately be redesigned and resubmitted.
Qualifying leasehold loophole addressed
A signi昀椀cant loophole in the Building Safety
Act 2022 (BSA) that had the potential to
adversely impact on leaseholders has now been
addressed giving certainty to both landlords and
leaseholders when renewing a qualifying lease.
To bene昀椀t from the BSA leaseholder protection provisions
available to leaseholders in high rise blocks, the tenant
must hold a ‘qualifying lease’ granted before 14 February
2022. As originally drafted, the qualifying lease status
would as be lost if the lease was extended after this
date as the extension of the lease effects a surrender
of the original lease and the grant of the new extended
lease. This has now been addressed by new provisions
added to the BSA at the end of October which provide
that a ‘connected replacement lease’ (that is a new lease
replacing another that was a qualifying lease) will be a
qualifying lease where all other criteria are satis昀椀ed. The
new provisions will take effect retrospectively and will
therefore apply to extended leases granted during the
period since the leaseholder provisions came into force.
Registration of high-rise buildings
The provisions of the BSA requiring the mandatory
registration of all residential buildings that are over
18 metres high or have more than 7 昀氀oors came
into force on 30 September 2023. New buildings
completed after 1 October 2023 must have a relevant
completion certi昀椀cate or 昀椀nal notice and must be
registered before residents can occupy them. The
register is not yet open for public view and evidence of
registration must therefore be requested as part of the
due diligence exercise where dealing with a property.
Sarah Rock, Construction Partner
Real Estate funding
Traditionally, banks and institutional lenders have
held sway in providing 昀椀nancing for property ventures.
However, in recent years, the emergence of private
debt funds and alternative lenders has injected a new
dimension into real estate 昀椀nancing. So, what are the
factors propelling this surge in private debt within the
UK’s real estate sector, how is its profound impact being
felt, and how is this not all bad news for traditional
lenders?
A shift in real estate 昀椀nancing
The real estate sector, long reliant on conventional
banking channels, has experienced a notable disruption
with the surge of private debt. Multiple factors have
converged to drive the surge of private debt in the
UK’s real estate domain. Following the global 昀椀nancial
crisis of 2008, Trussonomics and the high in昀氀ation-high
interest rate environment in which we now live, banks
have become more risk-averse and stringent in their
lending practices. Private debt funds have capitalised
on this demand by offering real estate developers and
investors access to alternative 昀椀nancing sources with
competitive returns. On the one hand, investors are
seeking higher yields beyond those offered by traditional
investment avenues. The typically 昀氀oating-rate nature of
real estate debt makes it attractive to investors, resulting
in signi昀椀cant capital in昀氀ows.
On the other hand, banks are tightening lending criteria
and withdrawing from certain types of riskier lending
all together. This has paved the way for non-traditional
lenders to step in and 昀椀ll the void. The evolution of
technology has also played a pivotal role. Fintech
platforms have streamlined the lending process,
facilitating faster loan approvals and enabling alternative
lenders to effectively assess property risks. This has
democratised access to capital, allowing a broader
range of players to participate in real estate ventures. It’s
also been bene昀椀cial on the investor side; platforms have
enabled a much wider variety of investors (and a larger
number on each transaction) to participate in loans.
Previously, the costs of managing these investors would
not have been worthwhile for private debt originators.
