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With office attendance down and face to face events less frequent, the ability to meet and network with industry peers has been somewhat stymied in recent years. 

This is particularly true for the in-house lawyer community who, having worked through a period of sustained legislative, societal, economic and regulatory change, have arguably been one of the groups to have suffered the most from the inability hear how other IHLs across the industry have managed these challenges. 

It was this thought that prompted Shoosmiths to host our inaugural Living sector In-house Lawyer Forum, delivering a series of presentations on some of the biggest legal challenges facing the Living sector, but also providing an opportunity to build new relationships and to ‘chat shop’. 

Offset or off-centre

First up were planning lawyers Matt Stimson and Lisa Tye, discussing the lessons learned so far around nutrient neutrality and biodiversity. With the UK being found to be one of the most nature-depleted countries in the world, with 15% of UK species threatened with extinction and having the lowest level of biodiversity of all G7 countries, the enormity of the challenge facing us all is stark. 

The Environment Act 2021 has ushered in a step change in how developers are expected to support nature and biodiversity in their schemes, with the mindset moving from one of conservation to enhancement, in particular with the biodiversity net gain (BNG) requirement coming in from November 2023. 

With a biodiversity uplift of 10% being required of all new developments after this date, the question of how to realise that net gain is a pressing one – onsite or offsite? Where perhaps the natural tendency is to want to preserve – and contribute to – the biodiversity of the location where a scheme is being developed, the counter argument is that it might not necessarily be the most effective location for biodiversity to flourish, suggesting an offsite solution could be preferable. Such calculations need to be had early on in a scheme so as to find the most cost-effective solution. 

Layering and additionality are also factors that will need to be considered, requiring developers to think more broadly than just solving an immediate issue, such as nitrates, and look at how a site can deliver multiple biodiversity benefits. Flood alleviation, recreation amenities and educational elements are all supplementary benefits which would bring additional value to a site beyond the obviously quantifiable. 

Despite this legislation not currently being included in next year’s Retained EU Law (Revocation and Reform) Bill 2022-2023, chances are that the focus on preserving biodiverse habitats won’t be taken off the government’s agenda any time soon. 

What lies ahead?

Richard Valentine-Selsey, Head of European Living Research at Savills, presented a fascinating session on what we can expect from the Living sector in terms of performance in the coming years. 

Richard talked of how, off the back of a period of sustained value growth, the housing market has reached a tipping point, with further drops in prices anticipated throughout 2023. 

Continued divestment of mortgaged Buy to Let landlords and falling rental supply is driving strong rental growth, with BTR volumes expected to continue to see interest, including in the still embryonic suburban single family housing segment. 

Rising construction costs, a stretched planning system, environmental restrictions for new developments, end of ‘help to buy’ and policy uncertainty are just some of the headwinds facing the Living sector. But the sector is proven to be resilient and resourceful when it comes to battling economic and regulatory challenges – this time will be no different. 

The Building Safety Act and cladding

Construction partner, Ian Hardman, then discussed the Building Safety Act and the implications for residential developers. Just a few of the points Ian raised included: 

• The definition of a higher risk building and the building categories caught by the Act.
• The extension of the limitation period for claims from six years to thirty years “retrospectively” and from six years to fifteen years for new claims.
• The introduction of the right to enable claims to be brought against construction product manufacturers and sellers for their role in causing problems associated with building safety.
• Issues around special purpose vehicles and Building Liability Orders.
• The role of the new Building Safety Regulator.
• The creation of a “gateway” regime, which will be intended to ensure that those involved in a project turn their minds to building safety issues at three distinct points (gateways) during the design and construction process.
• The need for a ‘golden thread’ of good quality building safety information to be created before building work starts and kept updated throughout the design and construction process.
• The introduction of a Building Safety Levy to apply to developers of any residential or mixed-use building to pay for the remediation of orphaned buildings, where no person is available to take responsibility for repairs.

Shoosmiths trainee, Eloise Ryan, then talked of the wider scale and impact of the Building Safety Act for developers, with the predicted total cost for the Living sector being around £3 billion, £812 million of which will be seen in the next two years. The Construction Industry Council has expressed concerns that the burden of the Act could force competent professionals to leave the sector, leading to even more challenges around labour shortages and the viability of projects. 

Rakhee Kotecha, head of legal disputes and compliance at Countryside, then discussed the steps that Countryside have gone through since Michael Gove’s building safety announcement on 10th January 2022 in order to prepare and begin implementation of the requirements of the Act. 

Rakhee talked of the limitation period and the challenges of being able to access building records beyond 15 years, as well as the difficulties in obtaining contributions to liabilities from third parties for buildings completed more than 12 years ago. These challenges have led Rakhee to establish a dedicated specialist business unit to deal with legacy buildings, as well as create new streamlined systems and processes to ensure that there is a consistent and proactive approach to fire safety for legacy buildings across Countryside.

The resurgence of ESG

Joanna Tomlinson, consultant at sustainability consultancy, EVORA, presented on how ESG issues have been elevated into the board room in recent years, now being embedded into corporate strategies across all industries. 

However, with this heightened focus comes closer scrutiny of sustainability claims and greater risk of ‘greenwashing’. Now more than ever, organisations need to ensure they are able to support their ESG claims, for fear of regulatory attention. A combination of new commitments and regulations, concerns of stranded assets across portfolios and increasing public interest is leading to greater transparency of operations. 

Joanna then talked of the sustainability reporting landscape and the various frameworks, ratings, global goals and principles and regulations, and how complex the market now is in terms of compliance. 

The ESG landscape is fast moving, and in-house lawyers will need to stay close to developments in this area. 

All in all, a content-packed day, with hopefully some fun thrown in for good measure. If you would like to join us for future IHL Forums, please contact [email protected].

 

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