Brexit: Legal considerations for Real Estate & Construction
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Brexit | Legal considerations for Real Estate & Construction
Brexit: Legal considerations for Real Estate & Construction In this note we consider some of the legal issues (and related commercial questions) which may arise for clients operating within the Real Estate and Construction sectors, following Britain’s vote to leave the EU. It is important to note at the outset that, until the UK completes the formal procedure for exiting the EU, all existing EU laws will continue to remain in force.
Tom Cawcutt Solicitor | Real Estate tom.cawcutt@laytons.com +44 (0)20 7842 8000
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Brexit | Legal considerations for Real Estate & Construction
Environmental Protection
Energy Efficiency
One potential area of concern following the referendum,
Similarly, there are other regulations that will have an effect
result is the legislation on environmental protection deriving
on the UK housing sector that may now be subject to change.
from EU law (including the Environmental Protection Act
For example, the Energy Efficiency (Private Rented Property)
1990). Environmental protection considerations often
(England and Wales) Regulation 2015 (‘the Regulation’) is
impact, for example, developers in the planning stages of a
due to come into force from April 2018. In short, the effect
development (as various mitigation schemes, environmental
of the Regulation will be to require landlords to improve the
licences or designs incorporating carbon reduction could
energy efficiency of buildings to a rating of ‘E’ or higher or
be required). The future status of environmental regulations
face civil penalties for failure to comply. There are also similar
deriving from EU law is not yet known, and it will be a decision
provisions relating to commercial property.
for the UK government. It remains to be seen whether the government will keep this As noted above, any legislation that had been passed by the
implementation date, or remove or delay the legislation to
UK Parliament will remain in force unless expressly repealed,
appease landlords who have been the target of several tax
but any Regulations passed by Brussels have direct effect and
changes recently.
may, depending on what ‘Brexit’ actually looks like, cease to have effect immediately following our withdrawal. It is likely that the government will want to keep the Regulations in place (by passing identical legislation), as there is unlikely
‘Brexit Clauses’
to be much appetite to dilute the environmental protection regime in the UK. It is worth noting that other international
For parties who have entered into Real Estate contracts
treaty obligations will continue to bind the UK following
subject to English law, it is important to note that the rules of
Brexit and it is likely that the requirements in relation to
contractual construction, and the laws governing contractual
environmental assessment as part of the planning process will
provisions generally, do not change as a result of the
remain.
referendum result. However, parties should be cognisant of the potential impact of so-called ‘Brexit’ clauses on current transactions. There have been recent reports that purchasers have invoked clauses allowing them to either pull out of a deal, or reduce the agreed purchase price, within certain agreed time limits contained in ‘Brexit’ clauses. Whilst these clauses are a matter of negotiation between the parties, investors especially could consider using a Brexit clause to buy time, contemplate the likely direction of the market, or to explore the viability of funding options. Parties on both the ‘buy’ and ‘sell’ side of Real Estate contracts should remain live to the possibility of such clauses being activated.
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Brexit | Legal considerations for Real Estate & Construction
Construction Whilst there has been significant news coverage of the impact
Accordingly, for now, businesses should continue to comply
of Brexit on the Construction industry, there are few legal
with their obligations under the DPA while taking practical
changes specifically effecting Construction companies. In
steps to prepare for the new GDPR rules that should apply
addition to the EU and domestic legislation cited above, the
from 25 May 2018.
uncertainty relating to free movement of workers is likely to be the biggest legal concern for the industry. Undoubtedly, the rules governing free movement of workers greatly benefit Construction companies in the UK. Not only do these laws give companies access to skilled workers from all EU member states (without having to sponsor work visas), they also provide a supply of unskilled but essential workers for major projects. It is not clear whether existing workers will be able to remain in the UK following Britain’s formal exit from the EU, or what rules will govern immigration once Brexit is complete, and Construction businesses will likely find it difficult to plan ahead for pipeline or upcoming projects where skills are required from outside the UK.
Conclusion: implications for UK businesses At present, data protection law is governed primarily by the DPA, and this is likely to remain the case up until 25 May 2018. From 25 May 2018 (assuming that the two-year Brexit process has not yet completed) the GDPR should apply to the UK. Around the time the UK leaves the EU, it is anticipated that the UK will enact national legislation which is closely comparable to the GDPR.
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