Understand Your Rights. Solve Your Legal Problems
The UK’s decision to divorce from the EU has put into question the status of British citizens, and that of companies based in the UK, in relation to other countries forming part of the European single market and customs union.
Since then, Brexit has been characterised by a number of hurdles, with the EU refusing to grant further concessions, and issues such as the Northern Irish border which resulted in an undefined deal, and which in turn has caused trade policy uncertainty.
The Prime Minister of the UK has continuously stated that “Brexit means Brexit”, which means leaving the single market, the customs union, and will also mark the end of the European Court of Justice’s jurisdiction over the UK. However, nothing is set in stone and this has caused heightened stock market and exchange rate volatility among others.
At this stage, it seems that Brexit will occur on the 29th March 2019 regardless of whether the UK finalises a deal with the EU or not. Alternatively, all other EU member states can agree to extend the process, or the UK can decide to stay within the EU, although the latter seems rather unlikely as things stand.
Leaving the EU without a deal could potentially spell disaster for the 200,000 British businesses[1] currently trading with the EU, with potentially significant short- and long-term disruptions to trade.
With the deadline for the UK’s withdrawal from the Union just around the corner, questions remain on the rights and status of UK citizens in the EU, and EU citizens living in the UK. According to official statistics there are 13,000 British citizens exercising their EU treaty rights in Malta[2], all who will feel the Brexit impact in some way. Malta’s position has been to ensure that the interests of its citizens and businesses are safeguarded, regardless of the outcome of this deal.
Since Malta has appointed the English language as one of its official languages, and is a member of the Commonwealth, it has a very strong relationship with the UK. There also is an understanding between the two countries that citizens will in no way be put through any negative experiences following Brexit.
One possibility for British citizens living in Malta is to register and acquire a new residence document, which is generally valid for up to 10 years.[3] For Maltese citizens in the UK, a settled status scheme is being implemented. Malta registered companies whose main business involves UK trade, on the other hand, will be offered assistance to limit the effect of Brexit.
Brexit will undoubtedly impact Malta, a former British colony for over 150 years which harbours close economic ties with the UK. In spite of this, a number of bilateral agreements between Malta and the UK ensure that the Brexit impact for individuals and businesses is mitigated.
The Reciprocal Health Agreement Malta-UK allows for reciprocal coverage of health care for ordinary residents, and the Malta-UK Health and Social Security treaties allow for reciprocal benefits when it comes to social security, health benefits, mutual support and cooperation. Further agreements allow British residents in Malta to vote in local council elections, and a Bilateral Investment Treaty between Malta and the UK aims to promote and protect investment.
British citizens who successfully applied for tax status under the High Net Worth Individuals and Residency Programme will be offered an alternative solution and will not lose the benefit of paying tax at the rate of 15%.[4]
Malta is a genuinely viable alternative for British persons and businesses, being the leading choice for British banks and companies should they decide to relocate after Brexit[5]. It incorporates an attractive tax regime, a high GDP growth, and robust financial services, i-gaming, maritime and aviation sectors amongst others which make it the UK’s potential gateway to Europe.
E&S Group is a boutique, multi-disciplinary corporate advisory practice that provides legal, corporate, advisory, tax, citizenship and domiciliation services to an international client base. From the simple setting up of a business operation to the more complex legal, tax and regulatory issues they face, our pro-active team of lawyers, financial advisors, accountants and corporate administrators are available to assist, advise and deliver to any aspects of our clients’ operations.
Visit our website https://www.ellulschranz.com/ or contact E&S Group on +356 20103020 or +356 20103022 or via email at info@ellulschranz.com.
[1] ‘Daily Hansard - Written Answers’ (UK Parliament, 2011) <https://publications.parliament.uk/pa/cm201212/cmhansrd/cm120327/text/120327w0005.htm#1203281002290>
[2] ‘FACTSHEET: Malta Government’s plans in case of a no-deal Brexit’ (Government of Malta) <https://www.gov.mt/en/Pages/brexitfactsheet.aspx >
[3] ‘FACTSHEET: Malta Government’s plans in case of a no-deal Brexit’ (Government of Malta) <https://www.gov.mt/en/Pages/brexitfactsheet.aspx >
[4] ‘FACTSHEET: Malta Government’s plans in case of a no-deal Brexit’ (Government of Malta) <https://www.gov.mt/en/Pages/brexitfactsheet.aspx >
[5]‘There are 5 countries Brits are most likely to move to if they were to relocate post-Brexit’ (Business Insider, 30 January 2017) <https://www.businessinsider.com/internations-survey-countries-brits-are-likely-relocate-to-after-brexit-2017-1>
Below Amanda Lathia, Associate at Hunters, examines how Brexit may well have an impact on the ability of UK companies to continue to benefit from this framework.
The Cross-border Mergers Regulations (2007), as amended (SI 2007/2974) (“the UK Regulations”) established a framework for cross-border mergers between English limited companies and those governed by the law of another EEA state. The framework is derived from the EU Directive 2005/56/EC on cross-border mergers of limited liability companies. This framework sets out three different structures which fall under the definition of a “merger”: (i) merger by acquisition; (ii) merger by formation of a new company and (iii) merger by absorption of a wholly owned subsidiary.
In the case of a merger by absorption of a wholly owned subsidiary, this typically comprises the merging of a dormant English company with its main branch located in another EEA state which carries out all of the business of the company and where all the company's employees are based. This structure has been popular as, until recently, the capital requirements for incorporating a limited company under certain EEA jurisdictions were considerably more onerous than in the UK. For example, in Germany, together with higher costs of notarisation, it was more attractive for German businesses seeking limited liability to set up an English company and carry on business through a branch in Germany.
Brexit has created a high number of mergers of English limited companies with EEA limited companies. One barrister even noted that he has completed more cross-border mergers in the last year compared to the last decade. The mechanics of the application are fairly regimented as follows: the first stage requires the English merging company to apply to the court for an order certifying that it has completed the pre-merger acts and formalities properly. The second stage is the approval of completion of a cross-border merger by the court in the country of the transferee company.
Although absorption of a wholly owned subsidiary ought to be straightforward, the preparation requires a meticulous approach. In summary, regulations 7 and 8 of the UK Regulations require the directors of the UK merging company to draw up draft proposed terms of the cross-border merger and a directors’ report respectively, both of which must fulfil specified requirements. In particular, the directors’ report must explain the effect of the cross-border merger for members, creditors and employees of the company as well as inform the court as to how these documents were delivered to the employees. Regulation 9 requires an independent expert's report which does not apply to a merger by absorption of a wholly owned subsidiary. Regulation 10 requires the members of the UK merging company and its employees or their representatives to be able to inspect the draft terms of the merger, the directors' report and independent expert's report (if there is one). Regulation 12 deals with public notice of receipt of registered documents, with a requirement to file them at Companies House, which then must publish confirmation of receipt in the London Gazette at least two months before a hearing for an application for a pre-merger certificate. Regulation 13 deals with the need for approval of the draft terms of the merger by members of the company, which again does not apply to a merger by absorption of a wholly-owned subsidiary. Regulation 14 deals with approval by creditors and applies only where the court has ordered a meeting of creditors. Finally, Regulation 15 deals with the provision of documents where a meeting of members takes place.
Although absorption of a wholly owned subsidiary ought to be straightforward, the preparation requires a meticulous approach.
If a company in an EEA state has not yet begun the process, there may still be time depending on whether the UK reaches an agreement with the rest of the EU on the European Union (Withdrawal) Bill. Ideally, the advisors instructed should speak both English and the language of the other EEA state to check the translation of the documents. Thankfully, the Companies Court is aware of the urgency of mergers of subsidiaries and may be able to set a hearing date with little notice and in some cases before the Brexit deadline. All being well, the English court will issue the pre-merger certificate on the same day as the hearing.
It is impossible to predict the outcome of an EEA pre-merger process which starts before Brexit, but is not completed by 29th March. If Brexit does go ahead at 11pm on 29th March 2019 (exit day) without a withdrawal agreement, the Cross-Border Merger Regulations 2007 will be revoked in their entirety and the whole cross-border merger regime, as it applies to the UK, will cease to apply.
In any case, it is essential to at least begin the process of stage 1 before exit day. The withdrawal agreement may still be agreed or alternatively the UK might apply for an extension of Article 50 to allow more time for politicians to negotiate a change to the agreement. If we do manage to reach a withdrawal agreement, there will be a transitional period during which EU law will continue to apply in the UK and any cross-border merger process that has begun before 29th March can be completed.
EU law has impacted UK employment law with the provision of rights for part-time and fixed term workers, paid holiday entitlement, working time protection and agency worker rights, among others. To explain the potential effects Brexit may have on workers’ rights, East Midlands-based law firm Nelsons held a workshop at its Nottingham office on Tuesday (5 March).
Associate and employment law solicitor Melanie Morton, who hosted the event, said: “UK workers have benefitted from employment rights that derive from European laws for many years. In fact, many people do not realise that some of the protections they enjoy at work are in place because the UK has had to implement certain laws and follow case law as a result of its EU membership.
“The uncertainty surrounding Brexit has understandably left a lot of workers worried about what could happen to their rights when we leave the EU, but it’s important to remember that it is unlikely any immediate changes will happen from an employment law perspective.”
Melanie, who has been advising on employment law matters since 2007, said: “The EU Withdrawal Act 2018 effectively converts EU law into UK law so that there is no legislative hole the day after Brexit and rights relating to working time, holiday, family leave, discrimination and agency workers will remain in effect, unless or until that legislation is amended.
“The government has also issued a technical notice about workers’ rights saying that regardless of whether or not we get a deal, employees will continue to enjoy the level of protection they are currently entitled to under EU law.”
Melanie said: “In the long term, dependent on which party is in power, we might see changes. There are many aspects of our current protection that employers, business groups and associates do not love so a few pieces of legislation could be, loosely speaking, under threat.
“For example, our government was resistant to the working time rules (which impose a 48-hour working week) and agency worker rights (which offer equal pay and conditions for agency workers) during EU negotiations. Some businesses are also not keen on the EU law which offers parents up to 18 weeks per child of unpaid parental leave as this can be quite disruptive on the workforce.”
“Leaving the EU will also mean the end of the jurisdiction of the European Court of Justice (ECJ), which provides guidance on the application of EU law to domestic courts and tribunals, in the UK,” said Melanie.
“This means UK courts will not be able to refer cases to the ECJ, a court that has been known to interpret the law more favourably for workers than the British courts.
“It’s also important to remember that we have come to expect a certain level of protection. Changes to primary legislation requires parliamentary approval and the government will have to decide if political reform of our employment law is desirable.
“Some of the principles are intrinsically entwined in our working life – scrapping or reducing entitlements could therefore be difficult from both a legal and an employee relations perspective.”
The directors of virtually every listed UK company face major liability risks for failing to prepare adequately for Brexit, especially if there is a ‘No Deal’ outcome, according to Mactavish.
Mactavish believes UK directors have massively overlooked these new liabilities, which could leave them personally exposed to legal actions because of traditional limitations applied to ‘Directors and Officers’ (D&O) insurance cover.
Even within the insurance sector, the Brexit focus has been diverted towards European passporting rights and the operational challenges facing insurers and brokers, Mactavish says.
Critical new insurance risks highlighted by Mactavish as being created by Brexit include:
Bruce Hepburn, CEO, Mactavish said: “There are many stories speculating about impending Brexit doom yet a key insurance challenge affecting almost every UK business has stayed under the radar.
“D&O insurance policies are extremely complicated and cover is bound up in a labyrinth of inter-connected policy definitions, policy triggers and cost categories, so that most company directors are far from clear on what they are actually covered for.
“This situation is becoming even harder for insurance buyers to manage in recent months because corporate D&O is one of the first areas of the insurance market to show signs of higher premiums and less flexible terms. What this means in practice is that once claims come in, it is usually too late to make any changes to policies and directors may not be covered.”
Mactavish points out that unless a company’s D&O policy has been specifically reviewed and negotiated, it is unlikely to be reliable because there will likely be far too many exclusions to cover and ‘outs’ for insurers. Policyholders should expect claims to be scrutinised carefully and negotiated aggressively if they spike.
Recent Mactavish research has suggested that as much as 45% of all large/complex insurance claims are disputed.
(Source: Mactavish)
And even though the Parliament rejected a no deal Brexit, it is not technically legally binding[1]; with Theresa May is keeping us all on our toes, businesses are yet to know what they should be preparing for.
In 2017, it was reported that a total of 52,741 laws have been introduced in the UK as a result of EU legislation since 1990[2], so, as you have probably gathered by now, it will not be a simple ‘farewell handshake and walk in opposite directions’ type of break up. Things will change, and the best way for us to prepare for it, is by briefly touching on some EU laws which majorly impact the way in which businesses in the UK work.
Who Will Be Left to Work for You?
In the public sector, where two thirds of organisations employ EU nationals, 42% have seen staff leave and the number of EU nationals registering as nurses in England had dropped by 92% since the vote.
Immigration was a major talking point during the EU referendum, but what was not addressed, was the importance EU nationals have in the workplace; from baristas to nurses, reduced EU migration may affect EU business development for UK businesses. We are expected to see pressures in a variety of sectors, and though settled status may be offered to those already residing in the UK, we aren’t too sure how restrictions of free movement will impact UK businesses.
As reported on Airmic: “According to the Chartered Institute for Personnel and Development (CIPD), there were 2.26 million EU nationals working in the UK in September 2016. More than half (56%) of these workers are employed in either wholesale and retail, health and social work, accommodation and food services, construction and manufacturing.”[3]
With the agriculture and construction sectors predicted to take a harder hit, CIPD's Labour Market Outlook for Winter 2016-17 found that 29% of employers claim they have evidence that EU nationals looked to leave their organisation due to the UK result of the Brexit referendum, with 27% considering doing so in 2017.
In the public sector, where two thirds of organisations employ EU nationals, 42% have seen staff leave and the number of EU nationals registering as nurses in England had dropped by 92% since the vote.
Could the Gig Economy Save Businesses?
Often presenting controversy in employment tribunals, the Gig Economy has been subjected to scrutiny. With the gig economy thriving on frictionless convenience, it allows individual workers and small businesses to operate in large marketplaces without needing the bureaucratic or operational support. But, self-employment is at an all time high, and it is this fluidity which enables it to work, Yes, with Brexit imposing the need for new EU workers to obtain a visa prior to working in the UK, we may witness a reduction. But not all is lost.
A report by McKinsey estimates that between 20 and 30% of the working age population are engaging in some form of independent work, with just under half (44%) relying on it for their primary income; the report also shows that 56% use it [the gig economy] to supplement their salary and a mass 74% stating it is their preferred way of working.[4] If businesses continue to offer the same opportunities that the gig economy presents to its workers, they may be able to soften the blow of losing EU nationals.
With much of the EU employment law being in effect via UK legislation, we expect very few changes and no immediate alterations to legislation
As stated in the HR Magazine: “It [the gig economy] also offers a solution to the skills shortages already being felt across a number of industries, and that could be compounded by Brexit. With an army of on-demand gig workers available from across the globe, and the technology to facilitate remote working, this could be a viable option for a variety of industries.”
Other workplace issues regarding staff shortages and productivity and their solutions, are as follows:
(Source: AirMic[5])
What Else Will Change Under Employment Law?
Speaking to Robert Bates, and Employment expert at Jordan Solicitors, he states that things should remain the same: “Last year the government issued a series of technical notices, one of which was entitled ‘Workplace rights if there’s no Brexit deal’. This technical notice stresses that immediately after 29 March 2019, workers in the UK will continue to be entitled to the rights they have under existing UK law.
“This includes those laws that originate from EU law, such as the working time regulations, family leave entitlements and legislation to prevent discrimination.
“In the short term, the government says there is no plan to change existing policy, which is designed to ensure a smooth transition. With limited exceptions, the employment rights which staff enjoy - including those staff working in the UK on a temporary basis – will be the same immediately after Brexit as before.
“How this will change in the medium to long term is a point of much speculation in political circles, which is not very comforting for employers and employees living in the real world.”
With much of the EU employment law being in effect via UK legislation, we expect very few changes and no immediate alterations to legislation; the UK expects a certain level of workplace protection, and major changes seem highly unlikely, especially when considering that changes require Parliamentary approval, with the Government considering whether reform is politically desirable prior to anything being confirmed.
Further to this, it is important to be aware that many laws and rights do not derive from EU employment law[6].
(Source: Brodies)
We may see some EU-rights and laws being altered, such as the right of agency workers being entitled to basic working conditions (such as annual leave) as equivalent to the permanent staff after 12 weeks; this wasn’t quite popular at Government level when first introduced, so it could be processed to change. Alterations which we are more likely to see will relate to requirements for interaction with EU institutions or bodies[7].
Business investment has taken a hit, with it barely growing ever since the referendum (see below); prior to the vote, it was predicted to grow more than 13% over two years (from 2016)[8]. The uncertainty of business operations is likely to have contributed to this fall.
(Source: FT)
Richard Thomas, Employment Lawyer and Partner at Capital Law tells Lawyer Monthly that if the UK can agree a deal with the EU which preserves the UK’s ability to continue to grant operating licences to UK based companies which will then be mutually recognised by the EU, those UK based companies will have to apply for 2 separate sets of operating licences – one for the UK and one for the rest of the EU.
He expands: “If a UK based Company wants to apply for an EU based operating licence then it will need to do so via an EU based Company and this is why many businesses in regulated sectors (such as the Banks, Pharmaceuticals, aviation and transport) are looking to set up EU based entities in order to apply for all the necessary EU based operating licences .
“This is a sensible course of action for these companies to take as there is no guarantee whatsoever that the EU will agree that any operating licences granted by the UK as a “Third Country” will be recognised as being mutually applicable throughout the EU. In fact, the EU very rarely agrees to any form of mutual recognition of different rules as it insists upon its rules being followed as the price of access to its market.”
Even if a transition period is agreed all businesses that wish to operate in both the UK and the EU would be prudent to consider setting up an EU based entity
“The EU Commission wrote to a number of companies in regulated sectors (such as aviation transport and maritime) in December 2017 to point out that once the UK becomes a Third Country their current operating licences (granted by the UK as an EU member) would no longer be valid within the EU.
“The UK Government initially complained about this action by the Commission but backed down when it was made clear that the Commission was simply pointing out the legal and commercial position that would apply.”
Richard goes on to explain that despite maintaining a mantra of “No deal is better than a bad deal” the UK Government has only recently made any conspicuous preparations for a no deal scenario.
“It is still possible that a transition period will be agreed by the UK and the EU (although this is still currently dependent on a suitable resolution of the issue concerning any border between N Ireland and the Republic of Ireland)”, he explains, “However even if a transition period is agreed all businesses that wish to operate in both the UK and the EU would be prudent to consider setting up an EU based entity from which to apply all relevant EU operating licences on the basis that this will prove necessary even if a final FTA is agreed between the EU and the UK.”
We can only wait and see to witness what will happen and how businesses will adapt to the rumoured changes; until then, be prepared for anything.
[1]http://www.bbc.co.uk/news/uk-politics-47050665
[2] https://www.thomsonreuters.com/en/press-releases/2017/march/eu-laws-introduced-in-the-uk-highlights-scale-of-challenge-facing-lawmakers-following-brexit.html
[3] https://www.airmic.com/news/guest-stories/businesses-must-prepare-workforce-challenges-post-brexit
[4] https://www.hrmagazine.co.uk/article-details/the-gig-economy-is-just-what-we-need-post-brexit
[5] https://www.airmic.com/news/guest-stories/businesses-must-prepare-workforce-challenges-post-brexit
[6] https://brodies.com/news/brexit-what-happens-next/brexit-the-implications-for-employment-law
[7] https://www.sage.com/en-gb/blog/how-will-brexit-affect-businesses/#changing-after-Brexit-anchor-link
[8] https://www.ft.com/content/cf51e840-7147-11e7-93ff-99f383b09ff9
This week Lawyer Monthly hears from David Vaughan, international dispute resolution partner, and Sneha Nainwal, international dispute resolution associate at Shakespeare Martineau, on the prospects of a ‘no deal’ Brexit on the litigation process cross-border.
On 18 January 2019, the European Commission circulated a note to the 27 European Union Member States, urging them to take advantage of “the opportunities of Brexit” and undermine the UK’s predominance in international civil litigation within Europe.
This appears to have been somewhat of a threat to the UK courts, with the Commission instructing the EU countries involved in Brexit negotiations to refrain from progressing any further with pending judicial cooperation procedures involving the UK, and to halt the launch of any new judicial cooperation procedures involving the UK.
This follows the UK Government’s technical guidance note on handling civil legal cases that involve EU countries if there is no Brexit deal, which attempted to outline how the rules for cases involving EU countries would change in the event of the UK exiting the EU with no deal.
If the UK were to leave in March 2019 with no deal, the justice system would no longer be part of the EU’s civil judicial cooperation framework. This would, therefore, affect choice of law and jurisdiction clauses involving parties based in the EU, or where the losing parties’ assets, for the purposes of enforcement of judgments, are in the EU.
Any international litigation involves the determination of issues such as, which country’s courts will hear the case (jurisdiction), which country’s law will apply to determine merits (applicable law), which country’s law will determine the procedure governing the legal proceedings (procedural law) and how judgments obtained in one country will be recognised and enforced in other countries (recognition and enforcement of judgments).
Currently, these issues are determined in accordance with the rules set out in various International Conventions and EU Regulations, which apply to the UK either because it is a signatory or by virtue of its EU membership.
However, in the event of a ‘no-deal’ Brexit, the EU Regulations that operate strictly on the basis of reciprocity will cease to apply to the UK. Furthermore, the International Conventions, which currently only apply to the UK because of its EU membership, will cease until the UK becomes a signatory in its own right and re-joins the Convention.
In this scenario, the key Conventions and Regulations and the relevant consequences of a ‘no deal’ Brexit, are:
There is also a suggestion that the bilateral enforcement treaties, concluded between the UK and various EU member states including France, Germany, Austria, Italy and Netherlands during the period of 1934 to 1969, could potentially be revived to provide an alternative mechanism for recognition and enforcement.
Parties are advised to include clearly structured choice of law and choice of jurisdiction clauses in their contracts to provide more certainty. Where possible, parties should opt for exclusive jurisdiction clauses, as the 2005 Hague Convention does not apply to jurisdiction agreements that are non-exclusive or asymmetric.
The EU rules on recognition and enforcement of judgments under the Recast Brussels Regulation do not extend to arbitration. Arbitration, therefore, is likely to emerge as a preferred choice for many, as the New York Convention 1958, to which over 150 countries - including the EU member states - are signatories, will continue to apply to the UK even following a ‘no-deal’ Brexit. Parties should, where possible, consider this option for resolving disputes and include arbitration clauses in contracts.
If, however, contracts do not allow for arbitration, then parties are advised to commence proceedings before 29 March 2019.
Meanwhile, parties with existing or imminent litigation against EU parties may also wish to accelerate any litigation or enforcement of any interim remedies or final judgments, in order to take advantage of the automatic recognition and enforcement mechanism currently available under the Recast Brussels Regulation.
It is possible that the current uncertainty regarding the position with respect to recognition and enforcement of judgments could make England a less desirable forum for litigation in the short term.
However, Brexit is unlikely to detract from the primary reasons commercial parties choose the English courts. London has been a favoured centre for a number of years and ultimately, the reputation of its High Courts for quality, consistency, honesty, transparency and technical knowledge, as well as its status as a global financial centre, ensure that London will continue to stand head and shoulders above other European countries despite the uncertainty ahead.
What is the backstop and why does it matter for Brexit? Reality Check's Chris Morris tackles the terminology.
Here Lawyer Monthly hears from Conor Geoghegan, Senior Associate Solicitor at Coffin Mew, and the things ahead in the real estate sector this year.
Whilst the country at large girds its loins for whatever 29 March 2019 shall bring (if indeed it brings anything!), perhaps a glance into the future is already being provided by the case of Canary Wharf (BP4) T1 Ltd and others v European Medicines Agency.
The case is currently being heard at the High Court and is being heralded as a potential game changer for the property market in the United Kingdom as the EMA argues that Britain’s decision to invoke Article 50 has operated to frustrate a 25 year lease of London office space that the EMA contracted to take back in 2011, post Brexit, they will be moving their operations to Amsterdam. With the contract worth £500 million the stakes are high.
The landlord claimants are seeking a declaration that the UK's withdrawal from the European Union and/or the relocation of the tenant will not cause the lease between the parties to be frustrated, so that EMA will continue to be bound by all covenants and obligations in the lease.
Landlords throughout the United Kingdom, with tenants who are inexorably linked with the operations of the European Union, will be looking out for the result of the case with great interest.
All firms are acutely aware of the necessity to ensure that filing deadlines are met and most have procedures in place to try and ensure compliance with those deadlines. Failure to file on time is a common source of claims against firms’ indemnity insurance policies.
Under the Stamp Duty Land Tax (Administration) (Amendment) Regulations 2018 and the Finance Bill 2018/19 Clause 45, the time limit for filing an SDLT return and for paying SDLT due in respect of a land transaction will reduce from 30 days to 14 days. This change will be applicable from 01 March 2019.
Once in force all firms will be well advised to review their filing procedures to ensure that the revised deadlines are met.
The results announced following on from the Christmas period show that the United Kingdom’s high streets continue to face an increasingly difficult environment in which to operate. Business rates are often cited by retailers as an expense which contribute to this unfavourable economic environment. With that in mind perhaps some potential comfort may be provided in regard to business rates in the coming year.
The Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Bill 2017-19 is due to come into force on a date to be appointed, and the expectation is that this date is likely to be in 2019.
Under the act, where two or more properties are occupied or owned by the same person and meet certain conditions, those properties will be treated, for the purposes of non-domestic rating, as one rateable hereditament.
Also, for two years commencing in April 2019, retail properties with a rateable value below £51,000 will enjoy a one third cut in business rates. It is hoped that this will be of benefit to up to 90% of retail properties currently liable for business rates and will no doubt be welcome news.
Following on from the 2016 Queen's Speech, the Ministry of Justice announced plans to publish a draft Law of Property Bill, which would address such issues affecting and creating property rights such as easements covenants and profits a prendre. The Ministry is now preparing a draft Bill for consideration in 2019, in response to the Law Commission's report.
Amongst issues being considered following on from the report are recommendations aimed at making it easier to create long-term arrangements for the enforcement of freehold positive covenants against successors in title, the outcome of which will no doubt be of interest to developers throughout the United Kingdom.
This is according to Simon Bath, CEO of online conveyancing service When You Move, who below discusses with Lawyer Monthly the serious implications Brexit is having on the UK property markets.
As the moment of the UK’s departure from the EU approaches, the UK property market has fallen victim to the political and economic uncertainty surrounding it. Following numerous house price reports monthly reporting a decline in house prices across the length and breadth of the UK, especially in more prosperous regions in England, such as the capital and the South-East, we are set to have a very interesting few months leading to Brexit.
The most recent House Price Index has been released by Halifax, one of the nation’s largest mortgage lenders, revealing that house price growth was 0.4% lower in the final quarter of 2018, than they were in the preceding three months. According to the Halifax House Price Index, prices in the three months to December were 1.3% higher than the same period last year, and values increased month on month by 2.2%, taking the average house price in the UK to £229,729 from £223,116 in December 2017.
House price growth was 0.4% lower in the final quarter of 2018, than they were in the preceding three months.
The lack of confidence in the market is also reflected in the lack of activity in the housing market. Just recently, high street lender, Barclays announced a raft of rate deductions. For example, their existing five-year fixed rate product of 1.94% was reduced to 1.87%, whilst their two-year rate was reduced from 1.97 to 1.84%, both of which are available to both new and existing customers.
However, it is not all negative, as first-time buyers can take advantage of the historically low mortgage rates. Homebuyers may be able to purchase a home that was previously out of reach, by way of, finances, size and location. There is potential for interest rates to increase post-Brexit, when certainty begins to return to the market.
While we wait for clarity on Brexit negotiations, the property market is likely to have a slow start to the New Year until the UK’s formal exit from the European Union. Back in September, Mark Carney, the Governor of the Bank of England, warned that house prices could fall by up to a third if there is a no-deal Brexit. Regardless of what happens, I think it’s important to bear in mind that the property market is relatively resilient, and houses tend to weather bumps in the road. However, there are some indicators that now, or at least in the short term, there are great opportunities to purchase property, either as an investment or buying your previously unobtainable dream home.
While we wait for clarity on Brexit negotiations, the property market is likely to have a slow start to the New Year until the UK’s formal exit from the European Union.
The battle over the border barrier has shut down the government, but it was not always such a divisive issue.
