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Residential Real Estate market update: navigating the current UK housing market

Posted on: August 9th, 2024 by Yvonne Uzoka

The Bank of England (the ‘BoE’) Monetary Policy Committee’s recent decision to cut interest rates to 5% and the anticipated government taxation regime announcement in October 2024 are likely to affect both the wider UK housing and Prime Central London (‘PCL’) markets. In this market update our Residential Real Estate team take a look at the possible effects.

Impact on Swap Rates and the UK housing market

Let’s dive in. The UK housing market continues to show robust price growth. Earlier analysts’ predictions of an expected 1.8% rise in housing prices in July 2024, prices have been surpassed by actual increases of 2.1%. This unexpected growth reflects strong pent-up demand as borrowing conditions improve. In anticipation of the BoE’s interest rate cuts, several mortgage lenders, such as HSBC, NatWest and Nationwide, have recently reduced their mortgage rates boosting approvals to around 60,000 per month.

Following the BoE’s decision, five-year swap rates fell to 3.6%, the lowest since February 2024. This is under the crucial 4% threshold and experts are predicting rates will stabilise around 3.25% above pre-pandemic levels.

Why does this matter? The current trends suggest that lenders expect long-term interest rate reductions, making 5 to 10 year fixed mortgages the most cost-effective options. This indicates that lenders are keen to secure borrowers at these lower rates, which are predicted to drop over the next few years – a positive signal for the housing market.

Overall, there is cautious optimism. While house prices are rising steadily, borrowing conditions are improving and no dramatic drops in rates are expected.

The contrasting trends in PCL: signs of recovery?

In the wake of 20+ months of economic fluctuations and high interest rates, the UK property market has shown a mix of different trends. In the broader market Q2 of 2024 saw a 22% increase over the previous quarter for properties valued between £3-15 million. However, during the same time period, PCL prices were falling, with valuations dipping slightly. The trend of increasing average discounts has continued for the seventh consecutive month after three years of declines. This suggests that PCL may be influenced by other factors and the recent interest rate reductions may have a limited effect.

Despite the ratio of available stock to monthly sales at 25:3 in Q1,2024 to 22:6 in Q2, 2024, supply remains high, with an above long-term average of 20. Consequently, sellers must maintain realistic expectations regarding property prices, especially as the market broadens and buyers are presented with more options.

Key takeaway:

  • Demand is rising, but price drops in PCL are likely to continue as supply remains high.

The Government’s taxation updates and potential impacts

Lastly, we address the central government’s upcoming taxation regime, due to be announced in October, and its potential impact on the housing market. The Labour Government’s mandate is pro-growth, with an expectation of coming into effect by 6 April 2025. However, the practical implementation remains uncertain.

They aim to boost public service investment and stimulate the economy without raising income tax, national insurance, or corporation tax, which constitute about 80% of tax revenue. Proposed changes include:

  • Taxation of non-UK domiciled individuals – individuals with 10 consecutive years of non-residence will be exempt on their foreign income and gains received in the first 4 years of residence in the UK. It is irrelevant whether the income and gains are remitted to the UK;
  • Introduction of VAT on private school fees;
  • Abolition of furnished holiday lets (FHL) regime;
  • Adjustments to taxation on carried interest; and
  • Changes to transfer of assets abroad.

It is unclear if the government can achieve growth with these mechanisms or if they will backtrack on promises. As such, borrowers, lenders, and property owners should stay vigilant in the coming months.

At Lawrence Stephens we are dedicated to helping our clients navigate these changes. If you have any questions or need assistance, please do not hesitate to contact our specialised Residential Real Estate team.

Joanne Leach comments on minimum service levels and industrial action in City A.M.

Posted on: August 8th, 2024 by Natasha Cox

Joanne Leach, Senior Associate in the Employment team, comments on the news that the UK government will repeal controversial laws enforcing minimum service levels during industrial action, in City A.M.

Joanne’s comments were published in City A.M., 7 August 2024, and can be found here.

“With the proposed plans to ignore minimum services levels legislation, the government can secure an easy early win in terms of following through on the employment commitments of their election manifesto.

“Repealing this controversial and ineffective legislation, which had already been subject to challenge via judicial review, will take up minimal legislative time in contrast to the scrutiny that will inevitably be required of the implementation of the rest of its New Deal for Working People. A direction to ignore its provisions in advance of that repeal will effect an even more immediate impact – the strengthening of the fundamental right of any worker to withdraw their services to protect their contractual terms.”

If you would like further advice on these legislative changes and the impact they may have on you, please contact a member of the Employment team.

Joanne Leach comments on anti-bullying policies in People Management

Posted on: August 6th, 2024 by Natasha Cox

Joanne Leach, Senior Associate in the Employment team, comments on a recent study which found that more than half of UK employees do not think that shouting at work counts as bullying and discusses how employers can address workplace bullying.

Joanne’s comments were published in People Management, 5 August 2024, and can be found here.

“Adopting an anti-bullying and anti-harassment policy is merely the first step an employer must take towards addressing workplace bullying. To ensure it is effective, employers must also train the whole workforce on what is required of them regarding their interaction with colleagues.

“What constitutes ‘acceptable conduct’ has shifted significantly in recent years, and behaviour that used to be tolerated can now lead to significant liabilities for an individual and their employer.

“When an incident of bullying occurs, employers are more likely to minimise liability with clear grievance and whistleblowing policies in place which employees can access and managers can understand.

“Policies that address workplace culture, such as a clear diversity, equity and inclusion policy and training on unconscious bias and allyship, also empower employees to support their colleagues and call out wrongdoing if they witness unacceptable conduct.”

If you would like any assistance in developing whistleblowing, workplace culture or diversity, equality and inclusion policies, please contact a member of our Employment team.

Lawrence Stephens announces new partnership with MB Motorsport

Posted on: August 6th, 2024 by Natasha Cox

Lawrence Stephens is pleased to announce its latest partnership with Laser Tools Racing and MB Motorsport. Founded and led by former Formula One driver Mark Blundell, Laser Tools Racing with MB Motorsport take to the track with Jake Hill in the 2024 Kwik Fit British Touring Car Championship backed by MBP, the relationship-driven sports marketing agency.

Both companies focus on building partnerships to drive new success for their clients. As such, they are an ideal fit for Lawrence Stephens, who’s guiding ethos is the provision of legal advice with a personal touch. We look forward to helping MB Motorsports’ ambitious clients continue building on their success.

Mohit Pasricha, Head of Sports and Entertainment at Lawrence Stephens, commented:

“Having had a relationship with Mark and MBP for many years we are thrilled to formally be partnering with a team at the top of British Touring Cars. Both the Sports and Entertainment team and the wider Lawrence Stephens firm are excited to share our expertise with the team, its partners and contacts. This announcement further demonstrates our commitment to motorsport and will serve to enhance our offering to our talent, agency and brand clients in the sector. We are excited to be welcomed by the team and to build a long-term partnership”.

Mark Blundell, Sporting Director of Laser Tools Racing with MB Motorsport, added:

“It is brilliant to welcome another industry leader in Lawrence Stephens to the Laser Tools Racing with MB Motorsport roster for the 2024 season. As ambitious as we are on track, they are firmly behind supporting their clients to be equally as ambitious off the track and I am looking forward to welcoming them to the team.”

To find out more about this partnership, please contact Mohit Pasricha or William Bowyer.

Insights from Matt Green and industry experts on achieving trust and security in Caribbean Web3 and Crypto

Posted on: August 5th, 2024 by Hugh Dineen-Lees

Matt Green, Head of Blockchain and Digital Assets and Head of Technology Disputes, recently featured on a panel at the Blockchain Lex Group x CryptoMondays Caribbean webinar: Achieving Trust and Security in Caribbean Web3 and Crypto.

Matt discussed whether crypto exchanges owe a duty of care to help victims of fraud. He argued that a formal common law duty will unlikely assist; those that are cooperative will continue in any event, and those which do not comply with Court Orders are already in contempt of Court and further duties may push them deeper into the shadows.

Matt argued that there should be (i) a reliance on implementing helpful technology like transaction monitoring, especially considering that key stakeholders have this technology, drawing parallels with the banking industry, and (ii)that a general consensus on best practices will promote the good actors allow them to follow pre-agreed protocols to assist victims of fraud.

Matt was joined by Keir Finlow-Bates, author and inventor at Chainfrog, Keniel Ledgister, the Caribbean Region Attaché at the Internal Revenue Service, Racheal Muldoon, Barrister at Maitland Chambers, Erika Knierim, Senior Associate at Founders Law LLC, Marina Markezic from the European Crypto Initiative, and Adella Toulon-Foerster, Partner at Hodder Law.

The full webinar can be viewed below.

Matt Green comments on the multi-billion pound class action over the delisting of the BSV cryptocurrency, in CDR Magazine

Posted on: July 31st, 2024 by Yvonne Uzoka

Director and Head of Blockchain and Digital Assets, Matt Green, comments on the news that the UK Competition Appeal Tribunal has agreed to certify a claim for investors to sue four crypto exchanges over their decision to delist the Bitcoin Satoshi Vision (BSV) cryptocurrency.

Matt commented: “This case lends itself to a wider narrative with two main camps: those who believe in BSV as Satoshi’s true vision for Bitcoin and those who do not.

“The claimant class may seek to justify both price and broader adoption issues on market manipulation and competition interference, in the form of delisting, by those who want to suffocate BSV. Whether there is a right to claim concerted market manipulation or whether this is simply private companies delisting a token to match market demand is likely to be a vital matter in this dispute.”

Matt’s comments were published in CDR Magazine, 31 July 2024.

Central Family Court hands down landmark ruling in matrimonial property case

Posted on: July 25th, 2024 by Yvonne Uzoka

In June 2024, HHJ Edward Hess sitting in the Central Family Court handed down his judgment in the case of RM V WP [2024] EWFC 191 (B) ­­– a complex financial remedies case concerning the division of matrimonial property, and to what extent real property had been ‘matrimonialised’.

Jim Richards and Eleanor Wood of Lawrence Stephens acted on behalf of the husband, instructing Jenna Lucas of Pump Court Chambers.

The case centred around four properties owned by the respondent husband, with the wife arguing that she should receive 50% of the equity of all four properties. She argued this on the basis that these properties – owned by the husband prior to the marriage and held in his sole name – had become ‘matrimonialised’ by virtue of serving as family homes throughout their marriage. HHJ Hess found that one of these properties had never served as a family home, and as such had not been ‘matrimonialised’. The wife contended that she should receive 50% of the equity of the three remaining properties if HHJ Hess view was that this asset was not matrimonalised.

In considering what the wife’s award should be, HHJ Hess concluded in paragraph 37 of his judgment that “there is justification here for departing in the husband’s direction from an equal division of the net equity in the three homes which have been family homes. My view is that the fair answer here is for the wife to be awarded the amount that meets her needs.”

HHJ Hess ultimately assessed the wife’s needs to be less than 50% of the equity in the three ‘matrimonialised’ properties and granted her award on this basis accordingly.

Eleanor Wood, Co-Head of Family at Lawrence Stephens and solicitor for the husband, commented: “We are pleased to have secured a successful outcome for our client in a complex case which presented several issues which needed to be considered and dealt with at various stages.

“This highlights the importance of a well-prepared case to identify how the assets were used and where they originated when determining how they should be divided upon separation. The outcome is a fair one. It reflects the needs of the wife in conjunction with how the assets were used or matrimonialised, and that it is not always a simple sharing principle being applied.”

The full judgment can be read here.

How athletes and celebrities can ensure they stay on the fairway during divorce proceedings

Posted on: July 18th, 2024 by Natasha Cox

Following Rory McIlroy’s recent divorce filing, and his subsequent dismissal of these proceedings, Head of Family Jim Richards and Associate in the Sports & Entertainment team William Bowyer explore how celebrities and athletes can ensure they stay on the fairway during divorce proceedings. 

Jim and William’s article was published in eprivateclient, 13 June 2024, and can be found here.

Golf superstar Rory McIlroy’s recently announced divorce raises a number of important questions for athletes and celebrities managing divorce proceedings – particularly when filing for divorce overseas. 

While Mr McIlroy and his wife Erica Stoll have since ended divorce proceedings, this widely reported case still bears relevance for those looking to manage high-profile separation proceedings.

High-net-worth individuals such as athletes and other celebrities often have a choice of jurisdictions in which to file for divorce. The forum for proceedings can be pivotal to a case, and thus will often be a key factor in deciding where proceedings are filed. 

In Mr McIlroy’s case, the Northern Ireland-born sportsman had papers served on Erica Stoll, his wife of seven years and a New York state native, at their home in Jupiter, Florida. Court documents were subsequently revealed to have been filed in Palm Beach County, Florida, confirming the jurisdiction selected by Mr McIlroy for the couple’s divorce proceedings.

Deciding on the most appropriate jurisdiction to deal with a divorce case can, however, lead to a number of challenges in dealing with assets across a number of jurisdictions as well as the tax considerations to which high-net-worth individuals must pay heed if they are to stay on the fairway during divorce proceedings.

Failure to consider the various cross-jurisdictional complexities of divorce can give rise to costly and unwanted satellite litigation, and suggests that it is therefore important for athletes and celebrities to seek advice from legal, tax and pension professionals from all relevant jurisdictions to ensure as swift and efficient a resolution as possible. 

However, the procurement of such counsel comes at a not inconsiderable cost, especially in situations where there is a wide range of disputes between the divorcing spouses, leaving both parties exposed to a significant cost burden at the outset of the case and throughout the ensuing proceedings.

Beyond the legal case itself, image and reputation management is also of the utmost importance, particularly for athletes and celebrities, as a messy and public separation could result in lucrative endorsements being lost. In Mr McIlroy’s case, as with so many others living in the glare of the media spotlight, already every available detail of the divorce proceedings is being pored over by the press and public alike in typically scurrilous fashion. 

Mr Mcllroy’s brand partners will need to consider their contractual arrangements with the golfer and assess whether a) this matter impacts their partnership and b) whether they have any grounds under their contract to end the relationship or at the very least, use it to their commercial advantage.

Celebrities who are forced to live their lives in the public eye have to be extra vigilant as to how each and every move they make will be interpreted, no matter how private the matter at stake. The well-documented travails of Mr McIlroy’s fellow golfer Tiger Woods during the collapse of his marriage to Erin Woods in 2009 will have given Mr McIlroy and his advisers ample food for thought when considering how best to handle the optics of his own marital breakdown.

High-net-worth individuals, celebrities and athletes must seek a wide range of advice before filing for divorce – including everything from tax and pensions advice to image rights and IP – to ensure that separation proceedings are handled swiftly and any potential fallout is minimised. Of paramount importance is choosing representatives to sensitively handle child arrangements to minimise the impact of the separation on the couple’s offspring. 

Frequently, children become unwitting victims of warring spouses’ anger towards one another during divorce proceedings, and all too often the glare of publicity spurs parties into even rasher and more regrettable actions than they may otherwise have taken had they not felt compelled to ‘prove’ themselves and their resilience to the world at large.

Similarly, it is imperative for both parties in divorce proceedings to select advisers as carefully as possible. It is, after all, their guidance which will be of critical importance to the outcome of the case, and to the ultimate financial settlement between the divorcing couple. 

Divorce and separation is never easy, nor pleasant, for either side, but when played out in the public eye there is even more potential for mistakes and missteps. Time spent calmly and diligently assessing options at the outset of a case may at times seem onerous and expensive, but if deployed properly will pay dividends in the end.

Abtin Yeganeh comments on landlord-imposed work from home bans in The Independent

Posted on: July 8th, 2024 by Natasha Cox

Senior Associate, Abtin Yeganeh, comments on landlords banning their tenants from working from home, as well as tenants’ protections in this area, in The Independent.

Abtin’s comments were published in The Independent, 07 July 2024.

“As a general rule, a landlord cannot stop a tenant from working from home as it would interfere with a tenant’s statutory right to quiet enjoyment of their property. The position is somewhat more complicated where a tenant seeks to run a business from their rental property. With that said, whilst landlords can seek to exclude a tenant’s right to work from home, The Small Business Enterprise and Employment Act 2015 (subject to several exclusions) provides that landlords cannot unreasonably refuse a tenant’s request to do so.”  

Emma Cocker comments on challenging bad references from previous employers in The Telegraph

Posted on: July 5th, 2024 by Natasha Cox

Emma Cocker, Senior Associate in the Employment team, comments on whether an employer can give a bad reference, and how employees can challenge a bad reference from a previous employer.

Emma’s comments were published in The Telegraph, 5 July 2024.

“An employer can give a negative reference, but it must be factual. Employers owe the subject of a reference a duty to take reasonable care to ensure the information it contains is true, accurate and fair. The reference must not give a misleading impression. If a referee gives a reference which is misleading, they may be liable for negligence, either to the new employer or the employee.

“In addition, if a referee knowingly includes false information with the intention that the recipient will rely on it, the referee will be liable to the recipient for a civil claim of deceit.

“It is difficult for employees to challenge a bad reference, unless they can demonstrate that the information was inaccurate, discriminatory or was given in retaliation for raising allegations of discrimination or whistleblowing. In practice, most employees will only become aware of a bad reference once a job offer has been withdrawn. At that stage, it is highly unlikely a prospective employer could be convinced to offer a role again, as the seeds of doubt will have already been sown.

“The only real option is for the employee to take legal advice to see whether they have a claim against the referee. If an employee does become aware of a bad reference before it has been shared with a prospective employer, they should try to discuss the reasons for the negative content with their new employer as soon as possible.

“Protecting your reputation is simple: be the best employee you can be. Courteous, on time for work and reliable – these are all behaviours employers hold in high regard. If there are circumstances which might affect your ability to comply with expected norms, such as being a parent or carer, or having a disability, discuss these with your employer as soon as possible so they are aware of any mitigating circumstances.

“There is a common misconception that employers are obliged to provide references. However, with the exception of regulated industries such as financial services, this is not the case. In reality, most employers will provide a “factual” reference, outlining the employee’s name, job titles and dates of employment, but they cannot be forced to provide further information.

“Employers are also entitled to include a disclaimer within the reference that limits any liability to the recipient of the reference. References may be given orally or in writing. However it is generally safer to provide basic factual references in writing with no further information given to avoid any liability to the employee or the recipient. If incorrect or misleading information is given, the recipient may allege negligence. Do not be tempted to say things on the phone that you wouldn’t commit to in writing!

“If you are not happy with a reference provided by your ex-employer, the first step is to find out whether the reference has actually been sent to the prospective employer. If not, you may be able to talk to your ex-employer and see whether they might be prepared to change the content. Remember however that they are under a duty to provide accurate information, so they may not be willing to change it. Also consider whether their approach or any of the information they have provided might be discriminatory, such as commenting negatively on high absence levels if you have taken a period of parental leave, or on your performance which has been adversely affected by a disability.

“If you have been given a bad reference because of or after raising concerns about discrimination, or after you have “blown the whistle”, you may have a claim against your ex-employer for victimisation or whistleblowing detriment. It is important to take legal advice at an early stage to assess whether you might have viable claims against the referee. This will be especially important if you have lost a job opportunity because of a negative reference.”  

If you have any questions relating to the above, please contact a member of our Employment team.

Lawrence Stephens strengthens Real Estate Finance and Banking teams with new Directors from Rosling King

Posted on: July 1st, 2024 by Yvonne Uzoka

Leading corporate and commercial law firm, Lawrence Stephens, is pleased to announce the appointment of Ann Ebberson as Director in the Real Estate Finance department, and Alex Edwards as Director in the Banking department – both joining from Rosling King.

Ann and Alex are well-known industry practitioners and their expertise complements the firm’s established Real Estate Finance and Banking practices. They are both recognised in The Legal 500 directory and bring with them a wealth of knowledge and experience across these sectors. 

Ann has acted for and advised lenders, loan servicers, developers and LPA/fixed charge receivers on real estate and real estate portfolio refinancing, sales, purchases, development acquisitions and sales, landlord and tenant matters including service charge disputes and forfeiture proceedings. She also has notable experience in title rectification issues and advising litigation colleagues in complex real estate disputes.  

Alex advises lenders, sponsors, developers and corporate borrowers on all forms of finance transactions. With a particular focus on real estate and development finance, Alex also regularly advises on senior and mezzanine loans and bridging finance, as well as restructuring and resolving existing loan facilities. In addition, Alex’s construction law expertise allows him to provide a comprehensive service to his clients on development finance transactions, dealing with both the finance and construction elements.

They join Directors Greg Palos and Ajoy Bose-Mallick who lead Lawrence Stephens’ Real Estate Finance and Banking practices respectively.

Ajoy Bose-Mallick commented: “Alex is a fantastic addition to our banking team and brings with him great experience of working with sponsors, developers, corporate borrowers and other alternative lenders especially development finance lenders, at a very exciting time for the firm.”

Greg Palos said: “Ann’s arrival provides us with greater strength in depth and bolsters our ability to advise clients in a wide range of transactions. Her arrival is in line with the expansion of our Real Estate Finance capability, which continues to go from strength to strength.”

News of Ann and Alex joining Lawrence Stephens was covered by Law360, New Law Journal and LegalMoves.

Matt Green comments on the UAE approving stablecoin regulations in The Fintech Times

Posted on: June 21st, 2024 by Hugh Dineen-Lees

Matt Green, Director and Head of Blockchain and Digital Assets and Technology Disputes, comments on how the UAE’s approval of stablecoin regulations may impact how stablecoins are generated and considered globally, in The Fintech Times.

Matt’s comments were published in The Fintech Times, 19 June 2024.

“It may be that the UAE is having its MiCA moment, which was the EU’s response to the issuance of stablecoins. 

“Here there are some ground rules which are helpful and may have a wider impact on how stablecoins are generated and considered globally – Dirham backed and clearer criteria for defining stablecoins. 

“The UK government may be prompted to take action – Britcoin progression has been limited, assumedly following more immediate political issues, and the market’s eyes may continue to turn east where innovation continues to climb.”