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Global rules on foreign direct investment (FDI)
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
United Kingdom | Publication | September 2021
The Insolvency Service published a press release on September 9, 2021 announcing that temporary measures brought in to support businesses from insolvency during the pandemic and set out in the Corporate Insolvency and Governance Act 2020 are to be phased out from October 1, 2021. However there is a sting in the tail for commercial landlords.
The Act came into force on June 26, 2020 and (amongst other things) imposes temporary restrictions on the use of statutory demands and winding-up petitions by creditors pursuing sums owed by corporate debtors, including landlords pursuing tenants for outstanding rent. This was to ensure that viable businesses affected by the restrictions on trading during the lockdown periods were not forced into insolvency unnecessarily.
Now that the economy is recovering, such restrictions are no longer seen as needed and – with the commercial rent exception below – the restrictions will be allowed to expire at the end of September. However they will be replaced by new “tapering” measures “to help smaller companies get back on their feet”.
Details of these new measures are set out in recently published regulations, The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Amendment of Schedule 10) Regulations 2021. They include:
These new measures will remain in force until March 31, 2022.
So far as commercial rent debt is concerned, petitions cannot be brought in respect of such debt until the end of March 2022 unless the creditor can prove that the non-payment of the debt is not related to the pandemic. This is intended to work hand in hand with the recent extension of the moratorium on the forfeiture of commercial tenancies until March 31, 2022 to allow time for the implementation of a new rent arbitration scheme (see our August Real Estate Focus).
The Government recognises that: “….these temporary measures are a significant intervention into the normal working of insolvency law, in particular the rights of creditors, therefore the government will keep these temporary measures under constant review whilst they remain in force”.
On April 29, 2021 the Government launched a consultation in relation to a residential property developer tax (RPDT) which ran until July 22, 2021 (see our May Real Estate Focus). On September 20, 2021 the Government published draft legislation for RPDT and is holding a technical consultation which will run until October 15, 2021.
RPDT is designed to raise revenue to support the replacement of defective cladding on residential property over 18 metres tall and to provide a low cost finance facility to enable the replacement of cladding on buildings between 6 and 18 metres tall.
At the time of the initial consultation, there were three key outstanding issues and, while the draft legislation is helpful with some of these, others remain to be determined:
RDPT will apply from April 1, 2022 with accounting periods straddling this date being treated for the purposes of RDPT as being two separate accounting periods, ending and beginning on April 1, 2022 respectively.
We will be considering the recently issued draft legislation and will keep you updated. If you have any questions please contact Tax partner Julia Lloyd or another member of the Real Estate Tax Team.
The Coronavirus Act 2020 includes temporary emergency measures to protect residential tenants from eviction during the pandemic.
In short, the Act restricts the ability of residential landlords to recover possession of certain residential premises and does so by extending the period of notice that must be given to tenants before possession proceedings can be commenced. The restriction applies to a range of residential tenancies, most notably assured shorthold tenancies, the most common form of tenancy in the private rented sector.
These provisions are amended (again) by The Coronavirus Act 2020 (Residential Tenancies and Notices) (Amendment and Suspension) (England) Regulations 2021. The net effect of the main changes is that the required periods of notice in respect of relevant tenancies revert, from October 1, 2021, to the pre-pandemic periods of notice. However the Government’s power to impose/reinstate longer periods of notice, if considered necessary, is retained until March 25, 2022.
Residential landlords should also note that new forms of notice (including new prescribed form section 8 and 21 notices) are introduced and must be used on and after October 1, 2021.
As the title suggests, the Regulations apply in England only. Wales has a similar but not identical regime.
A recent High Court case, The Royal Parks Limited and others v Bluebird Boats Limited [2021] EWHC 2278 (TCC), serves as a useful reminder of the difference between chattels and fixtures when it comes to additions to property.
In 2004, Bluebird Boats Ltd (Bluebird) won a tender to operate a concession for boating facilities on the Serpentine in London’s Hyde Park. The agreement (the Agreement) included obligations on Bluebird to replace the existing jetties and the boathouse (together the Boathouse). The Agreement is set to expire this October.
The Crown owns the freehold of Hyde Park and it is managed by The Royal Parks Limited (TRPL). The case was brought by TRPL who sought declaratory relief as to the ownership of the Boathouse which Bluebird had renovated at a cost of about £500,000. Bluebird contended that they had a right to remove the Boathouse.
TRPL’s claim was that the Boathouse was now part of Hyde Park as it was constructed to form part of the land. The Boathouse therefore belonged to the Crown and Bluebird had no right to remove it. Bluebird’s counter-argument was that the Boathouse remained a chattel rather than a fixture to the land given that its design allowed its assembly and subsequent dismantling; the Boathouse was therefore a capital investment intended to be removed at the end of any concession.
The court considered the Agreement, the composition and construction of the Boathouse, whether it now formed part of the land and the parties’ intentions at the time of contracting. In her judgment, Mrs Justice O'Farrell found in favour of TRPL on the basis that:
Bluebird has therefore been prevented from removing the Boathouse from its location in Hyde Park. Tenants and concessionaires looking to expend capital on improvements to a property which will result in some degree of annexation to the land should take note and ensure that documentation permitting any additions adequately covers the position as to removal or compensation at the end of any term.
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