We continue with our journey of analysing high performing property markets supporting legislative
frameworks. This week we direct our effort to the United Kingdom, a country known in real estate terms
as the most transparent in the world, sitting at the pinnacle of the Global Real Estate Transparency Index.
Further, we observe, the average price of houses in United Kingdom is around £290,000 as supported by
ONS data and Halifax Mortgages (UK) which is one of the highest in the world.
Property law in England and Wales is governed by statute and English common law principles. There are
two main pieces of legislation that relate to property and these are, the Law of Property Act 1925 and the
Land Registration Act 2002.
The Law of Property Act introduced reforms to pre-existing real estate law in order to consolidate and
modernise it. Land Registration Act is self-explanatory but most importantly, the Act brings out the state
guarantee of title as it indemnifies anyone against loss caused by mistakes in the register relating to a
registered title even if the mistake is the result of forged documents. The land registry has the right to
recover payments from third parties wholly or partly responsible for the mistake.
Regarding ownership, while individuals are allowed to buy and sell property without restriction, the
Economic Crime (Transparency and Enforcement) Act 2022 requires compulsory registration for overseas
entities who already own or wish to own real estate in England. Failure to comply results in the entity not
able to register at the Land Registry as legal owner of Real Estate and where it already owns, it means
they will not be able to sell, charge or grant a lease for a term of more than seven years as any buyer,
charge or lessee will not be able to register the disposition at the Land Registry. Compliance will be
enforced through restrictions on the title registers of land owned by overseas entities. There will also be
criminal sanctions for non-compliance and for delivering misleading, false or deceptive information.
In England, there are several categories of real estate rights that are recognised and these are; ownership
rights (freehold, leasehold and commonhold), legal rights , equitable rights, prescriptive rights.
Financing real estate acquisition is not regulated for commercial real estate but for individuals, which is
subject to The Consumer Credit Act 2006. Lending activity undertaken by banks and insurance companies
is subject to regulatory capital requirements and this can have a bearing on the nature and amount of
lending undertaken by such entities.
There are two distinct statutes that deal with leasing of business premises and these are the Landlord and
Tenant Act 1954 and the Landlord and tenant Act (Covenants) Act 1995. The earlier gives security of
tenure to occupying tenants of businesses at the contractual expiry of their lease so that, unless the
landlord can demonstrate one of a limited number of grounds such as an intention to redevelop. The 1995 Act amends the “privity of contracts” rule that any tenant is automatically released from its obligations as tenant on a sale and a landlord would be released on a sale of the reversion if it is reasonable in the circumstances and the correct release procedure is followed. Of importance to note is that there are no standards leases but leases can be registered with minimum set clauses.
With regards to the residential premises, there are various statutes that are applicable and these include;
the Landlord and Tenant Act 1985 which provides protection in relation to the level of service charges;
the Landlord and Tenant Act of 1987 which gives tenants the right of first refusal in certain circumstances
if the landlord wants to dispose of its interest; the Leasehold Reform Act 1967 and the Leasehold Reform,
Housing and Urban Development act 1967 which give tenants the right to “enfranchise” – to acquire the
freehold – and the Commonhold and Leasehold Reform Act 2002 entitles tenants to take over the
management of their buildings.
The leasehold Reform (Ground rent) Act 2022 abolishes escalating ground rents in most long residential
leases granted on or after 30 June 2022, restricting them to zero financial value throughout the term.
The main legislation for regulating tenancies is the Rent Act 1977 (RA 1977), the Housing Act 1988, the
Housing Act 1996. Each provides a different level of tenant protection and which will apply depends on
when a tenancy was granted. The Tenant Fees Act 2019 also limits the payments that landlords of
“tenancies of housing” can demand from their tenants.
The UK government is said to be considering a number of further legislative changes aimed at protecting
the tenants.
Lastly, with regards to Estate Agency, currently, estate agents are not required by law to be licensed or
qualified. However, many individual estate agents are professionally qualified and do belong to a
professional body, such as the Royal Institution of Chartered Surveyors (RICS), which offers sector
pathways to membership, including pathways for estate agents. The National Association of Estate Agents
(NAEA) offers various routes to membership and also offers professional qualifications.
Importantly, estate agents who engage in residential work must belong to an approved redress scheme
where if a consumer wishes to make a formal complaint, they must first contact the estate agent in
question. If the complaint remains unresolved, the matter can then be directed to the appropriate redress
scheme. Each scheme offers an escalated complaints procedure and has the authority to resolve the
complaint.
The regulator for estate agency across the UK is the National Trading Standards Estate Agency Team
(NTSEAT). The remit of the NTSEAT is to assess whether an individual or business is fit to carry out estate
agency work within the terms of the Estate Agents Act 1979.
The principal regulations are the Estate Agents Act 1979 (EEA 1979) and the Consumer Protection from
Unfair Trading Regulations 2008 (known as the Unfair Trading Regulations), both of which apply to the UK
as a whole. Very broadly, the EEA 1979 sets minimum standards of behaviour across the profession, whilst
the Unfair Trading Regulations protect consumers from unfair or misleading trading practices, misleading
omissions and aggressive sales tactics.
As outlined above, the Consumers, Estate Agents and Redress Act 2007 also requires all UK estate agents
who engage in residential work to belong to an approved redress scheme dealing with complaints about
the buying and selling of property.
The Estate Agents Public Register provides details of individuals and/or businesses who are currently
prohibited from engaging in estate agency work or who have received a formal warning under the Estate
Agents Act 1979.
The above given overview of England statutes is not exhaustive but gives a picture of how all aspects of
the property market are supported with appropriate legislation which helps boost its performance. This
also gives us a chance to reflect on our situation as we aim to raise our standard for international
competitiveness and growth.
The article was compiled by Mike E. Juru, the CEO of Integrated Properties. The views expressed in this
column are his own and in no way reflect the thinking of the various professional bodies and
associations that he works with. Mike can be contacted at mejuru@intpro.co.zw or 0773805000
