Real Estate and Infrastructure regulation: what’s coming up in the next 12 months
Published on 10th May 2016
The Real Estate and Infrastructure is being subject to increasing levels of regulation. Below are some of the regulatory developments to watch, taken from Osborne Clarke’s UK Regulatory Timeline, which also covers upcoming developments across a wide range of other sectors and regulatory regimes. Please click here for the full Timeline.
Q2/Q3 2016: overhaul of business energy efficiency taxes
The government will be consulting on its proposed reform of business energy efficiency taxes and associated regulations. The consultation’s objective is to review how tax schemes cross over with energy efficiency policies, with the aim of simplifying and improving the current structure. The review will consider, amongst others:
- the Climate Change Levy;
- the Carbon Reduction Commitment;
- climate change agreements;
- the mandatory reporting of greenhouse gas emissions; and
- the Energy Saving Opportunity Scheme.
1 August 2016: VAT on energy saving materials to increase
Following a Court of Justice of the European Union case in summer 2015, the government is proposing to remove the 5% reduced VAT rate for “energy saving material” supplied in residential accommodation. Whilst there are some circumstances where the 5% rate can remain, these exceptions do not apply to solar panels, wind turbines or water turbines. It is proposed that supplies of these items to end consumers will from 1 August 2016 be taxable at the standard 20% rate, representing a significant VAT hike.
Q3/Q4 2016: transparency of overseas purchasers
The Department for Business, Innovation and Skills has issued a consultation on proposals to improve the transparency of the beneficial ownership of foreign companies that purchase land or property in England and Wales.
The proposed measures are intended to safeguard the UK property markets from becoming a vehicle for tax evasion, money laundering and terrorist financing. We are expecting BIS’s response to the consultation and proposals in the second half of 2016 or in early 2017.
These proposals are part of the UK’s wider efforts on increasing transparency, which includes the people with significant control (PSC) register, which from 6 April 2016 unlisted UK companies and LLPs need to maintain (see here for more detail on the PSC register).
December 2016: Fourth Money Laundering Directive to be implemented
EU Member States have until June 2017 to pass national legislation implementing the Fourth Money Laundering Directive (MLD4) – althuogh they are being encouraged to pass that legislation by the end of 2016.
The objective of MLD4 is the protection of the financial system by preventing, detecting and investigating money laundering and terrorist financing. It aims to achieve this by setting out a high level of common standards that must be achieved by Member States as a minimum (it is a ‘minimum harmonising directive’). MLD4 covers:
- customer due diligence;
- beneficial ownership information;
- reporting obligations;
- data protection and record keeping; and
- policies, procedures and supervision.
MLD4 will apply to auditors, lawyers and other professionals when carrying out real estate transactions, as well as trust and company service providers, financial institutions, estate agents and any person trading in goods where cash payments of over €10,000 are received.
2018: Energy efficiency in the Private Rental Sector
Landlords of privately rented domestic and non-domestic properties must not grant new leases to new or existing tenants after 1 April 2018 where the energy performance of the property is below the minimum energy performance indicator of level E.
From 1 April 2023, the regulations will apply to all privately rented non-domestic properties. This will include where a lease is already in place.