Real Estate Horizons

The impact of Brexit on real estate

By Jackie Newstead and Hannah Quarterman

The original Treaty of Rome excluded land law from the ambit of EU legislation so many aspects of the UK land ownership system remain long-standing and stable, and operate on a UK specific basis. The industry can therefore take comfort that, unlike many other sectors, key day-to-day features of UK real estate investment and operation will remain unaffected, but….

All very frustrating?

A 2019 legal case considered whether Brexit could frustrate a lease. Frustration is the legal principle that a contract, including a lease, can be terminated if performance effectively becomes impossible. The landlord argued that the UK’s withdrawal from the EU and/or the relocation of the tenant (the European Medicines Agency – “EMA”) did not cause the lease between the parties to be frustrated. The court agreed and the EMA remains bound by the lease not withstanding Brexit. Ultimately, the arguments turned on the very bespoke characteristics of the EMA as a European institution. However, the EMA has been granted permission to appeal so residual concerns about the risk of commercial tenants arguing that Brexit is a legally frustrating event will remain pending the outcome of the appeal.

Development delays?

Lack of skilled construction workers is already a problem facing the development industry, which is only likely to be exacerbated by a reduction in access to overseas workers. This could be compounded by changes to the rules for freedom of movement of goods and the resulting congestion at UK entry points whilst new systems are put into effect. That may include building materials with the consequent impact on construction programs and therefore cost.

Planning consent challenges?

Judicial reviews are already a favored tool for those seeking to prevent development, with grounds such as air quality frequently being relied on. With the EU control over these issues lost it seems even more likely that people will look to the courts to protect the environment, increasing the risk of challenges to planning permissions.

Brexit Hub

When law, policy and politics converge, you need advisors who do not see Brexit through a narrow lens. Our Brexit Hub contains all our thought leadership across practices, sectors, and jurisdictions to help you navigate Brexit’s impact on your business. We have developed tools and checklists to provide practical solutions and you can access our dedicated Brexit Taskforce for specific advice. Find out more at hoganlovells.com/brexit.