“Perspectives”: A blog from the President of the PLA: Liz Peace CBE

 

I have to confess that a few years ago when I received a very formal (almost legal) letter asking if I might be interested in becoming President of the Property Litigation Association I thought it was a mistake. After all I am not a lawyer of any description (though my first assignment in the Ministry of Defence as a very green graduate was in a branch looking at the legal implications of the army’s operations in Northern Ireland) and I am not at all well known in the legal profession. Your colleagues in the PLA explained, however, that what they wanted was somebody who was well connected with the wider world of property since, whilst understanding the legal complexities of property litigation is pretty important for a property lawyer, they believed your bigger challenge was to make sure all those people in property who are not lawyers understood the relevance of what the members of the PLA do.

This was a theme picked up by your Chairman at the recent Oxford conference – I think I counted the word ‘relevance’ at least ten times in his opening address – but that is no implied criticism since he is absolutely right that your profession needs to think all the time about how it gets across to the property world why it is important always to be considering in their investment decisions the legal implications and potential pitfalls of what they are proposing. We are very proud in the UK of our stable law based system of property governance – indeed it is one of the reasons why investment in UK property is so strong despite all the political upheaval of the last few years.  But to take advantage of the strength of that law based system  means your clients and potential clients need to take advice on legal issues preferably before getting embroiled in what could turn out to be a costly disaster.

With all this in mind, I endeavoured, in my opening address to the conference, to do a helicopter tour of some of the interesting issues confronting the property sector at the moment – and also to make reference to why those are also relevant areas that the property legal world should be thinking about now – so that you will be well placed to help your clients when the challenges come.

Of course, I couldn’t ignore Brexit nor could I fail to refer to the interesting 17th century legal precedent that the Speaker of the House of Commons had used in order to prevent yet another vote on the Prime Minister’s deeply unpopular deal. Perhaps of more immediate legal relevance, though, is the recent High Court decision regarding the European Medicine Agency’s leasehold occupancy of a very expensive building at  Canary Wharf.  The EMA has now been given leave to appeal so this one has a long way to run but it is interesting to note how amidst all the political shenanigans it is the legal system that it being asked to judge precisely how Brexit should be defined.

Looking at the UK market as a whole, I couldn’t help but observe the meteoric rise of the ‘sheds’ market especially in relation to the construction of distribution centres to facilitate internet shopping. The need for industrial land, especially in London and its surroundings and the juxtaposition of that with the demand for housing will no doubt keep your planning law colleagues busy for some time. The obverse is however the massive decline of shop-based retail and the difficulties that is causing for retail landlords. I was never sure in my BPF days that the CVA process was fit for purpose and I have no doubt that it is open to abuse, as is the process of pre-pack administrations. PLA members will no doubt end up on both sides of this particular conundrum and until such time as the law changes must remain strictly legally objective. The industry, however, needs to start to think a little more creatively about how to use some of this redundant retail – which in my view will never come back – for alternative purposes. And it is interesting that gyms and other leisure (!!) pursuits seem to be one of the favoured alternative tenants for under-occupied secondary shopping centres.

The office market, despite talk some years ago of its imminent demise, seems to be booming especially in London – but it is changing. The drive for more flexible leasing products in the early ‘noughties’ didn’t seem to make much headway but now it is all the rage with the newcomers such as WeWork offering short lets, exciting facilities and the opportunity to sell pretty much whatever service the occupiers may want. That means the nature of the lease agreement is going to change – though whether it creates more – or less – potential for disagreement is an intriguing point. Property lawyers do however need to make sure they are moving with the times – a fifty-page lease for a desk space for 3 months is hardly going to impress the millennial (or younger) generation of entrepreneurs who simply want to know whether there is space for their dog or the billiard table!

Of course, much of the talk on the property industry at the moment is ‘resi’ based – though at MIPIM recently I noticed that it was very much about every form of resi other than the traditional little box product of the volume housebuilders. So, student living, senior living, co-living, PRS, BTL were the order of the day – not the sort of standard housebuilder product which, in my view, is actually going to have a tougher time over the next few years. But all these other forms of resi will require that our policy makers get the whole leasehold framework right. There is no doubt that some providers have abused what has worked more or less well in the past. The trouble is the politicians now feel the need to act – and if they do so too quickly we could end up with a legal mess that will not actually protect either landlords or leaseholders sensibly. It is an area where the policymakers should be consulting the lawyers before they legislate to make sure what they end up with is actually workable and I know the PLA has made sure that it is involved in this policy debate – which is exactly as it should be.

I felt I had to mention the digital revolution in my canter through current issues for the industry but it is definitely not my area of expertise. What I had picked up from comment in the property press, however, was a general perception that perhaps we as an industry were not quite as far ahead in the digital/tech world as we should be. All this talk of smart leases, distributive ledger technology, self-executing smart contracts – and of digital districts and smart cities – means that those who advise the creators of, and investors in, real estate need to be well on top of this. Even in my role as chair of the sponsor board for the Houses of Parliament Restoration and Renewal project we are looking at creating a ‘digital twin’ for the Palace in order to better manage and to cost the actual project and the subsequent maintenance. I know the industry has been involved in commenting on an electronic communications code but are we really getting stuck into understanding the wider implications for the property legal profession of this latest industrial revolution?

My last two ‘issues’ were of a slightly softer, more subjective nature. The first concerned what I perceived to be a problem of trust – or rather lack of it – in the property development world. The well-publicised bust-up between Lend Lease and Haringey Borough Council over their joint venture to redevelop large swathes of old and arguably unfit housing has led many in the industry to ask whether we are getting it right when it comes to community engagement. In particular, are we as an industry actually giving people the amenity they really need rather than the product that will make the best return for investors? I believe we will be seeing a step change in how development, especially in London, is managed and promoted in the next few years led by companies such as Grosvenor, U+I and Lend Lease and the legal profession needs to make sure it keeps abreast of the legal implications of ensuring the industry works with all its stakeholders.

The second of my ‘soft’ issues concerns diversity. Ironically the PLA world – and indeed the conference audience – seems to have no problem with ensuring that its profession reflects the gender balance of society. But I was thinking as I was walking along the Croisette at MIPIM, that if the property industry is one of the underpinning pillars of society – literally – then we ought to strive harder to reflect that society in our make-up. ‘Balance for Better’ was the slogan of one of the organisations that I spoke for on International Women’s Day and that would make a good rallying cry for the industry as a whole. As I said, property litigators seem to be doing their bit, but there is no room for complacency and we all need to be promoting good practice everywhere we can – in other parts of  law firms and amongst clients.

In conclusion, and going back to what Bryan said at the beginning of the conference, I think it is vital for the PLA and its members continually to look around them at the world in which they operate and ask themselves whether what they are doing is valuable and useful to society and that they are not operating in a legal bubble looking in on themselves. The property legal profession serves a fantastic industry that has a huge contribution to make to the economy, to education, to leisure, to life in general. Indeed, I wouldn’t have worked in it for 30 years if I hadn’t believed sincerely in the potential for creating and managing the sort of good places that society needs. The property legal system is an intrinsic part of that contribution – but the people who operate it need to stay flexible, adaptable and, above all, relevant.

Liz Peace CBE

President of the PLA