Welsh and English law: what's the difference?

The differing responses of the Welsh government and Westminster to the Covid-19 pandemic have been well-publicised, and have brought Welsh legal devolution into the public consciousness on both sides of the border.

It would be fair to say that those responses are “similar but slightly different” and the same could be said of areas of law and practice that impact on property development in Wales. This article aims to give a brief overview of some of those areas where England and Wales remain largely aligned and others where Wales is branching out on its own.

Site acquisition

Conveyancing and registration processes are largely the same in England and Wales. In particular, land registration is one of the matters reserved to the UK parliament by the Government of Wales Act 2006 as amended by the Wales Act 2017 – this changed the basis of legislative competence in Wales from a “conferred powers” model to a “reserved powers” model.

The reservation extends to the registration of estates and interests in land under the Land Registration Act 2002, commonhold land and units, land charges and local land charges. It also includes most matters relating to the keeping of the registers and associated matters, such as the provision of searches and information. However, the reservation does not prevent Senedd Cymru (the Welsh parliament, formerly the National Assembly for Wales) from creating new local land charges for a devolved purpose.

On the other hand, when it comes to due diligence, some of the detail will differ. For example, the principal body responsible for the regulation and protection of the environment in Wales is not the Environment

Agency but Natural Resources Wales. On the environmental front more generally, Wales is developing its own policies. The Environment (Wales) Act 2016 was enacted (among other things) to promote sustainable management of natural resources.

Certain taxes are devolved and, having purchased a site, the transaction will be subject to land transaction tax, introduced in April 2018 for transactions in Wales in place of stamp duty land tax and payable to the Welsh Revenue Authority rather than to HMRC. There is considerable alignment between the two regimes as it was recognised that significant differences might distort the property market. However LTT has been moulded to Welsh requirements, including different tax rates and bands to suit the Welsh property market, and aims to be simpler, fairer and more efficient.

Building on the site

“Planning ahead: Welsh planning law present and future”, EG, 19 August, highlighted that, with some exceptions including certain categories of nationally significant infrastructure projects, law-making power in relation to primary planning legislation now resides with Senedd Cymru.

The Senedd also has legislative competence in relation to building regulations and, on 19 June, it published its Building Safety – Position Statement, proposing significant reforms to building regulation and control in Wales. A white paper planned for later this year “will set out the full scope of our programme of reform across all aspects of the building lifecycle. It will make clear where we are joining with the UK government and where we intend to set out a different programme of reform for Wales”.

Letting the site

On the residential front, housing has devolved to Senedd Cymru. The Renting Homes (Wales) Act 2016 provides that tenancies granting individuals the right to occupy a dwelling must take the form of one of two types of mandatory “occupation contracts”: a “secure contract”, generally for use by public sector landlords for social housing, or a “standard contract”, generally for use by private landlords. The Act is not yet in force but when it is, it will have retrospective effect.

As to the commercial private rented sector, there is little divergence as yet, but commercial leasing is not a matter reserved to Westminster. Interestingly, sections 81 and 82 of the Coronavirus Act 2020 impose temporary restrictions on residential and commercial landlords in both England and Wales seeking to take enforcement action against tenants. The National Assembly for Wales (as it was then) was asked to give its formal consent to the Bill before it was enacted as it covers matters such as these that have devolved to it. Extensions of these restrictions in Wales are at the discretion of the Welsh ministers.

In general terms, energy conservation is a reserved matter. The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 prohibit landlords in both countries (the clue is in the title!) from granting a new tenancy of a privately rented commercial or domestic property with an EPC rating below “E”.

Managing the development

In the case of the residential PRS, the Housing (Wales) Act 2014 introduces a compulsory system of registration and licensing for landlords and agents involved in letting and managing private residential premises. Registration and licensing are through Rent Smart Wales and the aim is to ensure landlords and agents are “fit and proper” to hold a licence. Also, the Renting Homes (Fees) etc. (Wales) Act 2019 prevents landlords and letting agents from charging costs other than “permitted payments”. The Act is similar, but not identical, to equivalent legislation in England.

Tip of the iceberg

It is perhaps unsurprising that the situation is complicated, given that the schedule listing the matters reserved to Westminster runs to more than 20 pages of small print. The above is just the tip of the iceberg. Those considering development of land and property in Wales need to be alert to the many nuances before dipping a toe in Welsh water.