Property deals face competition law challenge
Property developers and land owners could face fines and deals deemed void if they are not careful, a Birmingham property expert has warned.
David Hayes, head of real estate at DLA Piper, has spoken following the government’s decision to place land agreements under the rules of the Competition Act.
From April next year, leases, transfers and other land agreements will have to meet the requirements of the Competition Act 1988, which prohibits a wide range of "anti-competitive" practices such as price fixing or limiting output.
The move means those in the industry will have to consider whether restrictions, such as covenants preventing specific use of land, could be seen as anti-competitive.
Hayes said: "While the new rules won’t come into force until April next year, they will be applied retrospectively, meaning businesses need to start looking at their agreements now.
"Further guidance on the new rules will be issued in the autumn but the sooner land owners start self assessing their agreements to identify any potential issues, the more time they will have to change covenants as needed to avoid falling foul of the new legislation and incurring heavy penalties."
Agreements that infringe the act will be deemed void and cannot be enforced, unless the anti-competitive clauses can be removed.
