The Building Safety Act 2022 and its accompanying legislation seek to address issues regarding building safety brought starkly into view by the Grenfell Tower fire in 2017. Beyond the tragedy of the fire itself, the event (and subsequent inquiry) highlighted the need for building safety remediation works to many higher-risk buildings and the potentially profound implications to leaseholders if required to contribute to the cost of those works under the terms of their leases.

The "leaseholder protection" provisions of the Building Safety Act 2022 were introduced in light of this to reallocate the burden of the cost of any remediation works where the legislature felt that it is fair and reasonable to do so. These provisions apply to buildings that are at least 11 metres (five storeys) high and seek to deliver on two principal goals:

1. to ensure that developers/original building owners of defective buildings take responsibility for fixing them (even if they no longer own the building); and

2. to remove (or significantly restrict) any liability on the part of leaseholders to pay for the remediation of historical safety defects.

Developer responsibility

To address the first of these goals, the legislation aims to ensure that building owners pay remediation costs for buildings which they (or any of their associates) had a role in developing. No service charge is payable for a defect for which landlord, or an associate of the landlord, is responsible.

Service charge limitations

Reinforcing this (and tackling the second goal), the legislation introduces the following further protections for any leaseholder who holds under a "qualifying lease":

  • no service charge is payable for removal of unsafe cladding; qualifying leaseholders are protected from all cladding system remediation costs;
  • no service charge is payable if the landlord meets the contribution condition (i.e. if the landlord group's net worth as at 14 February 2022 was more than £2,000,000, per relevant building);
  • no service charge is payable where the value of the lease was below £325,000 on 14 February 2022 (or £175,000 if the premises are outside Greater London); and
  • a cap of £10,000* on any contribution towards non-cladding related defects, spread over ten years.

*Increased to £50,000 if the value of the lease was between £1,000,000 and £2,000,000 on 14 February 2022, and £100,000 if the value of the qualifying lease then exceeded £2,000,000.

To facilitate the operation of the leaseholder provisions, the legislation requires certain information to be provided by a leaseholder to its landlord and by a landlord to its leaseholder:

Leaseholder deeds of certificate

To demonstrate they have a qualifying lease (and so benefit from the leaseholder protections), a leaseholder should produce a leaseholder deed of certificate (and they must do so if the landlord requires). If the leaseholder does not provide a certificate when they should have done, they will be treated as not having a qualifying lease. The form of the certificate is set out in the legislation, as is the information that it must contain (relating to ownership of the premises on 14 February 2022 and value of the lease) and evidence that must be provided.

Given the far-reaching implications for a lease which is not considered to be a qualifying lease, a leaseholder would be well advised to prepare a leaseholder deed of certificate now, so it is readily available if requested by their landlord.

Landlord's certificate

The current landlord must provide to its leaseholders a certificate in specified instances (including where the landlord makes a service charge demand for remediation costs, within four weeks of being notified by a leaseholder that its leasehold interest is to be sold and within four weeks of a leaseholder requesting it).

The information that the certificate must contain and the evidence that needs to be provided is extensive and is set out in the legislation. The landlord will, via the certificate, demonstrate:

  • whether they were, or were associated with, the developer of the building on 14 February 2022; and
  • whether they met the contribution condition on 14 February 2022.

The landlord must provide a copy of the landlord certificate and leaseholder deed of certificate to the RTM, RMC and any named manager within one week of completion or receipt. If it fails to do so, costs cannot be passed on to leaseholders.

Remediation orders and remediation contribution orders

As well as protection from being required by a landlord to contribute to remediation costs, the leaseholder will also want to ensure that those safety works to their building are carried out (and paid for).

This is addressed in the Act by provisions which entitle any leaseholder (as well as RTM company, RMC or named manager) to apply to the First-tier Tribunal for:

  • a remediation order requiring a landlord to remedy defects in a building; or
  • a remediation contribution order requiring a landlord, developer or an associate to contribute towards the cost of remediation works.

The legislation is broad in scope and many of its provisions complex. In some instances, the implications of its provisions are only becoming apparent as it comes into force and it has already been amended on several occasions by secondary legislation; more amendment is expected.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.