Earlier this year we launched our Procuring for Building Safety report. It sets out key principles and guidance on what good, quality procurement looks like. Over the next few months we’ll be releasing regular bulletins that supports our network with their building safety programmes. We’re pleased to release our first one today – a summary of the leasehold protections under the Building Safety Act 2022 by David Ashby, our Head of Operations.
Leaseholder protection only applies to buildings which are at least 11m high or have at least 5 stories. Remediation protection for leaseholders only applies to a relevant defect which causes a building safety risk. This means a risk to safety of people in and about a building arising from the spread of fire or collapse of the building. Accordingly, protection does not extend to other historic defects.
Building Safety leaseholder protections operate as a “waterfall” – with developers paying first, followed by building owners and landlords. Where building owners do not have the means or ability to pay the full costs of remediation, they may be able to raise some of the funding required from leaseholders. However, the Act contains further protections limiting the total amount any leaseholder will pay towards remediation. For leaseholders, costs are capped and spread over 10 years.
What are the key takeaways?
- Leaseholder protections only apply to buildings at least 11 meters or at least 5 storeys.
- Protection is for the principle home – or not more than 3 dwellings in the UK.
- Leaseholders are protected from all costs in relation to the removal / remediation of unsafe external cladding. Building owners must rely on the Building Safety Fund.
- The Landlord cannot pass on any costs for non-cladding building safety costs where responsible for the defect, or linked to, or associated with the developer.
- Landlords with a net worth over £2M, per affected building, cannot pass historic remediation costs on to leaseholders.
- In all other cases the leaseholder contribution, for service charges falling due after commencements, or in the five years to 28.06.22, are capped at – £10,000 (£15,000 in London) for all but most expensive properties.
- Money paid by leaseholders in the last 5 years counts towards the cap.
- Annual service charges in respect of remediation of defect is limited to 1/10th of the permitted maximum.
If you’d like more information please let me know.
Watch this space – we’ll be posting monthly updated on legislation relating the Building Safety. This will include a client’s perspective and an update on construction products.