The latest round of amends to the ever-evolving Building Safety Act are set to come into force at the start of October, further fixing and untangling the complicated legislation first introduced last year. In the latest on our series of articles linked to the act, we go through what landlords need to know when trying to get their head around the latest regulations:
A brief background
Welcomed for its introduction of new provisions concerning the relationship between leaseholders and landlords following the tragic Grenfell Tower fire in 2017, the Building Safety Act 2022 (BSA) was the outcome of a government commissioned independent review into the causes of the incident.
Also introducing substantial provisions relating to service charges, in particular, restrictions on when these can be charged to leaseholders, the BSA received Royal Assent on 28 April 2022, coming into force in June that year.
Since then however, it has faced substantial criticism for the complexity and number of defects resulting from the perceived rush to pass legislation of its size which has resulted in uncertainty and difficulty in interpretation.
Due to these many criticisms, the BSA has seen a range of amends having to be introduced to tidy it up, with the latest changes due to come into effect from 1 October 2023.
For more on the BSA, check out our previous articles.
The new changes
Passed by Parliament earlier this month, the Building Safety (Leaseholder Protections) (England) Regulations 2022 brings forward a range of changes.
As well as introducing more informational amendments such as a range of further new definitions, the amendments also has some teeth, requiring specified corporate bodies to pay remediation costs and making landlords jointly liable where responsible for a defect.
A new regulation is also added requiring a landlord’s certificate to be provided to leaseholders and substitutes a new form of landlord’s certificate.
How the Bill impacts landlords
There are two main reasons why landlords should take note of the BSA – the changes to the liability to tenants on covering costs through service charges and, where they are payable, the limits that apply.
For the former, no service charges are payable by the tenant:
- if a landlord is responsible for a relevant defect. This does not only apply to qualifying leases, but to any premises within a relevant building;
- where the value of the lease is less than £325,000 in Greater London and less than £175,000 elsewhere;
- under a qualifying lease for the removal/replacement of a cladding system that forms the outer wall of an external wall system and is unsafe;
- under a qualifying lease in respect of a relevant measure if the landlord on 14 February 2022 met the contribution condition.
In terms of the limits to payable service charges, landlords should be aware of the cap introduced by the BSA on charges for relevant measures under a qualifying lease - £15,000 in Greater London and £10,000 elsewhere (although this could potentially be increased based on the lease value as of 14 February 2022) and only 10% of this maximum can be charged in any given year
Additionally, landlords are precluded from charging any costs relating to relevant measures where they have failed to provide the tenants with the prescribed information and are also prevented from recovering their legal or professional costs relating to the assessment of liability for a relevant defect as a service charge from a tenant of a qualifying lease.
Under the BSA Long leaseholders now have greater protections than they did prior to the implementation of the BSA, in respect of service charges payable in connection with defects that occur or have occurred in the last 30 years. As such, there is scope for landlords to potentially be required to reimburse service charges already paid in connection with any relevant defects.
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