The Building Safety Act came into law on 28th June 2022 and will provide many qualifying leaseholders with protection from having to pay unfair bills to make their homes safe.
Instead, those who own the property or are responsible for any historical safety defects will be legally obligated to pay for any essential repairs.
The overall aim of the Building Safety Act is to “create lasting generational change” in how high-risk and residential buildings are constructed and maintained in the UK following the 2017 Grenfell Tower disaster while protecting the rights of leaseholders.
According to the Government, a number of developers have already complied with the new laws:
“…45 of the UK’s biggest homebuilders have agreed to fix life-critical fire-safety defects on all buildings 11 metres+ that they have played a role in developing or refurbishing in the last 30 years”.
What is a qualifying leaseholder?
A qualifying leaseholder is someone who resides:
- In a property over 11 metres tall (or five storeys), and on 14 February 2022:
- Is their main home; or
- Owned no more than three UK residential properties in total
A person can also be a qualifying leaseholder if they bought their property after 14 February 2022, but either of the two above bullet points was applicable for the property on this date.
Summary of the Building Safety Act
This significant piece of legislation updates and amends a number of other laws, including, the Landlord and Tenant Act of 1985, the Defective Premises Act of 1972, and the Building Act 1984.
The Building Safety Act brings into place new powers which:
- Permit the Secretary of State to limit irresponsible developers’ ability to build new properties;
- Extends the Building Safety levy which is worth an estimated £3 billion; and
- Improve building owners’ legal rights to take action against developers.
Here are the key protections being provided to leaseholders via the Building Safety Act:
Leaseholder protections
“For the first time, qualifying leaseholders living in buildings above 11 metres tall or with at least 5 storeys will be legally protected from extortionate building safety costs:
- Qualifying leaseholders (those living in their own homes, or with up to 3 UK properties in total) will be protected, in full, from the costs associated with the remediation of unsafe cladding. They will also have robust and far-reaching protections from the costs associated with non-cladding defects, including interim measures like waking watches.
- It will be illegal for freeholders to pass on the cost of historical building repair works or the removal of cladding to any of their leaseholders, including non-qualifying leaseholders, if they are or are linked to the building’s developer.
- It will be illegal for freeholders to pass on any historical building safety costs to qualifying leaseholders if they pass the wealth test set out in law.
- Where a developer cannot be held responsible and the building owner is not required to meet the costs in full, leaseholders with non-cladding-related issues will also be protected by a cap on how much they can pay for these costs. The cap will only apply to non-cladding-related work for those whose property is valued at more than £325,000 (London) and £175,000 outside London (owners of properties below this ceiling will pay nothing). Where leaseholders have bought through shared ownership, their cap will reflect their share of ownership in the property.
- Any costs that are not recoverable from leaseholders will need to be met by building owners and landlords.
- Buyers of new-build homes will be able to hold their developer responsible for safety and quality issues under a new scheme from the New Homes Ombudsman.”
To be able to recover some or all of these costs from leaseholders, freeholders must provide a formal legal certificate or other documentation which shows that the costs they are seeking from leaseholders don’t relate to repair works covered by the new Act.
Other measures included in the Building Safety Act include:
- “New powers for the Secretary of State to restrict irresponsible developers’ ability to build new homes, including if they refuse to take responsibility for fixing life-critical fire safety defects on all buildings 11 metres+ that they have played a role in developing or refurbishing in the last 30 years.
- Extending the Building Safety Levy to be charged on all new residential buildings. Expected to raise an estimated £3 billion over 10 years, this will fund a new Government scheme to pay for the removal of unsafe cladding on buildings of 11-18m where the developer cannot be traced or has failed to agree to cover the costs upfront.
- Enhanced civil liabilities for building owners, enabling them to launch legal action against developers, contractors and manufacturers for shoddy construction works and defective products which have caused homes to be unhabitable in the past 30 years.
- Extra powers for the Courts in England and Wales to go after associated companies. This means businesses who have hidden behind shadowy shell companies within their corporate structures can now be pursued to pay.
- These new laws will allow the Government to consider appropriate action to pursue these companies as part of a new Recovery Unit that is based in the Department for Levelling Up, Housing and Communities.”
Additionally, for buildings over 18 metres with cladding-related problems which don’t have clear plans in place to deal with these issues, freeholders/owners must have full assessments ready to send to the Building Safety Fund. Additionally, freeholders/owners must communicate with leaseholders throughout the process. If they do not, authorities will be able to compel them to repair building issues and ensure that they pay the costs.
Freeholders have been contacted by the Secretary of State to make them aware of the Act and their new responsibilities. They have also been informed that they will be acting illegally if they attempt to avoid paying building repair costs and that they must ensure properties have updated fire risk assessments and that these assessments reflect the latest guidance on proportionality.
New Building Safety Regulator
The new Act is attempting to ensure that properties are built and maintained in much made safer and that a proportionate approach is taken to safety. One of the ways it is doing this is by introducing a new Building Safety Regulator, which will be overseen by the Health & Safety Executive.
The Regulator will enforce a stricter regulatory regime on the safety of high-rise buildings in England. It will also deal with safety concerns raised by residents through a new Residents’ Panel.
National Regulator for Construction Products
Additionally, a new National Regulator for Construction Products will put in place stronger standards for construction manufacturers in the UK. This new regulator will carry out important market surveillance to identify and then remove any unsafe materials faster. It will also manage poor practices by taking action against those that break the rules.
How can we help
James Coningsby is a Partner in our expert Commercial Property team.
If you require any advice in relation to the subjects discussed in this article, please do not hesitate to contact a member of our expert Commercial Property team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online enquiry form.
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