October 16, 2023

Leaseholder Protections – Update

by Natasha Sumboo in Uncategorised

If you are a landlord of a relevant building, under the leaseholder protections, it is important you are made aware that there have been some important changes to the legislation that we would like to update you on.

WHAT ARE THE LEASEHOLDER PROTECTIONS?

The leaseholder protections is a section of the Building Safety Act that brings new financial protections for leaseholders in regards to historical safety defects. These protections only apply to ‘relevant buildings’ (buildings over 5 storeys/11m that are not leaseholder owned).

WHAT ARE THE ‘HISTORIC SAFETY DEFECTS’?

Historic safety defects otherwise known as ‘relevant defects’ are defects that meet all of the following criteria:

  • It put’s people’s safety at risk from spread of fire or structural collapse
  • It’s arisen from work done to the building (including use of inappropriate or defective materials) during construction, refurbishment of remediation.
  • It was created in the 30 years prior to the leaseholder protections coming into force
  • It relates to at least one of the following;
    ׇ Initial construction of the building
    ׇ Conversion of the building
    ׇ Any other works undertaken or commissioned by or on behalf of the building owner or management company

WHO PAYS FOR REMEDIATING RELEVANT DEFECTS?

The developer or building owner (if associated with the developer) is responsible for paying for all costs for remediating relevant defects. If the building owner is not associated with the developer they are still responsible for the costs, although they may be able to recover some of the costs from leaseholders, up to a capped amount. This depends on the landlord groups net worth (known as the contribution condition or net worth test).

Any works qualifying leaseholders have paid towards relevant works since the 28th June 2017 contribute towards their cap.

WHAT ARE THE LEASEHOLDER CERTIFICATES AND LANDLORD CERTIFICATES?

The leaseholder deed of certificate is the means for a leaseholder to demonstrate they qualify for the leaseholder protections. Being a qualifying leaseholder depends on when they owned the property and whether they own multiple properties in the UK.

The leaseholder certificate is sent by the leaseholder to the landlord. It can be sent at any time but is usually sent when a leaseholder makes arrangements to sell their property.

The landlord certificate is the means for the landlord to provide important information back to the leaseholder. The information on the certificate should include:

  • Landlord group net worth
  • If they are the developer or an associated company, responsible for the relevant defects
  • Details and costs of works already undertaken to remediate relevant defects
  • Supporting evidence

Each landlord certificate is specific to the individual lease and date the certificate was produced.

WHEN DOES A LANDLORD NEED TO PROVIDE A CERTIFICATE?

  • When the landlord or management company intends to pass on remediation costs for relevant defects to leaseholders through the service charge
  • Within 4 weeks of being notified that a leaseholder is selling their property
  • Within 4 weeks of becoming aware that a relevant defect was not covered by a previous landlord’s certificate
  • Within 4 weeks of a leaseholder requesting a landlord certificate
  • Within 4 weeks of becoming aware of a new leaseholder certificate which contained information not included in a previous landlord’s certificate

Recent changes to the legislation requires that copies of both the landlord certificate and leaseholder certificate be shared with the RMC, RTM or named manager within one week of completion or receipt.

HOW CAN WE SUPPORT YOU

The majority of the information on the landlord certificates can only be completed by the building owner. When it comes to the section on what relevant works have taken place at the property since the 28th June 2017, we can assist our clients in pulling together the information to help identify these works and costs.

MORE INFORMATION

You may wish to find out more information on this topic and can visit the Gov.UK website: Building safety leaseholder protections: guidance for leaseholders – GOV.UK (www.gov.uk)

If you are a HML client, please feel free to reach out to your property manager or the building safety team: [email protected]

Contact the Building Safety Team