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On 28 June 2022, provisions in the Building Safety Act 2022 (BSA) came into force to protect certain flat-owners from the financial impact of historical fire safety work.
The BSA has changed the terms of some lease agreements to make building owners liable for the cost of remediating historical safety defects.
Only qualifying leaseholders are protected
To be a qualifying leaseholder the block must be over 11 metres in height (or 5 storeys) and on
14 February 2022:
- the property was the leaseholder’s main home, or
- the leaseholder owned no more than 3 UK residential properties in total.
Leaseholders who had to move out and sublet their home on 14 February are also covered. The protections automatically transfer to future (new) owners.
Qualifying leaseholders cannot be charged for cladding remediation and the amount they might have to pay towards non-cladding work is capped (see below).
There is an online Leaseholder Protections Checker to help leaseholders check if they qualify for financial protections under the Building Safety Act.
Which costs are covered?
For the protections to apply, the work must fix a building safety risk as defined in the BSA. The Government says:
…this includes any defect caused during the construction or refurbishment of a building in the past 30 years that causes a risk to people’s safety from the spread of fire or the collapse of some or all of the building.
Remediation of combustible cladding is covered, as are works to replace inadequate fire doors or fix missing compartmentation. Interim fire measures, such as waking watch costs, are covered.
Who pays for historical remediation works?
Building owners and landlords must pay if:
- they are (or are linked to) the developer of a building with fire safety defects, or
- they meet a certain wealth threshold. The Act says all owners with net worth of over
£2 million, per affected building they own, should pay for the work.
Over 45 of the biggest UK house-builders have pledged to fix, at their own cost, all life-critical fire safety defects on buildings over 11m they’ve had a role in developing or refurbishing over the last
30 years, including those they don’t own.
If a developer can’t be found or won’t pay, “funding will be made available directly to pay for cladding repairs.” The Building Safety Fund for cladding remediation on blocks over 18m reopened for applications on 28 July 2022. A new fund will open for blocks between 11-18m financed by the Building Safety Levy. More detail is expected “shortly”.
If an owner or developer is liable to pay but refuses to do so, a number of bodies have powers under the BSA to take them to court, including fire and rescue authorities, local authorities, the Building Safety Regulator, leaseholders or the Secretary of State.
In a letter to freeholders, building landlords and managing agents of 27 June 2022, Michael Gove, then Secretary of State for Levelling Up, Housing and Communities, said
Not only am I prepared to exercise my new legal powers under the Act, but my new Recovery Strategy Unit will also identify and pursue this kind of behaviour, working closely with other enforcement authorities.
What about non-cladding work?
Responsibility to pay for this work is the same as set out above. However, in cases where the developer can’t be held responsible and the building owner doesn’t meet the wealth threshold, some costs can be passed to leaseholders, subject to a cap. The cap in most cases is £10,000 outside of London and £15,000 in London. The sum payable will be spread over 10 years.
Where a flat’s value is less than £175,000 (£325,000 in London) the cap is zero – leaseholders will make no contribution.
For properties worth over £1 million the cap is £50,000 and for properties worth over £2 million the cap is £100,000.
For shared-owners the cap is proportionate to their equity stake in the property.
Sums paid towards interim fire measures, including waking watch costs, over the last five years will count towards the cap.
In the event of a shortfall the Government says:
What if I receive an invoice for historical fire safety work?
The Government advice is for leaseholders not to pay invoices relating to relevant historical remediation costs until building owners have fulfilled a series of transparency and financial reporting requirements.
The requirements are set out in The Building Safety (Leaseholder Protections) (England) Regulations 2022 which came into force on 20 July 2022. Government guidance covers the information required to complete the leaseholder deed of certificate and information building owners must provide in the landlord’s certificate. Building owners must complete the landlord certificate to be able to pass on any historical safety remediation costs to leaseholders.
Invoices already issued will have to be reissued: “Any landlord or agent who seeks to enforce them could be committing a criminal offence.”
When will the work be carried out?
Building owners must ensure the safety of their buildings. Where they fail to progress necessary work the Government is advising leaseholders get advice from the Leasehold Advisory Service.
The Government has said: “Developers that have signed the pledge have committed to starting and completing work as quickly as possible.”
Exclusions from protection
- Blocks under 11m – the Government says it will continue to investigate cases of costly remediation work to understand why it is being commissioned.
- Where leaseholders have enfranchised and jointly own the freehold – the Government intends to consult “shortly” to understand better how these buildings are affected.
The Commons Library does not intend the information in this article to address the specific circumstances of any particular individual. We have published it to support the work of MPs. You should not rely upon it as legal or professional advice, or as a substitute for it. We do not accept any liability whatsoever for any errors, omissions or misstatements contained herein. You should consult a suitably qualified professional if you require specific advice or information. Read our briefing for information about sources of legal advice and help.