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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.
At 25 October 2022, 49 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.
A draft developer remediation contract was published on 13 July 2022. Negotiations are at an “advanced stage” to turn pledges into a legally binding commitment. Developers who haven’t signed the pledge will be invited to sign the final contract. Developers “who fail to do the right thing face significant commercial consequences.”
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 Medium-Rise Scheme pilot fund opened for blocks between 11-18m “where the developer cannot be traced or held responsible for remediation work” on 30 November 2022. Around 60 blocks are being invited to apply. A wider scheme will rollout in 2023 funded by the Building Safety Levy.
If an owner or developer is liable to pay but refuses to do so, several 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, 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.
On 9 October 2022, the Government said it had taken the first steps towards legal action against a freeholder for failing to remediate unsafe cladding.
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 issued before 28 June 2022 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 opened a call for evidence on affected blocks on 22 August 2022 to gain an understanding of the implications. Submissions were accepted up to 14 November 2022.
- Leasehold high-rise flats: Who pays for fire safety work? – House of Commons Library
- The Leasehold Advisory Service has guidance for leaseholders and several FAQs on fire safety
- Leaseholder protections on building safety costs in England: frequently asked questions
- Building safety leaseholder protections: guidance for leaseholders
- Mandatory information required from leaseholders and building owners – GOV.UK
- What are my building owner’s legal obligations?
- Medium-Rise Scheme (MRS) pilot opening: leaseholder factsheet – GOV.UK
- Leaseholder Support Scheme: guidance for applicants GOV.WALES
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