28 July 2023 by Matthew Hawkins

Building Safety Act 2022 – a hidden consequence for leaseholders

The Building Safety Act 2022 (the “BSA”) was introduced to give new and significant protections to leaseholders concerning safety matters affecting their building. The BSA creates an obligation on builders and developers to remedy historical building safety defects to the extent that leaseholders will not have to pay the costs associated with any remedial works. The Act then provides a process to hold those responsible for the defects to be held to account.

The leaseholder protections that form part of the Act are set out in Part 5 and Schedule 8. The protections will apply to a leaseholder within a “relevant building” and “higher-risk building” (both defined in the Act) and where the building suffers from “relevant defects” (again, defined in the Act). The leaseholder will either not have to contribute anything to remedial works or is protected by way of a contribution cap of £10,000 (or £15,000 in Greater London).

The second stage of this is that the leaseholder must hold a “qualifying lease” (defined by the Act). Not all leaseholders will be entitled to this protection – for example, those who own multiple dwellings in the UK such as Buy-to-Let landlords.

The substantive issue for many leaseholders who would otherwise meet the definition of a “qualifying lease” is the requirement for the lease to have been granted before 14 February 2022.

If a lease is extended under the Leasehold Reform Housing and Urban Development Act 1993 (”LRHUDA”), a new lease is granted in substitution for the existing lease. The new lease would not be a lease granted before 14 February 2022 and, on the face of it, will not qualify.

The general understanding and consensus is that the Government did not intend for leaseholders to lose this statutory protection following extension under the LRHUDA. The Government has acknowledged that an amendment to the legislation is needed but this has not been published at the time of writing.

In the meantime, so leaseholders do not lose their protections, it is our advice that all Section 42 Notices served under the LRHUDA include a provision that recognises there is a new lease created, but that the new lease will be held to be a “qualifying lease” according to the BSA. This is, at present, an untested method.  However, there ought to be no prejudice to the landlord in question if the existing lease is already one that qualifies.

If you have any questions about lease extensions, and how they might be affected by the BSA, please contact one of the experts in our Lease Extensions & Property Management team.

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