Humphreys & Co. Solicitors: The Building Safety Act 2022
Expert solicitors discuss how the BSA strengthens protection for leaseholders
The Building Safety Act 2022 (BSA) introduced by the government aims to address the cladding crisis and improve building safety. The BSA builds on previous piecemeal reforms brought in by the government in the wake of the Grenfell fire.
The BSA affects all buildings but has special implications for Qualifying Leases, Relevant Buildings and Higher-Risk Buildings.
All buildings must comply with more stringent building standards in their construction. BSA introduces a new regulator, called the Building Safety Regulator (BSR), who will have the ability to review industry standards, identify risks and ensure greater safety across all buildings. As new construction practices arise and further risks are identified, the role and behaviour of the BSR should change to ensure it can move with the times.
The BSA also introduces the concept of a Qualifying Lease. If you own:
(a) A residential lease dated before February 14th, 2022,
(b) the lease term is longer than 21 years,
(c) the property was your sole residence on February 14th, 2022 and,
(d) you are liable to pay service charge;
you are a qualifying leaseholder.
The category of a Qualifying Leaseholder was introduced in the wake of Grenfell. Qualifying Leases are protected from absorbing the costs of safety remediation works as the financial costs to leaseholders prior to the BSA have been onerous. Since 2017, leaseholders in cladding blighted properties have faced bills of hundreds or even thousands of pounds. These substantial bills have made obtaining mortgages on cladded properties difficult and in some cases not possible. The introduction of this new statutory regime aims to resolve this by removing costs to Qualifying Leaseholders and addressing the cladding crisis head-on.
Relevant Buildings and Higher-Risk Buildings are identified in the BSA as being of particular importance. A Relevant Building is a building which is at least 11 metres high (five storeys). Relevant Buildings must have an Accountable Person on record. This individual will be a representative of the owners and managers of the building and will be responsible for repairing the common parts of the building. They will have a duty to listen to residents and demonstrate they are implementing effective measures to manage building safety risks.
Moreover, a Higher-Risk Building is a building which is at least 18 metres high (seven storeys). Higher-Risk Buildings similarly have an Accountable Person on record, with the additional requirement that the building is registered as a Higher-Risk Building in an online register.
Although the BSA constitutes considerable reform to building safety and greater financial protections for leaseholders, it is not a comprehensive regime. Purchasers of leasehold properties must be aware that the legislative grey area created by the BSA is substantial.
One notable problem is that a lease granted after February 14th 2022 is not a Qualifying Lease and will not benefit from the financial support offered for crucial remediation works. This means the leaseholder will be liable to pay for required works, usually through increased service charges.
Additionally, resale leases, where the original lease is dated before February 14th 2022, may also be at risk of falling foul of the legislation. If the seller of a lease is unable to prove that the property was their sole residence on February 14th 2022, the lease will not be classified as a Qualifying Lease and the new owner will be liable to pay for any required works. This may be relevant for sellers who have moved abroad or sublet their property.
In conclusion, the Building Safety Act 2022 represents a significant step forward in addressing the cladding crisis and improving building safety in the aftermath of the Grenfell fire. The Act introduces stricter building standards and establishes the BSR to oversee industry standards and enhance safety measures across all buildings. It also introduces the concept of a Qualifying Lease to protect leaseholders from the financial burdens of safety remediation works.
However, the Act does have limitations, with leases granted after February 14th 2022, not qualifying for financial support, and potential risks associated with resale leases. These grey areas highlight the need for careful consideration and awareness for those purchasing or selling leasehold properties.
Overall, while the BSA strengthens protections for leaseholders and addresses building safety concerns, further measures may be required to ensure comprehensive coverage and clarity in the legislation.
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