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To what extent do leaseholder protections apply?
If you have a qualifying lease in a relevant building, and the defect identified in your building is a relevant defect, restrictions will apply on what costs can be recovered under the service charge for works to remedy those defects under leaseholder protections.
What is a qualifying lease?
A qualifying lease is a long lease (more than 21 years in length) of a single dwelling within a building of more than 11 meters or at least five storeys (a relevant building), and you are responsible for paying a service charge.
The lease must have been granted before 14 February 2022 (the qualifying date), and on this date, the dwelling was your main home, and you didn’t own more than three homes in the United Kingdom in total.
A Relevant building must contain at least two dwellings and cannot be a leaseholder-owned building (as there is no separate landlord to which costs can be passed).
The protections only apply in England.
Leaseholder protections under the Act
If either of the below tests applies, the Landlord cannot recover any costs through the service charge to remedy the defect, and the landlord will be responsible for paying to remedy the defect:
If the landlord or an associate undertook or commissioned the works relating to the defect (the developer test).
The landlord has a net worth of “the number of buildings over 11 meters with fire safety defects in the landlord group times by £2 million” (the contribution test).
When a landlord does not meet the developer test but meets the contribution condition, the landlord has an obligation to pay for all remediation costs, but where the landlord does not have a net wealth of at least £ 2 million per relevant building, they will be able to re-coup a capped contribution to help pay for the required works.
There is an obligation to deduct from the capped contribution any payments already made towards the remediation of a relevant defect since 28 June 2017.
What is a relevant defect?
These are historical building safety defects that put people’s safety at risk from the spread of fire or structural collapse which has arisen from work done to a building and includes the use of defective products during construction refurbishment or remediation, and the defect had to be created from 28 June 1992 to 27 June 2022.
Landlord’s obligations before passing on a charge
To recoup some of the cost of remediating a relevant defect through the service charge, the landlord must serve the “Landlords Certificate” (in a prescribed form) to demonstrate they are not associated with the developer and do not meet the contribution condition.
The certificate must also be served within four weeks of:
- receiving notification the leasehold interest is to be sold,
- becoming aware of a relevant defect which was not covered by a previous landlord’s certificate or
- of a certificate being requested.
There is a presumption where a landlord fails to provide a certificate that the “contribution condition” has been met and that the landlord is responsible for the defect and will be unable to recover any costs associated with the defect via a service charge.
The Act also places the responsibility on the landlord to invite the leaseholder to provide the “Leaseholder Certificate” to establish whether the lease is a qualifying lease and therefore benefits from the enhanced protections.
If no response is received, the landlord must serve a reminder and allow up to four additional weeks for a response (if requested), and a lease is presumed to be a qualifying lease until the landlord has taken all reasonable steps to obtain the certificate.
Non-qualifying leaseholders
Non-qualifying leaseholders are only protected from the costs of historical safety remediation if the landlord satisfies the developer test. Where this is not the case, the leaseholder will be liable for remediation costs as per the terms of the lease.
Non-compliance by the landlord
If the landlord does not remedy the defect when they are liable, the leaseholder is able to apply to the Property Chamber of the First-tier Tribunal for a remediation order or a remediation contribution order or both, and the landlord will have an obligation to fix the defect specified by a specified time frame with failure to comply being enforceable by the county court.
