How do these legal changes affect my lease?
The leaseholder protections affect existing leases that qualify under the leaseholder protection provisions in the Building Safety Act 2022.
Applies to England
Summary
1. The leaseholder protections affect existing leases that qualify under the leaseholder protection provisions in the Building Safety Act 2022.
2. Where the terms of any lease would contradict the leaseholder protection scheme in the Building Safety Act 2022, the Act overrides the lease.
3. The Act protects qualifying leaseholders from costs and is fully retrospective. This means it applies to bills irrespective of whether they were issued before or after 28 June 2022.
4. This applies to any terms in qualifying leases, or other agreements and contracts, whether they existed before 28 June 2022 or are added subsequently. This means that any terms in your lease which would allow the cost of remediating cladding system relevant defects to be passed onto you no longer have any effect.
5. Leaseholders will not be liable to pay their service charge which relates to non-cladding costs beyond those which the leaseholder protections allow.
What does the legislation mean?
Cladding systems
6. If you are a qualifying leaseholder in a relevant building or your landlord is - or is associated with - the developer, your building owner (the definition of ‘building owner’ can be found in What are my building owner’s legal obligations?) cannot use or enforce any of the terms (or impose any new terms) in a lease, agreement or contract which would allow them to pass on costs for a relevant cladding system defect.
7. It is illegal for your building owner to send a bill or a demand for payment from 28 June 2022 for remediation of a relevant cladding system defect or associated interim measures (such as waking watch or the installation of communal alarms) beyond those which the leaseholder protections allow.
8. If your building owner issued a bill or demanded that you pay to remediate a relevant cladding system defect, or any associated interim measures, before 28 June 2022 and you have not paid, then you do not have to pay it. It is illegal for your building owner to demand payment.
9. Residential leaseholders may also benefit from grant funding for the removal of unsafe cladding system in buildings above 18 metres, as well as the Building Safety Fund and the Cladding Safety Scheme which opened in July 2023 for buildings between 11-18 metres.
Non-cladding
10. If you are a qualifying leaseholder in a relevant building, your building owner cannot use or enforce any of the terms (or impose any new terms) in a lease, agreement or contract which would allow them to pass on costs to remediate a non-cladding relevant defect and any associated interim measures to leaseholders beyond those which the leaseholder protections allow.
11. It is illegal for your building owner to send a bill or a demand for payment from 28 June 2022 for remediation of a non-cladding relevant defect or associated interim measures where:
a. your building owner is, or is associated with, the developer (i.e. they meet the developer test).
b. your landlord meets the contribution condition , and you are a qualifying leaseholder
c. the value of your lease is calculated as being below £325,000 (Greater London) or £175,000 (elsewhere in England)
d. you are a qualifying leaseholder
12. If any of paragraph’s 11a, 11b, 11c or 11d above apply and your building owner issued a bill or demanded payment for a non-cladding relevant defect or associated interim measures before 28 June 2022 which you have not yet paid, then you do not have to pay it.
13. Your building owner must provide you with a landlord’s certificate to demonstrate they do not meet the developer test nor the contribution condition.
14. Once the relevant certificates have been exchanged, your building owner may then be able to request capped contributions. If your building owner does not provide the certificate, they cannot pass on costs.
How does this affect me, the leaseholder?
15. If your building owner is - or is associated with - the developer, or you are a qualifying leaseholder who has received a bill or a demand for payment towards any of the below which you have not paid, then you do not have to pay it. It is illegal for the organisation or person who sent you the bill to demand that you pay it.
a. cladding system remediation
b. remediation of relevant non-cladding defects
c. interim measures
16. If you are a qualifying leaseholder, you are only required to pay up to a capped amount for non-cladding remediation and interim measures where your landlord is not associated with the developer, does not meet the contribution condition or where your property is calculated as being less than £325,000 in Greater London (or £175,000 elsewhere in England).
17. Any money you have already paid towards relevant cladding systems and non-cladding works since 28 June 2017, including for any interim measures will not be reimbursed, but will count towards the qualifying leaseholder cap on costs for non-cladding defects.
18. If you are a non-qualifying leaseholder in a relevant building and your building owner is associated with the developer, you will be protected from all historical safety remediation costs.
19. If your building owner is not - and is not associated with - the developer and you are not a qualifying leaseholder, then you should continue to pay in accordance with the terms in your lease, unless told otherwise that your building owner has benefitted from the Building Safety Fund or the industry scheme.
20. If you are a non-qualifying leaseholder, your landlord or freeholder will still be able to apply to the Building Safety Fund, the next phase of which will open shortly, if your property is in a building over 18 metres tall with dangerous cladding.
21. There is also the Cladding Safety Scheme which opened in July 2023 to fund the remediation or mitigation of life-safety fire risks in buildings where unsafe cladding is present. The scheme is being delivered by Homes England and is open for applications for buildings between 11-18 metres in London and buildings over 11m in the rest of England, where a responsible developer cannot be identified, traced, or held responsible.
22. Industry negotiations have also delivered a wide-ranging industry agreement with 55 of the largest developers signing legally binding contracts committing to remediate life-critical fire safety defects in residential buildings they had a role in developing in England over the 30 years prior to 5 April 2022. This total includes all Top 10 housebuilders. Between them, the developers who signed the contract account for almost half of new homes. By signing the contract, they have committed to remediate or pay to remediate 1,345 buildings above 11 metres which are identified as needing remediation works in England. Together, they have taken responsibility to carry out or pay for an estimated £2.7 billion of works to make those buildings safe.