Splitting liability among building owners
This guidance looks at how remediation costs are dealt with when the total costs are more than the amount that can legally be passed on to leaseholders.
Applies to England
Summary
Regulations under the Building Safety Act 2022 set out how remediation costs must be split between building owners.
The definition of ‘building owner’ is in What are my building owner’s legal obligations?
What the legislation requires
In some circumstances, more than one building owner may meet the developer test and will be responsible for remediating a historical safety defect.
In limited circumstances, qualifying leaseholders are required to pay capped costs for:
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non-cladding remediation
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interim measures
For example, non-cladding remediation can include work like replacing unsafe fire doors or installing fire alarms. See Non-cladding remediation costs: summary for more detail.
If the total costs are higher than the amount that can legally be passed on to leaseholders (including where capped costs apply, building owners must cover the shortfall, in accordance with the Act and regulations.
Where more than one building owner or landlord needs to cover the shortfall, regulations set out how they must split those costs. The split is based on their interest in the building (in proportion to the number of floors they hold, as set out in the regulations).
Apportionment provisions in the regulations ensure that building owners and landlords who hold a greater interest in the building will have to contribute a greater amount than those with a lower interest.
More detail on how costs should be allocated is set out in the Building Safety (Leaseholder Protections) (Information etc.) (England) Regulations 2022.
How this affects you, the leaseholder
If you’re a qualifying leaseholder:
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you cannot be charged more than your contribution cap
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any contribution is spread over 10 years
If you’re a non-qualifying leaseholder:
- you cannot be charged more than the amount set out in the terms of your lease – read more about what you do and do not have to pay
Examples of split costs
Example 1
You’re a qualifying leaseholder in a one-bedroom flat in a building over 11 metres tall in Newcastle. You do not own more than three properties. The value of your lease is £250,000.
The building owners are not (and are not associated with) the developer responsible for the defects. Your landlord’s net worth is not more than £2 million per relevant building, so they do not meet the contribution condition.
Under the Act:
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your maximum contribution for non-cladding remediation and interim measures is £10,000 over 10 years
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you have already paid £5,000 towards interim measures
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your remaining cap is £5,000
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you cannot be charged for cladding remediation
Your share of non-cladding remediation work is £25,000:
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you can be charged up to £5,000 (over 10 years)
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building owners and landlords must cover the £20,000 shortfall (£25,000 is greater than the amount that can be legally charged to you)
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they must split the shortfall using the method in the regulations
Example 2
You’re a qualifying leaseholder in a 2-bedroom flat in a building over 11 metres tall in London. You do not own more than 3 properties. The value of your lease is £400,000.
The building owners are not (and are not associated with) the developer responsible for the defects. Your landlord’s net worth is not more than £2 million per relevant building, so they do not meet the contribution condition.
Under the Act:
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your maximum contribution for non-cladding remediation is £15,000 over 10 years
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you have already paid £15,000 in the last 5 years towards interim measures and remediation costs
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you have paid up to your cap and cannot be charged anything more for remediation works
Building owners and landlords must cover any shortfall and must split it using the formulas in the regulations.
Example 3
You’re a qualifying leaseholder in a one-bedroom flat in a building over 11 metres tall outside London. This is your principal home. The value of your lease is £500,000.
Your landlord’s group has a net worth of more than £2 million per building owned within their group. They meet the contribution condition and must cover the costs of remediation.
You cannot legally be charged anything towards the costs of remediating your building, and the landlord must cover costs that would otherwise have been allocated to you.
Example 4
You’re a qualifying leaseholder in a 3-bedroom flat in a building over 11 metres tall outside London. You do not own more than 3 properties. The value of your lease is £400,000.
Your landlord is associated with the developer responsible for creating some of the defects in your building. This means:
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they cannot charge you any costs to remediate the defects they were responsible for
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they must cover the costs of remediating those defects
Because only some defects were created by the developer, you may be asked to contribute towards remediating the remaining defects where the legal tests for leaseholder contributions are met.
If you (or the previous owner) have not contributed anything towards remediation in the last 5 years, you can be charged a maximum of £10,000 over 10 years.