The new provisions
On 28 June, a number of provisions contained within the Building Safety Act 2022 ("the Act") came into force.
The changes include provisions designed to protect leaseholders in England from paying for the cost of remediating "relevant" defects that cause a safety risk, for which the developer or landlord/freeholder is responsible. With "relevant" defects being defined as those contributing to the risk of the spread of fire or the collapse of a building.
The Act creates statutory protections for leaseholders in relation to the costs associated with the removal and replacement of defective external cladding.
In the first instance, the developer of the building will be called upon to pay for remedial works. If this is unsuccessful, the freeholder will be able to look to central funding options such as the Building Safety Fund or the soon to be launched fund for "medium rise properties". However, if these sources fail, the liability will remain with the freeholder and it cannot be passed on to the leaseholder.
Leaseholders may however remain liable for costs associated with other fire safety measures up to a maximum of £10,000 (£15,000 in greater London), where the landlord and its associated persons (including group companies and directors) do not meet the net worth threshold (which is currently set at £2,000,000 per building which requires remediation).
The Act also creates increased routes for developers and freeholders to try and recover costs from the parties responsible for the original construction (see our article which highlights some of these changes.
Separately, the Act also provides for:
- "Remediation Orders", which will require landlords to carry out remediation works where they have not willingly carried out required remedial works and it is just and equitable to do so.
- Remediation Contribution Orders, which can be made against former landlords and developers (or people associated with them).
All of these measures apply to residential buildings over 11m (or with 5+ storeys) with at least two dwellings, with "relevant defects" being those contributing to the risk of the spread of fire or the collapse of a building.
The potential consequences
In a letter published yesterday, Michael Gove stressed the consequences of failing to comply with the Act's new provisions; and that any attempt to continue to charge qualifying leaseholders for these costs would be a breach of the Act and would constitute a criminal offence, with a penalty of up to 10 years in prison.
In order to avoid the risk of committing an offence, building owners– whether developers, landlords or other freeholders - should carefully review these new provisions and consider their applicability to buildings in their ownership.
For further information on the Building Safety Act 2022 and the remediation of defective cladding works more generally, please visit our Brodies Building & Fire Safety Hub.