What is the Building Safety Act 2022?
The Building Safety Act 2022 (BSA 2022) was implemented and received Royal Assent on 28 April 2022 as a response to the consequences of the Grenfell Tower fire on 14 June 2017. The impact following the incident in 2017 led to the Government’s to focus on the building safety of high-rise residential buildings.
Currently, large parts of the Building Safety Act only apply to high-rise residential buildings which are more than 18 metres tall or higher. Prior to the BSA 2022 leaseholders in affected buildings discovered that they were legally liable for 100% of the costs of building remediation and many leaseholders subsequently found themselves facing huge bills for the costs of making their homes safe. The BSA 2022 now offers certain statutory protection for leaseholders only if the lease was granted before 14 February 2022. This is one of the big criticisms of the Act and the Government is turning its focus to considering gaps in the new legislation.
One of the conditions of the BSA 2022 for leaseholders is if they are ascribed to what is called a ‘qualifying lease’. Most of the protections in Schedule 8 of the BSA 2022 only apply to ‘qualifying leases’ which are defined by section 119.
The requirement set out in section 119 of the BSA 2022 are as follows:
1. The lease must be a long lease (lease granted for a term of years certain exceeding 21 years);
2. The Lease was granted before 14 February 2022; and
3. The dwelling must have been the relevant tenant’s only or principal home, or the tenant must not have owned any other dwellings in the UK.
What are the key issues of section 119 BSA 2022?
The Association of Leasehold Enfranchisement professionals (ALEP) has written to the Government to call for an urgent amendment to the BSA 2022 , which it says is currently causing doubt and uncertainty for leaseholders. The key concern over the definition of a ‘qualifying lease’ under Section 199 of BSA 2022 states that the lease needs to have been granted before 14 February 2022 to qualify. The government acknowledges this to be an issue which has created concerns especially when a qualifying leaseholder decides to either extend or vary their lease after 14 February 2022, this will automatically result in the leaseholder not being entitled to the statutory leaseholder protections in the BSA 2022.
By varying or extending the lease after 14 February 2022 a leaseholder may surrender their lease. The effect of a lease extension is that the ‘old lease’ is surrendered and then immediately replaced by a ‘new lease’. The effect of the surrender and reg-grant of the ‘new lease’ would mean after 14 February 2022 the leaseholders will not benefit from the protections in the BSA 2022 as the new lease will not be a ‘qualifying lease’. This is because the qualifying leaseholders can benefit from substantial protections in respect of landlords recovering costs associated with remedying relevant defects in the flat. Another benefit from the protection is that leaseholders will not be required to make any payment towards cladding remediation. Also, amounts that can be recovered in respect of other remediation is likely to be severally limited.
Proposals for change
On 21 April 2023, the Government admitted there was a serious problem in connection with the BSA 2022 regarding lease extensions after 14 February 2022.
https://www.gov.uk/guidance/qualifying-date-qualifying-lease-and-extent
The key paragraph states ‘if you are qualifying leaseholder and you extend or vary your lease, you may surrender your existing lease and be granted a new lease. As the new lease will not have been granted before 14 February 2022, the statutory leaseholder protections in the Building Safety Act 2022 will not apply’.
The Government then goes onto further state they are looking to resolve the issue as soon Parliamentary time allows. Meaning, in due course they will look to either reform this contentious area of statutory law or to bring in new provisions. However, in the meantime, the Government encourages leaseholders who may want to extend their lease to seek legal advice and seek to come to agreement with landlords to apply the same protections as contractual terms.
The last section of the Government’s comments suggesting that leaseholders come to an agreement with landlords seem to be a peculiar one because the landlords may take the opposite approach. The failure in the legislation draws in many more leaseholders than might at first seem to be the case and there are growing number of lawyers who point out that the error makes the lease extension process more complex.
As it stands, it is a complex matter and until the Government changes the legislation, we advise any leaseholders who look to extend their lease to first seek legal advice. It is easily assumed by leaseholders that if they extend their lease before the prospective changes by the Government that they may benefit from the statutory protections retrospectively, when this would be incorrect.
Another defect of the BSA 2022 is when a site collectively enfranchises, it also loses protections under the BSA 2022. Legal advice should be sought prior to any enfranchisement in order that the implications of the BSA 2022 can be fully explored.
Written by:
Syed Hoque, Commercial Property Executive - syed.hoque@lawcomm.co.uk / 01489 864 160
Bill Dhariwal, Solicitor and Managing Director - bill.dhariwal@lawcomm.co.uk / 01489 864 117
The above article is for information only and does not constitute legal advice.
