New Building Safety Act 2022 Provisions: Leaseholder Protection, Extended Civil Liabilities And A New Cause Of Action

• Published date: 04 July 2022
• Subject Matter: Real Estate and Construction, Construction & Planning, Landlord & Tenant - Leases
• Law Firm: Gowling WLG
• Author: Ms Sue Ryan and Helen Arthur

Section 170(3) of the Building Safety Act 2022 (the "BSA") sets out a number of provisions that come into force on 28 June 2022 - two months after the BSA received Royal Assent (28 April 2022).

Those changes include new protections for leaseholders against charges for cladding and fire safety remediation works, updates to the Defective Premises Act 1972; the Building Act 1984 and further rights of recourse against construction manufacturers.

Leaseholder protection

We have all seen the stories of individual leaseholders facing bills of tens of thousands of pounds for remedial works and in some cases, declaring themselves bankrupt.

For the first time, qualifying leaseholders living in buildings above 11 metres tall or with at least five storeys will be legally protected from building safety costs:

• Qualifying leaseholders (those living in their own homes, or with up to three UK properties in total) will be protected, in full, from the costs associated with the remediation of unsafe cladding. They will also have protections from the costs associated with non-cladding defects, including measures like waking watches.
• It will be illegal for freeholders to pass on the cost of historical building repair works or the removal of cladding to any of their leaseholders, including non-qualifying leaseholders, if they are linked to the building's developer.
• It will be illegal for freeholders to pass on any historical building safety costs to qualifying leaseholders if they pass a prescribed wealth test.
• Where a developer cannot be held responsible and the building owner is not required to meet the costs in full, leaseholders with non-cladding related issues will also be protected by a cap on how much they have to pay for these costs, if the value of their property exceeds a certain amount.(leaseholders of properties below this ceiling will pay nothing). Where leaseholders have bought through shared ownership, their cap will reflect their share of ownership in the property.

Any costs that are not recoverable from leaseholders will need to be met by building owners and landlords. The Secretary of State, Michael Gove MP, wrote to freeholders yesterday setting out their new legal responsibilities and pointed out the consequences of non-compliance, including criminal sanctions.

See below for ways in which building owners and landlords may be able to recover the costs they are left to bear.

The Defective Premises Act 1972 (the "DPA")

It is a misconception that the changes...