If you are thinking of having your long lease extended either on a voluntary basis by agreeing new terms with the landlord, or through the statutory route pursuant to the Leasehold Reform Housing and Urban Development Act 1993, you must first consider whether the protections provided by the new Building Safety Act 2022 with regards to your property may be impacted once you extend your lease.
When you extend your lease, it is considered in law that the current lease has been surrendered and a new lease has been granted. In these circumstances the leaseholder protections received by virtue of the Buildings Safety Act could be lost.
We recommend that you make these enquiries from the outset in order for you not to incur additional and unnecessary legal costs. Then once you have this information, please revert to our experienced property team. This is something that we can assist you with, in addition to the lease extension, should you wish to instruct us to do so. You can get in touch by calling 0800 086 2929, emailing info@elitelawsolicitors.co.uk or by completing our Free Online Enquiry Form.
Background
The fire at Grenfell Tower in Kensington in 2017 and the Hackitt ‘Building a Safer Future Report’ emphasised the need for anyone thinking of buying a flat to investigate the fire safety aspects of the flat, and the building it is part of. It is important to understand the risks, so you know:
- Whether the flat is a safe place to live
- How much you might have to contribute to the costs of building works to make your flat safe
- How straightforward it may be to sell
- The nature of any fire safety work or other building safety work that needs to be carried out
- How such works might affect your use of the flat (for example, if you want to work from home)
The landscape is complex and changing. New laws have been passed, such as the Fire Safety Act 2021 and the Building Safety Act 2022. The impact of these changes on parts of the residential property market is significant. Essentially the landlord should ensure that people can leave the building safely if there is a fire, that the building has not been constructed using materials which ameliorate the conditions through which fire spreads, and that fire risks are reduced.
The Building Safety Act 2022
By way of explanation, The Building Safety Act 2022 and associated regulations provide leaseholders with protection against costs which may be payable by the leaseholder to the landlord or management company for costs associated with building-safety related works to the property. A leaseholder will still have to pay up to a capped amount in line with service charge apportionments which are payable as determined by your lease, once the Landlord/Management Company provides a Landlord’s Certificate confirming your eligibility.
Leaseholder Deed of Certificate
As a leaseholder, you need to consider whether you need to provide your landlord with a Deed of Certificate (LDoC) in order to obtain a Landlord’s Certificate as mentioned above. The LDoC will provide information which will enable the landlord to determine whether you may be required to contribute towards those building safety related costs, which are to be paid by someone else such as the developer or landlord and to ensure that you only pay the amount the law deems appropriate. The certificate allows the landlord to calculate the maximum financial contribution you may have to pay towards those costs.
The costs associated with certain relevant defects which might result in fire and spread of fire, defects arising from work done to a building including the use of inappropriate or defective products during its construction or when later works are carried out, will be capped. The defect must be created between 28 June 1992 and 27 June 2022. However other fire safety regulations may still apply and government funding is available for unsafe cladding if certain criteria are met.
The Criteria
In order to qualify, you will have to meet the following criteria :
- It must be a long lease (more than 21 years term)
- Leaseholder must be liable for paying service charges to a third-party landlord or management company (so does not include properties in which you have a share of freehold)
- Lease must be granted before 14 February 2022 (hence will not apply to lease extensions granted after this date)
- The property must be your main home or if it is not, then you must not own more than 3 properties
- The property must be at least 5 storeys or 11 metres high whichever is reached first
- The building must contain at least two dwellings
If you do not qualify then you may still be protected from costs of historical building safety remediation works where the building owner is or is associated with the developer.
There cannot be a service charge for liability for building safety work if the flat is worth less than £175000 outside of London or £325,000 in London.
Landlord’s Certificate
The landlord’s certificate will be required when you sell the property if the criteria are met and the landlord must provide it where the building owner becomes aware of a defect at the building which falls within the definitions of the Act.
The current owner is responsible for providing the information required by the LDoC but is based on the details of the leaseholder who owned the property as at 14 February 2022.
If a leaseholder does not complete the LDoC or does not provide the correct information, the leaseholder and future leaseholders of the property will not benefit from the protection of the Act and will be liable for remedial costs based on the usual service charge apportionment. If the landlord does not provide the certificate required to be provided by the landlord) than the landlord will not be able to charge for relevant defects by way of service charges.
Either you can write to your landlord or management company (if there is one) to ask them to confirm in writing with regards to the height of the building. If they are able to say for certain that the building is less than 11 metres high and the other criteria apply, then you could consider proceeding with the lease extension. Alternatively, you could provide the landlord with the LDoC and wait for a response from them either with the certificate or to say that you or the building does not fall into the criteria. This is the safer option.
If you think that your building could be over or near 11meters high (or you are anyway unsure) then it is imperative that you serve the landlord with a leaseholder’s certificate at the earliest opportunity in your transaction, so as to avoid delays later.
The landlord must provide the certificate within 4 weeks of receiving notification from the leaseholder that the property is to be sold, or upon a request from the leaseholder requesting a landlord’s certificate or if the landlord becomes aware of a relevant defect which was not covered by a previous landlord’s certificate. However, please be aware that if they issue a certificate, but you proceed with the lease extension, then the benefit of the certificate would be lost because of the 14 February 2022 criteria.
It is unlikely that a landlord will agree to apply the protections of the Act to any new lease granted by way of a lease extension on a voluntary basis, (although the Government is suggesting that we try and agree contractual provisions with the landlord to cover the benefits of the Act when the lease extension is completed). Therefore, you must consider whether you want to proceed with the lease extension until a landlord’s certificate is made available.
Please therefore consider whether the above criteria may apply to you. The height of the building is calculated by taking into account certain specified factors and therefore you may need to instruct a surveyor to determine the height of the building.
Please note the Building Safety Act 2022 is a new piece of legislation and has received substantial criticism from some legal commentators, particularly in light of onerous lender requirements. We can give no guarantees that the standard set today will be acceptable in the future.
If you are certain that you will not lose the benefit of the protections granted by the Act by proceeding with the lease extension because the criteria mentioned above does not apply in your case, then we can assist you with your lease extension transaction. If the criteria does apply and your lease term is not around or below the 80 year mark, then you may want to wait to extend your lease until you are sure you will get the landlord’s certificate or the landlord has agreed to voluntarily apply the provisions of the Act.
How Elite Law Solicitors can help
If you are thinking of having your long lease extended either on a voluntary basis by agreeing new terms with the landlord, or through the statutory route pursuant to the Leasehold Reform Housing and Urban Development Act 1993, it is essential to consider whether the protections provided by the new Building Safety Act 2022 with regards to your property may be impacted once you extend your lease.
It is highly recommended that you make these enquiries from the outset in order for you not to incur additional and unnecessary legal costs. Once you have obtained this information, please revert to our experienced property team who will be able to assist in this regard as well as in relation to the lease extension. You can get in touch with one of our experienced property lawyers by calling 0800 086 2929, emailing info@elitelawsolicitors.co.uk or by completing our Free Online Enquiry Form.
The content of this article is for general information only. The information in this article is not legal or professional advice. If you would like legal advice you should contact a qualified property lawyer, such as those within our firm.
