Recovering the cost of fire safety defects

Schedule 8 to the Building Safety Act 2022 introduced restrictions on the ability for a landlord to recover the cost of remedying fire safety defects from residential leaseholders in buildings over 11 metres in height.

With these restrictions in mind it is important for Landlords to be aware of the requirements to obtain Leaseholder Certificates and/or serve Landlord Certificates.

Landlord Certificates

A Landlord Certificate must be served on a leaseholder:

• When a demand is made for a payment of service charge to remedy fire safety defects
• Within four weeks of notification from leaseholder that the leasehold property is to be sold
• Within four weeks of the landlord becoming aware of a fire safety defect, or
• Within four weeks of being requested to do so by a leaseholder.

 The Landlord Certificate will confirm, amongst other things, whether:

• The relevant Landlord’s group has a net worth of at least £2m multiplied by the number of relevant buildings in which the landlord holds a lease of all or part of it (the ‘contribution condition’) – though it should be noted that the ‘contribution condition’ test in paragraph 3 of Schedule 8 to the Act does not apply to local authorities or private registered providers of social housing; and
• The relevant landlord (or associate of the relevant landlord) was responsible for the fire safety defect in question in that it undertook or commissioned works relating to the defect.

There are further onerous requirements that must be complied with in order for a relevant landlord to issue a valid Landlord Certificate. These are set out in the Building Safety (Leaseholder Protections) (England) Regulations 2022. It may be that the Landlord needs to liaise with third parties in order to provide the required information and this will pose timing difficulties in some cases.

If the Landlord meets this criteria, it will not be able to recover a service charge to remedy the cost of relevant defects from qualifying leaseholders.

Leaseholder Certificates

A Leaseholder Certificate confirms whether the dwelling in question was the leaseholder’s only or principal home. With this information the Landlord can then establish if the lease benefits from enhanced protections under the Building Safety Act 2022 such as service charge caps.

Where the leaseholder of this type of building has the benefit of a lease for a term longer than 21 years, granted before the Schedule 8 of the Building Safety Act 2022 came into force on 14 February 2022, Landlords are required to serve notice and a copy of the form of Leaseholder Certificate on the leaseholder. The content of the notice is dictated by the Act and notice must be served within five days of the landlord becoming aware that the leasehold interest is to be sold, or that there is a fire safety defect in the building.

Sanctions

It is crucial for Landlords to be aware of, and able to comply with, the provisions of the Act by issuing Landlord Certificates whenever required. This is because a failure by a Landlord to serve a Landlord Certificate will result in the law treating the landlord as being responsible for the defects in question (thus debarring the Landlord from recovering service charges in relation to those defects, whether the Landlord was actually responsible for the defects, or associated with anyone responsible for them, or not).

For more information on building safety, please contact Steven Eccles.