Leasehold: NRLA win as building safety funding extended

Leaseholders who have been unable to access funding to cover sky high repair bills for serious building and fire safety defects will benefit from new founding announced today.

While existing rules under the Building Safety Act protect some leaseholders from being billed for historic building safety defects some, including landlords, have fallen through the gaps.

To qualify for the leaseholder protections under the Act you had to meet strict eligibility criteria. To be recognised as a ‘qualifying leaseholder’ your lease had to have already existed before 2022 and:

• The property needed to be in a high rise (over 11m high or five storeys tall) and be home to at least two residences and
• It needed to be your primary residence (or you owned no more than three UK homes.)

This left many landlords (and owner occupiers for that matter) out in the cold.

We have been campaigning on the issue for a number of years, arguing it is unfair that anyone should be asked to pay for repairs for historic construction issues that had nothing to do with them, and calling for these leaseholder protections to be extended.

The Government has listened and, for the first time, will have the powers it needs to recover contributions from manufacturers connected to historic unsafe cladding and insulation products, while extending eligibility criteria.

This will include extending the number of properties a landlord can own while being eligible for help from three to six – meaning many more landlords will qualify for help.

It will also make it easier for you to sell your rental properties, as the Government is exploring ways to remove non-qualifying status from people who buy leasehold homes off landlords.

Who can benefit from the new funding?

The new measures will intend to help:

•  Leaseholders – such as landlords – with multiple properties that have non-cladding building safety problems they did not cause, and who are not currently protected under the Building Safety Act. At the moment, protections cover people who owned no more than three properties on 14 February 2022. The government plans to raise this limit to six, so more people who owned four to six properties and did not qualify on this date will be protected from having these costs passed on to them.
• Leaseholders who buy a flat as their only home but miss out on costs protections because of the previous owners’ circumstances. Under current rules, whether someone is protected from some building safety bills can depend on the circumstances of the person who owned the flat before them – namely on 14 February 2022. In these circumstances they miss out, because a previous owner was ineligible.
• Leaseholders in collectively owned and enfranchised buildings who can face some of the biggest bills for fixing fire-safety problems. Because there is no separate freeholder, residents are, historically not covered by the leaseholder protections of the Building Safety Act.

Step in the right direction

NRLA chief policy officer Chris Norris said: “We have been campaigning on this issue for many years, and today’s announcement is a step in the right direction. It is grossly unfair landlords should face huge bills for safety issues created by manufacturers that have nothing at all to do with them.

“We hope that this will remove some of the obstacles to rectifying safety issues within buildings which have made lives for owners and residents a misery for far too long.” 

What happens next – and how do I access funding?

These new proposals were unveiled in Parliament during the second reading of the Remediation of Unsafe Cladding Bill.

The Bill is intended to speed up action by placing a legal duty on those responsible to fix unsafe buildings, with those failing to act facing criminal penalties and fines of up to £500,000. It will also allow authorities to step in and get work done where those responsible consistently refuse to do so.

The new changes comes alongside plans for wider reforms to give leaseholders stronger rights, protections and control over their homes, with the Commonhold and Leasehold Reform Bill set to be introduced to Parliament before Christmas.

The Government said further details on eligibility and funding for the new protections, as well as how the construction product manufacturer scheme will operate, will be introduced into the Bill later as it passes through Parliament, or will be published alongside it in due course.

Keep an eye on our news and social media channels to stay up to date on progress.