The Building Safety Bill this week received Royal Assent and passed into law – although it won’t come into force for two months. The conclusion of the bill process sees confirmation about the level of funding available for the remediation of unsafe cladding in medium-rise buildings (11-18 metres high) in England.
Following a robust campaign by the NRLA, the UK Government reversed its original suggestion to completely exclude leaseholder landlords from plans for developers to cover the cost of cladding remediation in medium-rise blocks.
Under the new legislation, owners of up to three properties in the UK will qualify for the protections. This includes all properties, not just those which require remediation – for example, an owner-occupied principal home plus two let properties.
However, landlords with larger portfolios will be excluded from the protections unless the affected property is their primary residence, despite widespread support across the political spectrum for provisions to be extended. The NRLA has continued to highlight the risks of treating landlords differently from other leaseholders and the impact this will have on all owners if works are delayed.
For non-cladding remediation, developers and then building owners will be expected to cover these costs where possible. Building owners will be legally required to prove there are no other sources for funding before passing any costs onto leaseholders.
Building owners will not be able to pass costs onto qualifying leaseholders where they are, or are linked to, the developer or where they have sufficient net wealth.
In the remaining cases, the cost of remediation of non-cladding defects and interim measures, such as waking watches, will be shared between the building owner and leaseholders. Qualifying leaseholders (as outlined above) will be protected by a cap:
- Outside London: no cost for properties valued less than £175,000; £10,000 cap for properties valued £175k-£1m
- Within London: no cost for properties valued less than £325,000; £15,000 cap for properties valued £325k-£1m
- Across England: £50,000 cap for properties valued £1m-£2m; £100,000 cap for properties valued over £2m.
The costs will be spread over 10 years, and any payments for non-cladding defects or interim measures made in the last five years will count towards the cost cap. The building owner will be responsible for any costs above the cap.
There will be no protections for leaseholders in buildings less than 11 metres high, as the Government considers there’s “no systematic fire risk”. Buildings over 18 metres high continue to be covered by the Building Safety Fund.
The Government guidance on the leaseholder protections is available on the GOV.UK website.
The Building Safety Bill is an extensive piece of legislation, addressing issues raised by the Grenfell Tower fire and subsequent inquiry. Other provisions include:
- Requiring building owners to manage building safety risks, including involving residents in decision-making
- Residents have legal obligation to respond to requests for information from accountable person and to ensure their actions don’t create safety risks
- New Building Safety Regulator within the Health and Safety Executive to implement and enforce regulations for residential blocks over 18m high
- National regulator for safety of construction products
- Extension of limitation period for build and refurbishment defects to 30 years.
Implementation of the full scope of the legislation is expected to take 12-18 months.