Sales and purchases of leasehold properties are increasingly more time consuming. Below are some recent updates which could be useful for anybody looking to sell a leasehold property to ensure you are aware of what could be asked during the sale process. Being prepared from the outset of a sale could prevent lengthy delays to a transaction.
Building Safety Act
The Building Safety Act 2022 (“BSA”), amongst other things, provides protection for ‘qualifying leaseholders’ against the costs of works to be carried out to their building where their building is a ‘qualifying building’ (which is a building more than 11 meters or 5 Storeys high and where construction was completed before 27 June 2022) for cladding and non-cladding related fire risks.
To be a qualifying leaseholder, the following must apply:
1. The lease is a long lease (which means a lease of a term of more than 21 years) of a single dwelling in a relevant building;
2. The tenant under the lease is liable to pay a service charge;
3. The lease was granted before 14 February 2022; and
4. At the qualifying time (defined as the beginning of 14 February 2022);
a) the dwelling was a relevant tenant’s (which means any one of a number of tenants) only or principal home;
b) a relevant tenant did not own more that 3 dwellings in the UK in total.
Where the above conditions are met and the building is a qualifying building, a leaseholder and a freeholder will be required to provide a ‘Deed of Certificate’ in various situations, including when a leasehold interest is sold. If a leaseholder fails to comply within the specified time period, they risk losing any status as a qualifying leaseholder. The consequence of that is a leaseholder may find themselves liable for the costs of relevant defects where they might otherwise not have been. Similarly, if a freeholder fails to complete a Deed of Certificate at the relevant time, they may be unable to recover the costs of relevant defects from any leaseholder whether they are qualifying or not.
This requirement has seen a dramatic impact on the progress of leasehold transactions whilst landlords, tenants, management companies and managing agents implement and provide required documentation. Should you require assistance in completing a leaseholder or freeholder deed of certificate, our property litigation team would be more than happy to assist with this.
To prevent delays to transactions it is advisable for sellers of leasehold property in qualifying buildings to obtain advice early on for the documents to complete and enter into dialogue with their landlord or managing agent as soon as possible to ensure the relevant certificates are being dealt with by or on behalf of the landlord.
Since 1st October 2023, it has been a requirement that all high risk buildings (those that are over 18 meters tall or at least 7 storeys) are to be registered with the Building Safety Regulator. The accountable person (this is an organisation or person who has a legal obligation to repair common parts) will need to show that a high-risk building has been registered. Again, potential sellers of leasehold property in high-risk buildings should be in contact with their landlord to ask for evidence that the building has been registered with the Building Safety Regulator prior to marketing their property.
Building Regulations
In addition the BSA has implemented amendments to current legislation relating to enforcement periods that Local Authorities will have for breach of the Building Control Regime, these have been extended from 12 months to 10 years. This will mean there are now more requirements for evidence that works completed by property owners have met building regulation requirements. Ensuring seller’s have this information to hand to pass onto their solicitor will help reduce delays to transactions. If sellers appoint their conveyancer prior to offers being made this could assist in ensuring there is a complete contract pack to send out once a purchase has been agreed.
External Fire Risk Assessments
There have been changes to the requirements for fire risk assessments. The ‘BSA’ made various amendments to the Regulatory Reform (Fire Safety) Order 2005 Any residential buildings with 2 or more sets of domestic premises will require a fire risk assessment that considers the structure, external walls and flat entrance doors. Residents must be provided with information on the risks from fire and the fire safety measures provided to keep them safe.
This now means that all leasehold properties will require a fire risk assessment including maisonette style properties which have no shared communal areas.
Early instruction of a fire risk assessment will help prevent delays during the transaction and will allow the building owners time to implement any recommendations that may be highlighted in good time.
If you require any further information, please do contact Claire Turner, Charlene Boyaram or Carly Callaghan who would be pleased to assist.