Following on from Ian Seeley’s analysis on the Building Safety Bill (“the Bill”), there is a particular point which we expand upon here, in order to consider the Bill from the perspective of the occupiers of the buildings the Bill effects.
In a nutshell, the Bill seeks to set the groundwork for ensuring the safety of a building during its lifecycle – i.e. during construction and afterwards. The reason the Bill has been created is to carry forward the Governments ‘Building a Safer Future’ consultation, which came into existence following the Grenfell Fire tragedy in 2017.
The new regime, overseen by the Health and Safety Executive, is expected to apply to all multi-occupied residential buildings over 18 metres, or 6 storeys, in England – these are referred to in the Bill as ‘Higher Risk Buildings’ (“HRBs”). It appears likely on the face of it that the Bill will include existing properties as well as newly constructed. However, the full definition is to follow in secondary legislation, so we don’t yet know the scope of the definition of HRB will be.
The significance of the Bill for leaseholders is that it enables new terms to be implied into long leases (i.e., leases over 21 years) out of HRBs in England and Wales to enable recovery of costs for building safety expenditure by the freeholder during the lease. This is referred to as the ‘Building Safety Charge’ (“the Charge”).
The Charge is to cover the costs of ongoing fire and structural safety of the building, which is required to be managed by an ‘Accountable Person’ (this might be the landlord, but does not have to be), who will appoint a building safety manager to attend to building safety on a day to day basis. The Charge which will be separate to service charges, which is currently where the cost of fire safety works is generally recovered.
As the Charge is separate to other charges, the freeholder must keep the money paid in a separate account. Leaseholders can only refuse payment if it the Charge is deemed unreasonable, or a clear breakdown has not been given. Otherwise, the Bill requires the payment to be made within 28 days of the request being issued. Leaseholders are also required to keep and repair relevant safety items and to ensure they cooperate with an Accountable Person’s requests.
The Charge is intended to not only ensure ongoing safety of HRBs, but to force freeholders to be transparent with leaseholders about what they are being charged for when it comes to ensuring the safety of the building they live in.
Many leasehold organisations have welcomed the change – but only to an extent. With the increased liability to ensure building safety the costs required to be paid by certain leaseholders will inevitably increase. The Government has published within its guidance a semblance of reassurance for those in existing HRBs, though, stating it is “…committed to making sure that leaseholders won’t pay unaffordable costs for historic repairs to their buildings”. The Bill does also, as mentioned above, include within it an ability to withhold payment on grounds of reasonableness.
The interaction (and perhaps, clash) between the desire for safety and the cost of safety will undoubtedly give rise to a new wave of disagreements between landlords and tenants. If you have any queries on the Bill, or what the Bill will mean for you, then please contact Lee Pearce, Joe Brightman or Molly Frankham.