As a result of the Building Safety Act 2022’s provisions going into effect today, many leaseholders will now have legal protection against being subjected to inflated costs to make their properties safe (28 June 2022).
Instead, those in charge of prior safety flaws and building owners will be liable for the cost of necessary repairs.
Some builders are already stepping up and taking the proper action; 45 of the largest homebuilders in the UK have promised to repair life-critical fire-safety flaws on all structures 11 meters or taller that they have helped construct or renovate in the previous 30 years.
Stronger provisions in the act include extending the Building Safety Levy, which is projected to be worth £3 billion, giving the Secretary of State greater authority to limit reckless developers’ capacity to build new houses, and strengthening building owners’ legal recourse against developers.
Levelling Up Secretary Michael Gove said:
“Today marks a major turning point for building safety in this country, as we introduce a tough new regime to make homes safe and help rid the sector of bad practice once and for all.
“Hundreds of thousands of innocent leaseholders now have the legal protection they rightly deserve, freeing them from a financial burden they should never have faced.
“I’m pleased that most of the largest developers have agreed to play their part in solving this.
“But there is more to do – we are focusing intensively on work with lenders to unlock the mortgage market and empower leaseholders to take their next step on the property ladder, and we will remain vigilant if anyone fails to act on the pledges they have made.”
The Secretary of State has written to freeholders to acknowledge this significant milestone and to make it plain that the days of leaseholders being hit with high bills for building safety works are now over.
The letter serves as a reminder to freeholders that qualified leaseholders now have legal safeguards against fees, and that any attempt to get around such safeguards would be against the law.
The letter also serves as a reminder of their new obligations under the Act, including the need to ensure that buildings have up-to-date fire risk assessments that take into account the most recent recommendations about proportionality.
The Building Safety Fund, which will soon reopen for new applications, requires full assessments to be prepared for submission in cases where freeholders or owners of buildings over 18 meters with cladding-related issues do not have clear plans to address these issues.
This will help to ensure that applications can be handled in good time, minimizing the disruption and stress to leaseholders.
Leaseholders must be kept updated and consulted at all times. Responsible authorities now have the legal authority to order them to remediate their buildings and to guarantee that they pay the associated costs if they refuse to do so.
In addition, contracts for a new Professional Insurance Indemnity Scheme have been signed by the government.
The ability of professionals to make wise decisions will be ensured, and common sense and proportionality will be restored to the market. This will assist assessors in conducting EWS1 evaluations to determine if buildings have fire safety hazards.
To guarantee leaseholders are protected, the following Act provisions have been prioritized and are effective as of right now:
Leaseholder protections
For the first time, qualifying leaseholders living in buildings above 11 metres tall or with at least 5 storeys will be legally protected from extortionate building safety costs:
- Qualifying leaseholders (those living in their own homes, or with up to 3 UK properties in total) will be protected, in full, from the costs associated with the remediation of unsafe cladding. They will also have robust and far-reaching protections from the costs associated with non-cladding defects, including interim measures like waking watches.
- It will be illegal for freeholders to pass on the cost of historical building repair works or the removal of cladding to any of their leaseholders, including non-qualifying leaseholders, if they are or are linked to the building’s developer.
- It will be illegal for freeholders to pass on any historical building safety costs to qualifying leaseholders if they pass the wealth test set out in law.
- Where a developer cannot be held responsible and the building owner is not required to meet the costs in full, leaseholders with non-cladding related issues will also be protected by a cap on how much they can pay for these costs. The cap will only apply to non-cladding related work for those whose property is valued at more than £325,000 (London) and £175,000 outside London (owners of properties below this ceiling will pay nothing). Where leaseholders have bought through shared ownership, their cap will reflect their share of ownership in the property.
- Any costs that are not recoverable from leaseholders will need to be met by building owners and landlords.
- Buyers of new build homes will be able to hold their developer responsible for safety and quality issues under a new scheme from the New Homes Ombudsman.
Other measures in the act include:
Making industry pay
- New powers for the Secretary of State to restrict irresponsible developers’ ability to build new homes, including if they refuse to take responsibility for fixing life-critical fire safety defects on all buildings 11 metres+ that they have played a role in developing or refurbishing in the last 30 years.
- Extending the Building Safety Levy to be charged on all new residential buildings. Expected to raise an estimated £3 billion over 10 years, this will fund a new government scheme to pay for the removal of unsafe cladding on buildings of 11-18m where the developer cannot be traced or has failed to agree to cover the costs upfront.
- Enhanced civil liabilities for building owners, enabling them to launch legal action against developers, contractors and manufacturers for shoddy construction works and defective products which have caused homes to be unhabitable in the past 30 years.
- Extra powers for the courts in England and Wales to go after associated companies. This means businesses who have hidden behind shadowy shell companies within their corporate structures can now be pursued to pay.
- These new laws will allow the government to consider appropriate action to pursue these companies as part of a new Recovery Unit that is based in the Department for Levelling Up, Housing and Communities.
Improving building standards and restoring common sense
Tough, new regulations for the industry will enforce a higher quality of building standards – ensuring homes are made safer and that a proportionate approach is taken to safety:
- A new Building Safety Regulator – overseen by the Health & Safety Executive – will enforce a new, more stringent regulatory regime on the safety and performance of high-rise buildings in scope, in England. It will also consult and respond to safety concerns raised by residents through a new Residents’ Panel.
- A National Regulator for Construction Products will implement stronger standards on construction manufacturers in the UK. Part of the Office for Product Safety and Standards, this new regulator will conduct vital market surveillance to spot and remove unsafe materials faster, as well as confront poor practice by taking action against those that break the rules.