Long-awaited amendments to the regulations governing leaseholder protections under the Building Safety Act 2022 have been issued and came into force on 5 August 2023. While some aspects will simplify the landlord's certificate process, others introduce additional pitfalls for landlords.
The Building Safety (Leaseholder Protections etc.) (England) (Amendment) Regulations 2023 (the Amendment Regulations) introduce amendments to two significant pieces of secondary legislation introduced under the Building Safety Act 2022 (BSA 2022), namely the Building Safety (Leaseholder Protections) (Information etc.) (England) Regulations 2022 (the Information Regulations) and the Building Safety (Leaseholder Protections) (England) Regulations 2022 (referred to as the Leaseholder Protections Regulations).
Amendments to the Leaseholder Protections Regulations
Many landlords and conveyancers will breathe a sigh of relief to see that the Amendment Regulations introduce a more tailored form of landlord's certificate, meaning that each section of the certificate only needs to be completed where it is actually relevant to the leaseholder's potential liability for remediation costs.
The amendments also streamline the evidence and information that is required to be enclosed with the certificate, meaning that evidence is now only required to be provided where the leaseholder faces a potential liability for remediation costs. For example, there is an exemption from providing substantial documentation associated with the landlord's group of companies where the landlord accepts either responsibility for relevant defects in the building or that it meets the contribution condition relating to the net worth of the landlord group.
There is a further option to indicate where the landlord is exempt from the contribution condition and therefore calculation of the net worth of the landlord group (and provision of related information), which will be the case where the landlord is a private registered provider of social housing or a local authority.
The downside for landlords is the introduction of a further trigger requiring a landlord certificate to be served within four weeks of a leaseholder deed of certificate being served that contains information that was not included in a previous landlord's certificate.
Amendments to the Information Regulations
Many of the changes introduced to the Information Regulations are expected, including the inclusion of the government's home-building body Homes England as an "interested person" who is able to seek a remediation order to compel a landlord to undertake remediation works, or a remediation contribution order requiring a landlord, developer or their associate to pay for remediation costs. Resident management companies, right to manage companies and named managers are now also able to seek remediation contribution orders.
Further clarifications have been made to the provisions allowing current landlords to serve notice requiring payment for remediation costs from former landlords or other landlords in the building where the current landlord is unable to recover those costs via service charges from leaseholders due to the leaseholder protections. These provide an alternative to a remediation contribution order for current landlords seeking to remediate building safety defects and will be much easier to pursue due to the absence of the "just and equitable" test in section 124 of the BSA 2022, which governs remediation contribution orders. Instead, by simply requiring the service of a notice, this route provides more certainty for landlords who have purchased the building since 14 February 2022 and find themselves out of pocket following the discovery of relevant defects.
The Amendment Regulations set out prescribed information to be included in such a notice and sets out that if the recipient of the notice disputes their alleged liability to pay, they must appeal to the First-tier Tribunal (Property Chamber) within 30 days. If there is no appeal, or the Tribunal establishes liability, then the former landlord will be required to pay the remediation amount set out in the notice, which is recoverable as a civil debt.
The Amendment Regulations introduce further onerous obligations on current landlords, providing that within one week of either serving a landlord certificate or receiving a leaseholder deed of certificate, the current landlord must provide a copy of the certificate to any other landlords of premises in the building, the Resident Management Company, Right to Manage company or named manager. If the landlord fails to do so, then the costs of remediating defects in the building cannot be recovered via service charges.
Actions required
Despite the introduction of the Amendment Regulations, the landlord certificate process remains exceptionally complex and is likely to cause continued frustration for landlords and leaseholders alike. In order to achieve compliance, landlords will need to implement the following changes with immediate effect:
- Ensure that the new prescribed form of Landlord Certificate is used;
- Comply with the revised provisions regarding supporting evidence to be enclosed with the certificate;
- When a Landlord Certificate is served on a leaseholder or a leaseholder deed of certificate is received by the landlord, ensure that a copy is sent within one week to any other landlords of premises in the building, the Resident Management Company, Right to Manage company or named manager; and
- Within four weeks of becoming aware of a new leaseholder deed of certificate containing information that was not included in a previous landlord's certificate, a new landlord certificate incorporating the updated information will need to be served.
