The Building Safety (Leaseholder Protections etc) (England) (Amendment) Regulations 2023 were passed on 20 July – almost identically named to regulations passed in February 2023 but with an added ‘etc’.
The Building Safety Act 2022 restricts landlords recovering via service charges certain costs of dealing with safety defects in buildings taller than 11m or five storeys.
Costs for dealing with building defects cannot be recovered from: any tenants where the landlord was responsible for the defect or associated with the person responsible; or qualifying tenants where the wealth of the landlord’s group exceeded a certain threshold.
In July 2022, Building Safety Regulations prescribed the calculation for the landlord’s net worth and imposed an obligation on current landlords to provide a Landlord Certificate to qualifying leaseholders following certain triggers. They contained a fatal drafting error, later fixed by the February 2023 regulations.
The Landlord Certificate, accompanied by prescribed information and documents, is onerous. The new regulations attempt to streamline it, clarifying the information/documents needed depending on which tests are met. Concerns have already been raised, not least over the need for a second set of regulations to fix flaws in the original drafting.
Lurking in the latest regulations is a fatal consequence for landlords who fail to comply with a simple administrative task. Whenever a landlord issues a Landlord Certificate, it must provide a copy to any other landlord in the building or any management entity within one week. Failure to do so strips the landlord of the ability to recover as service charge any of the costs of dealing with the defect from any tenants in the building. The penalty also applies if the current landlord does not pass on a leaseholder’s certificate within a week of receiving one.
Prepare the floodgates for professional negligence claims.
Matthew Bonye is head of real estate dispute resolution and Shanna Davison is a professional support lawyer at law firm Herbert Smith Freehills