As set out in more detail in my colleague Lauren Michaelides’ recent blog:
- A building safety risk is set out in the Building Safety Act as a “risk to the safety of people in or about the building arising from the spread of fire or structural failure”; and
- Landlords will be required to pay for all costs for building safety risks where the Landlord is ‘involved’ in the works and/or they meet a certain financial threshold.
However, where there is a building safety risk and the above circumstances do not apply in relation to the landlord, leaseholders may be required to contribute to the cost of remedying a building safety risk.
For leaseholders who do not hold a qualifying lease (i.e. the lease did not meet the criteria set out in the Building Safety Act as of 14 February 2022 - for more details on what is the criteria for a qualifying lease, please see my recent blog), there is no cap on the contribution that the leaseholder may be required to pay towards building safety risks (other than the normal provisions that are set out in the relevant lease).
For leaseholders who hold a qualifying lease (i.e. the lease did meet the criteria set out in the Building Safety Act as of 14 February 2022) the Building Safety Act contains leaseholder protections capping the amount that leaseholders may be required to contribute towards building safety risks depends on the value of the lease. The protections are in addition to those protections in relation to cladding remedial works, which I discussed in my recent blog.
The provisions for calculating the cap are set out in the Building Safety (Leaseholder Protections) (England) Regulations and are based on the value of the lease when it was last sold, adjusted depending on the year of sale. Broadly the position is:
- for leases valued at under £325,000 in London, or £175,000 elsewhere – leaseholders are not required to contribute;
- for leases valued at over £325,000 (but less than £1m) in London –- the leaseholder contribution is capped at £15,000;
- for leases valued at over £175,000 (but less than £1m) outside of London - the leaseholder contribution is capped at £10,000;
- for leases valued at £1 million to £2 million in London or elsewhere – the leaseholder contribution is capped at £50,000; and
- for leases valued at more than £2 million in London or elsewhere – the leaseholder contribution is capped at £100,000
Further protections are offered to leaseholders to ensure that large sums are not requested in one invoice, as there is an annual limit on the amount that leaseholders can be required to contribute set at 1/10 of the overall cap. Landlords may therefore need to recover sums over a period of time.
The cap also includes any costs paid since 28 June 2017, waking watch costs, costs of fire alarms and consultant’s fees.
It is also important to note that the caps attach to the lease and not the relevant leaseholder, so where a lease is sold, the cap does not restart and any sums paid by a previous leaseholder will be taken into account.
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