The Department for Levelling Up, Housing and Communities has released an update to its guidance on the current confusion around the implementation of the Building Safety Act (BSA) and the extent to which the leaseholder protections apply in cases there is a lease extension.
The “Qualifying date, qualifying lease and extent,” first published in July 2022 has been updated to provide guidance on lease extensions. The updated wording, outlined in paragraph 8 states
“Leaseholders should seek legal advice to make sure explicitly in their agreements that their protections are extended as part of their lease. It was intended to work like this and freeholders should make sure that lease extensions reflect this position.”
However, the response has been underwhelming with practitioners taking to social media to express their continued confusion at the legislation which risks bringing the leasehold property market to a standstill as firms refuse to act in cases affected by BSA.
A recent Today’s Conveyancer survey* revealed 52% of respondents said they were not currently acting on sales or purchases of leasehold properties affected by the BSA. A further 15% said they were only acting in transactions with certain lenders.
There has been widespread criticism of the lender’s response to the introduction of BSA, with “onerous” Part II requirements placed on conveyancers. Nationwide and The Mortgage Works (NBS & TMW) in particular have come under fire with a subsequent UK Finance Lender Handbook update stating
As you will no doubt be aware, earlier in the year we completed our UKF Lender Handbook Part 2 requirements for the new 5.14.17 Part 1 section.
There does appear to be some confusion regarding when these instructions are relevant and for which buildings, as we are seeing a high number of queries from Conveyancers regarding properties for which the Building Safety Act does not apply, nor our instructions.
Within our Part 2 requirements for 5.14.17a, we confirm the following:
‘Where we have not provided you any information or documentation regarding Building Safety, you can assume that no checks or further information are required.’
For clarity, when you do receive a relevant instruction, these documents (also outlined in Section 5.14.17a & b) will be accompanied by a Covering Letter and attached to Lender Exchange along with the Offer document. These will be clearly labelled.
We hope that confirmation of the above will assist you and your firm in identifying relevant instructions and minimising avoidable delays.
Thanks
Nationwide
PI Insurers remain tight-lipped and are in a “wait and see” phase concerning the Building Safety Act, reminding firms to take a “precautionary approach” to leasehold work, especially in transactions affected by the BSA, ensuring all advice is documented and evidence can be provided should any issues arise in the future.
*Poll of Today’s Conveyancer’s readership conducted via social media with the authenticity of respondents as conveyancers verified. Results accurate as of 31st March 2023.
2 responses
In other words, it’s a matter of negotiation. But why should a ground landlord agree to it? Lease extensions are a statutory process. Landlords are not obliged to agree to anything beyond what statute provides.
Is this only relevant where this are already historical remedial works at the building?
If there haven’t been any then is there still a need to include a provision?