Last week the House of Lords passed two amendments to the Levelling-up and Regeneration Bill. The aim being to address some of the gaps in the leaseholder protections within the Building Safety Act 2022.
The first amendment successfully passed, Amendment 282C, 1 was originally put forward to fix an existing issue in the current Building Safety Act 2022. The purpose is to ensure qualifying leases do not lose their protection if the leaseholder enters into a Deed of Variation or exercises Statutory Lease Extension. This amendment would be backdated to apply since the Building Safety Act came into force. The Government stated earlier this year that they were “looking to legislate to resolve this issue as soon as Parliamentary time allows”, and this amendment now expedites the closure of this gap.
The second successful amendment, Amendment 282ND, 3 increases the protection for “non-qualifying” leaseholders. Non-qualifying leaseholders (who own or have an interest in more than three UK properties), currently face uncapped costs to remediate non-cladding safety defects on all properties except their principal home.
It is estimated that there are around 400,000 dwellings in mid or high-rise buildings that are owned by a non-qualifying leaseholder. Currently, in any building where this is even just one non-qualifying leaseholder who cannot pay the remediation costs, work to make these dwellings safe may be delayed or unable to go ahead.
This amendment has been designed to secure parity between both qualifying and non-qualifying leaseholders by extending leaseholder protections to three properties for all types of leaseholder. The amendment would also ensure that any property, that is jointly owned, is not counted as a wholly owned property. Prior to this amendment, this has unjustly caused many leaseholders to exceed the threshold for protection. Lastly, the amendment removes the “non-qualifying” status from a property once relevant defects are remedied so that the status does not last in perpetuity. This is significant for future purposes such as mortgage lending and subsequent sale of the property.
Suzy Spilling, co-lead of the Non-Qualifying Leaseholders Group stated:
“All leaseholders are blameless and equally deserving of protection from the costs of fixing historic defects. It is a scandal that many thousands of non-qualifying leaseholders are facing life-changing costs, and this could be the first step in righting that injustice. We are grateful to have such strong cross-party support which we will rely on as our battle continues.”
Suzy went on to discuss her own situation as a non-qualifying leaseholder:
“My husband and I jointly own our own home plus four rental properties to provide a retirement income, which includes two flats in Salford with fire safety defects. We each pay tax on the rental income based on our 50% share of the property, so it is inexplicable that joint ownership is not taken into account for building safety purposes. That anomaly means we are deemed nonqualifying, and we are liable for tens of thousands of pounds to fix defects that are not our fault. Every day we live with the possibility that we might receive a huge bill with 28 days to pay and face bankruptcy and losing our home.”
Carla, a shared ownership leaseholder from London, stated:
“I had little choice other than to extend my lease this year, because the lease was getting close to 80 years and if I had waited any longer, it would have become unmortgageable without paying extortionate costs in the future. This issue has been causing a huge deal of distress for so many shared ownership leaseholders like me. It is extremely worrying that a mistake in the Building Safety Act meant the very people the leaseholder protections were designed to protect could be excluded through no fault of their own.”
4 responses
These amendments should have been made in the original text of the BSA, and still require the approval of MPs in the Commons if they are ever to come into law.
Excuse my ignorance, but does this mean the defect the Government made when they drafted the Building Safety Act has now been put right? Or are there more steps in the process before these amendments become law?
Robin, did you ever receive any answers to your above question?
None of this addresses the problem faced by those leaseholders who also between them own the freehold of their property. We are not included in the protections and this was recognised in the original BSA, with a stated intention to address the issue in future. As far as I am aware, there has been no progress on this.