Building Safety Act 2022: changes to leaseholder protections

Lauren Madams, a specialist lease extension solicitor, takes a look at the proposed changes to leaseholder protections under the Building Safety Act 2022.

Leaseholders and solicitors alike gave a small sigh of relief on 18th September, when the House of Lords voted in agreement to an amendment to the Building Safety Act 2022 which, if successfully passed through Parliament and given Royal Assent, could see qualifying leaseholders have their protections restored where they own a flat within a relevant building (a building which contains 5 storeys or more, or is 11 metres or higher), and meaning lease extensions can proceed as normal.

On the basis of the proposed wording of the amendment ‘282C, 1’, any qualifying leaseholder issued with a new lease since the Act came into force last year, and going forward, would have protections, from possible remediation costs, reinstated to them if their flat is located within a Relevant Building.

Separately, in respect of flat owners who are at the moment considered ‘non-qualifying leaseholders’ (they own a flat within a relevant building, but they also currently own 3 or more dwellings within the UK, and so the protections would not apply), an additional amendment ‘282ND, 3’ will hopefully change this position, and so if a ‘non-qualifying leaseholder’ owns up to 3 properties (owned wholly and not jointly) they will now have the same protections from costs as those leaseholders who were ‘qualifying’.

However, it should be noted that the wording of both amendments is subject to change until the amendment is agreed and passed into law.

Leaseholder protections: why is this announcement important?

When the Building Safety Act was given Royal Assent back in summer 2022, it quickly became apparent that there was a glaring error in the drafting relating to qualifying leases and qualifying leaseholders, meaning that tens of thousands of leaseholders could lose their protections from remediation works costs to their building (if it was considered a relevant building) if they proceeded to complete a lease extension, and which could expose them to significant cost implications in the future, where they would not have been before had they not completed their lease extension.

When can we expect this change to be enacted?

Now that the House of Lords have agreed to the amendment, it will need to move through the various stages of parliamentary process, and go before the House of Commons, where both Houses then need to be in agreement to the wording of the amendment, until it is finally put before the King, given Royal Assent, and brought into force as law and as an amended Act.

The Leasehold Enfranchisement Division at Holmes & Hills will be following developments closely in respect of this amendment, and will be watching the King's Speech closely in November as to any parliamentary announcements.

Our previous article The Building Safety Act 2022: what's new for leaseholders? discusses the Act from the leaseholder perspective.