How the Building Safety Act impacts service charges
The Building Safety Act represents a shake-up in the property sector, heralding changes across the board. But how does it affect landlords’ service charges? Let’s find out more.
The Building Safety Act 2022 was brought in by the government in the wake of the 2016 Grenfell Tower disaster. While the most headline-grabbing aspects of the Act relate to fire safety in high-rise buildings, it also has far-reaching effects in construction, planning and several other parts of the real estate sector.
One area where the Act has significant consequences relates to service charges in high-rise rental flats. If you’re a landlord with this type of property in your portfolio, you need to understand the changes now in force and how they affect you. In this article, we’ll explain more.
The Building Safety Act 2022
To safeguard high-rise buildings from fire and avoid another Grenfell disaster, many buildings need urgent alterations, including remedies to their cladding which was the cause of the dreadful fire in 2016. The question is, who will pay for these repairs, which are sure to be highly costly? The government promised that no leaseholder living in their own high-rise flat would have to pay a penny to fix their cladding. So, the burden falls on landlords and freeholders.
What’s more, the Act aims to ensure that landlords cannot pass these costs onto their leaseholders by increasing their service charges. If a tenant has a Qualifying Lease (meaning their flat is more than 11 metres or five storeys high and is their main home), they are protected from higher services charges as a result of cladding alterations by various caps and restrictions. Landlords are also prohibited from passing on legal or professional fees to tenants on a Qualifying Lease.
How can landlords recover their money?
It will be tough for landlords not to be left out of pocket if they need to fix the cladding on their high-rise properties. However, the Act requires landlords to pursue means of alternative funding. These routes to extra capital include:
Grants from the Building Safety Fund
Insurance
Guarantees from developers, designers or constructors
The Act urges landlords to speak to their lawyers to get advice on available options and make applications. If you’re a landlord in this situation, you should not delay acting on these requirements.
Finally, landlords must keep their tenants in the loop on the progress of cladding alterations, even if it includes divulging privileged legal advice or other commercially sensitive information.
Ensuring compliance with the Act
If you’re a landlord with high-rise properties on your books, the Act is sure to make life more complex, even if its aims (avoiding another Grenfell disaster) are laudable. Complying with the Act can be technical, time-consuming and costly.
To ensure you achieve full compliance while minimising stress, it’s essential that you have an experienced property solicitor on your team. They’ll be able to assess your situation, explain your options in an easy-to-understand way and, if necessary, act on your behalf. Don’t delay in fulfilling your requirements under the Building Safety Act. Talk to your solicitor today.
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