The Effects of The Building Safety Act 2022 on Lease Extensions
When the Building Safety Act 2022 came into force on 28 June 2022, we presumed that it would have little effect on the specialist area of enfranchisement and lease extensions. However, there was a defect in the legislation which means that for leaseholders extending their lease after the 14 February 2022, if their existing lease gave them the benefit of the protections of the Act, these would be lost when entering into a lease extension.
The protections are that the leaseholders are protected from having to pay excessively high bills to remedy defects in any relevant buildings (i.e. cladding or fire safety issues) and that the developers must be responsible for the costs of remedying any defects.
The Government have confirmed that this defect was not intended and they will legislate to remedy the defect. However, in the meantime they are strongly recommending (but cannot enforce) that freeholders contract around the problem to ensure that leaseholders retain their protections when extending their leases.
For a leaseholder of a “relevant building” (which is a building of at least 11 meters high or at least five storeys high), we would look to include a provision in the lease extension that they will remain a “qualifying leaseholder” for the purposes of the Building Safety Act, although, as stated above, the freeholder would need to agree this amendment or the leaseholder would have to look to the First-Tier Tribunal (FTT) to enforce it.
This article is intended for general information only, applies to the law at the time of publication, is not specific to the facts of your case and is not intended to be a replacement for legal advice. It is recommended that specific professional advice is sought before relying on any of the information given. © Jonathan Lea Limited 2023.