The Building Safety Act 2022 (“BSA 2022”) has already been subject to amendment and a large number of secondary regulations. The Levelling Up and Regeneration Act 2023 ("LUARA 2023"), amends the BSA 2022 again, and resolves a potential problem in connection with statutory lease extensions.
Schedule 8 of the BSA 2022 introduces certain protections for leaseholders as to what sums in relation to ‘relevant measures’ to ‘relevant defects’ can be claimed from them by way of service charges. As the BSA 2022 was originally drafted, for a leaseholder to benefit from some of the key protections afforded to them by Schedule 8, the lease had to be a ‘qualifying lease’. To be a qualifying lease (amongst other things), the lease had to be granted prior to 14 February 2022.
This created problems for leaseholders where they had extended their lease on or after 14 February 2022 because an extension, whether voluntary or under the Leasehold Reform, Housing and Urban Development Act 1993, takes effect as a deemed surrender and regrant. Where this had occurred post 14 February 2022, the tenant’s lease would no longer be a ‘qualifying lease’ for the purposes of Schedule 8 BSA 2022.
This issue was brought to the Government’s attention at an early stage, and it had (as an interim measure) recommended that leaseholders and landlords agree contractual terms that mirror the statutory protections the lease would have enjoyed under Schedule 8. There was though at that time, no statutory obligation on landlords and leaseholders to do so, and of course if a leaseholder was not well-advised the issue could be overlooked in any event.
Without much fanfare, the issue has now been addressed in the LUARA 2023, which received Royal Assent on 26 October 2023. This introduces (though it is not yet clear when this comes into force) a new section to the BSA 2022, s.119A, which provides that a qualifying lease will remain one, even if it is varied or a surrender and regrant takes place (and in some other scenarios). This will be retrospective and therefore include situations where a surrender and regrant took place prior to the new s.119A BSA 2022 coming into effect, once it does so.
We are following developments on our Building and Fire Safety Hub, which can be found here.
“In a nutshell, the Government made a mistake when they drafted the Building Safety Act. Unwittingly, they have removed the protection that some leaseholders were entitled to. They have known for months that there has been this defect, and I do not accept that the defect is so complex that it cannot now be put right. That is what my amendment does. I seek leave to test the opinion of the House”.—[Official Report, 18/9/23; cols. 1248-95.]