The Building Safety Act 2022 ("BSA") gives tenants of "qualifying leases" protections against costs arising from building safety defects, such as the costs of removal or remediation of any part of a dangerous cladding system.
A "qualifying lease" is a lease of a single dwelling within a "relevant building" for a term of at least 21 years, which was granted before 14 February 2022, and under which the tenant is liable to pay a service charge. The dwelling must also be the leaseholder's main home or the leaseholder must not own more than two dwellings in the UK (apart from their interest under the lease in question). A "relevant building" is a self-contained building or part of a self-contained building, which is at least 11 metres high or have at least five storeys and contain at least two dwellings.
The requirement in the BSA that the lease must have been granted prior to 14 February 2022 in order to be a "qualifying lease" has meant that tenants of such leases have been reluctant to extend their lease terms as they would lose the financial protections afforded to them under the BSA and be potentially liable for the costs of remedying building safety defects.
Section 243 of the Levelling-up and Regeneration Act 2023, which came into force on 26 December 2023, addresses this issue by amending the definition of "qualifying lease" in the BSA, so that it includes a "connected replacement lease". This means that, subject to meeting prescribed requirements, a lease granted after 14 February 2022 extending a "qualifying lease" can be considered a continuation of the previous lease thus preserving the leaseholder's existing rights under the BSA.
Now that the position is clear, Local Authorities may receive an increase in applications for lease extensions from tenants.
To discuss any of the points raised in this article, please contact a member of the team.