Information for Buyer’s of Leasehold Properties

With over 45% of law firms deciding not to act in connection with any properties affected by the Building Safety Act 2022, we have a specialist dedicated team to deal with this on your behalf. The following links provide further information on what we can do to help.

The Building Safety Act 2022

We would like to explain how some aspects of the Building Safety Act 2022 (BSA 2022) might affect your purchase of a leasehold property.  The BSA 2022 is designed to improve safety in high-rise buildings by imposing on-going duties on those who manage tall buildings.  It also deals with who should pay to remove defective cladding from tall buildings and for other repairs that are needed to remedy historic defects.

Does the BSA 2022 apply to the property?

The duties relating to the ongoing management of building safety risks apply to “higher-risk buildings”.  Broadly speaking, a higher-risk building is a building that is at least 18 metres in height (or has at least seven storeys) and contains at least two residential units.

The provisions in the BSA 2022 about remedying historic defects apply to “relevant buildings”.  To be a relevant building, the building must be (among other things) at least 11 metres in height or have at least five storeys.

We recommend that you should take independent specialist advice as to the height of the building and as your legal adviser we will also raise enquiries of the seller and/or their landlord/managing agent regarding this.  As such, we will rely on other parties (such as your lender or your surveyor) to determine whether the building could be either a “higher-risk building” and/or a “relevant building”.  We will check that the information we collect during our investigations into the property is consistent with their view on whether the property is in a higher-risk building and/or a relevant building, and will inform you of any discrepancies.  We will also assess whether the property has a “qualifying lease” as required under the BSA 2022 (see further comments below).

What if the building is a “higher-risk” building?

If the building appears to be a higher-risk building then the BSA 2022 requires the “accountable person” to assess and manage any building safety risks that could cause harm to people in or around the building.  The accountable person might be the landlord or it could be a management company.

The costs of taking building safety measures can be charged through the service charge of certain leases, even though this is not expressly referred to in the lease.  We will advise you if it appears that your lease could be subject to this additional service charge.

You should be aware that the service charge paid in the years before 2023 will not have included this additional charge, so future service charges may be higher than those in previous years.

What if the building is a “relevant building”?

If it appears that the building is a relevant building, unless you instruct us otherwise, we will investigate:

  • Whether there are any known historic defects in the building
  • Whether any remediation works are in progress or planned and how disruptive any works would be to the property.
  • Who is liable to pay for any remediation works, including whether the lease you are buying could be a “qualifying lease” which benefits from the leaseholder protections that restrict the amount that you can be required to pay towards the remediation works. To be a qualifying lease, the lease must have met certain criteria on 14 February 2022.  You should be aware that the status of the lease as a qualifying lease (or not) may have an impact on the valuation of the property and, in some cases, on the mortgage lender’s willingness to lend on the property.

What are the risks?

When investigating the property, we will rely on information given by the seller’s conveyancer.  We cannot verify all of the information independently and are not liable for any errors or inaccuracies in the information we receive.

There is a risk that the information that we are given might later turn out to be incorrect, possibly after you have bought the property.

The effect of this could be that you buy the property believing that the lease is a qualifying lease (and that it therefore benefits from the protections in the BSA 2022 that limit the amount that the leaseholder can be charged for remedying historic defects) when, in fact, the lease is not a qualifying lease and you are liable to pay significantly more towards the costs of remedying historic defects.  We will however raise suitable enquiries of the seller and their conveyancer to obtain as much information as possible and to safeguard your interests and that of your lender (if any) as much as possible.

This risk applies to all leases in buildings that are affected by the BSA 2022.  The Law Society has asked the government to take steps to reduce the risks, but these measures are not in force at the moment.

Will the BSA 2022 investigations cost more or cause delays?

During our investigations we will gather information about the property, including how it is affected by the BSA 2022 as outlined above.  These investigations may take longer than they would for a purchase that is unaffected by the BSA 2022.

Due to the additional checks and/or enquiries we will need to make, the purchase make take longer than expected.  In addition, if, when we provided you with your conveyancing estimate, it was not known that the BSA 2022 applied to the property you are purchasing, additional fees will be payable.  We will advise you of what those are and let you have a revised estimate of costs and expenses if this is the case.

Will my mortgage lender want to know what the investigations show?

If we are acting for your mortgage lender, we will have to satisfy their requirements in relation to the BSA 2022 before the purchase can progress to completion.  These requirements vary from lender to lender, with some being more onerous than others.  We will advise you if we are unable to satisfy their requirements and this may mean that you will need to seek an alternative mortgage lender to enable your purchase to proceed.

Will I receive further information on how the property is affected by the BSA 2022?

Once we have carried out our investigations into the property we will send you a report on title, which will include any information we have discovered about how the property appears to be affected by the BSA 2022.

 

 

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