What is a qualifying leaseholder under the Building Safety Act?

A qualifying leaseholder is one who owned the lease on 14 February 2022 (the date the leaseholder protections came into force) and for whom the property is their only or principal home, or who owned no more than three UK residential properties at that date. Qualifying leaseholders in buildings where the developer or freeholder is linked to the original developer benefit from full protection and cannot be charged for any relevant building safety remediation costs. Qualifying leaseholders in other buildings benefit from capped contributions.

Are there caps on what qualifying leaseholders can be charged?

Yes. Where the landlord or developer cannot be made to pay, qualifying leaseholders in buildings above 18 metres face a maximum contribution of £15,000 in London (£10,000 outside London) for non-cladding fire safety defects. For buildings between 11 and 18 metres, the cap is £10,000 in London (£5,000 outside London). For cladding defects specifically, qualifying leaseholders cannot be charged at all if the building is above 18 metres. These caps apply per flat over the lifetime of the protections, not per year.

How does the Building Safety Act affect selling a flat?

The Act has significantly improved the position for leaseholders selling flats in buildings with fire safety issues. The leaseholder protections and the EWS1 process mean that many buildings that were previously unmortgageable now have a clear route to remediation funding and lender confidence. However, buildings with unresolved fire safety issues may still face challenges with mortgage lending and insurance. An up-to-date EWS1 certificate showing an acceptable outcome is typically required by lenders for buildings within the scope of the external wall fire risk assessment process.

How the Building Safety Act Affects Leaseholders | Hampstead Chartered Surveyors & Building Consultancy

Q: What costs are leaseholders protected from?

Qualifying leaseholders are protected from the costs of remediating relevant defects in the building, which includes cladding remediation, fire safety defects in external walls, and defects in common parts that create a building safety risk. The protections cover the cost of the remedial works themselves, associated professional fees, and temporary safety measures such as waking watches. Non-qualifying leaseholders (those who owned more than three properties at the relevant date) do not benefit from the cost protections.

Overview

Leaseholder protections explained

The Building Safety Act 2022 introduced comprehensive protections for leaseholders in buildings with fire safety defects. These protections determine who pays for remediation and cap the amounts that qualifying leaseholders can be charged. Understanding your status under the Act is essential if you own a flat in a building affected by cladding or fire safety issues.

Qualifying vs non-qualifying leaseholders

The Act distinguishes between qualifying and non-qualifying leaseholders. A qualifying leaseholder is one who owned the lease on 14 February 2022 and either occupied the flat as their main home or owned no more than three UK residential properties. Qualifying leaseholders benefit from cost protections; non-qualifying leaseholders (those with larger property portfolios) do not.

Cost caps and protections

For qualifying leaseholders, the Act establishes a hierarchy of liability. First, the developer or original builder must pay if they can be identified and are solvent. Second, the freeholder must pay if they are linked to the developer. Only where neither of these can be made to pay do leaseholder contributions come into play, and even then they are subject to caps: £15,000 in London for non-cladding defects in buildings over 18 metres, with lower caps for smaller buildings and outside London. For cladding defects specifically in buildings over 18 metres, qualifying leaseholders pay nothing.

Impact on the market

The protections have significantly improved the position for leaseholders in affected buildings. EWS1 certificates provide the standardised assessment that lenders require, and the combination of government funding schemes and leaseholder protections has restored confidence in many buildings that were previously unmortgageable. However, buildings with unresolved issues may still face lending and insurance difficulties until a clear remediation pathway is established.

FAQ

Frequently asked questions

What is a qualifying leaseholder?

A leaseholder who owned the lease on 14 February 2022 and either occupies it as their main home or owned no more than three UK residential properties. They benefit from cost protections for remediation.

What costs are leaseholders protected from?

Remediation of cladding and fire safety defects, associated professional fees, and temporary safety measures. Non-qualifying leaseholders do not benefit from these protections.

Are there caps on leaseholder charges?

Yes. In London: £15,000 for non-cladding defects in buildings over 18m, £10,000 for 11-18m buildings. For cladding defects in buildings over 18m, qualifying leaseholders pay nothing.

How does this affect selling a flat?

The protections and EWS1 process have improved lending confidence. Buildings with clear remediation pathways are more readily mortgageable, though unresolved issues may still cause difficulties.

Next Steps

How the Building Safety Act Affects Leaseholders