The Leasehold and Freehold Reform Bill — strengthening leaseholder protections against the cost of building remediation work

The Leasehold and Freehold Reform Bill was introduced to Parliament on 27 November 2023 and is currently in the second reading stage in the House of Lords.

As part of its objective, the Bill is intended to give more rights and protections to homeowners as part of the most significant reforms to the leasehold system for a generation. The Bill proposes a number of amendments to the Building Safety Act 2022 with a view to ensuring that freeholders and developers do not escape their liabilities to fund remediation work. 

In its current draft, Part 8 of the Bill includes proposed amendments to Part 5 of the Building Safety Act 2022 in relation to:

1. A new definition of ‘relevant steps’, namely the steps the freeholder is required to take in relation to remediation of defects. These include steps which have as their purpose:

• preventing or reducing the likelihood of a fire or collapse of the building (or any part of it) occurring as a result of the relevant defect
• reducing the severity of any such incident, or
• preventing or reducing harm to people in or about the building that could result from such an incident.

2. The definition of ‘relevant measure’ in Schedule 8 (remediation costs under qualifying leases etc) to be substituted with:

• a measure taken to remedy the relevant defect, or
• a relevant step taken in relation to the relevant defect.

3. The definition of ‘remediation order’ in section 123 to be replaced with an order requiring a relevant landlord to ‘do one or both of the following by a specified time:

• remedy specified relevant defects in a specified relevant building
• take specified relevant steps in relation to a specified relevant defect in a specified relevant building.

4. Proceedings for a remediation order to include the First-Tier Tribunal’s ability to provide directions requiring a relevant landlord to provide or produce an expert report or survey relating to:

• relevant defects, or potential relevant defects, in a relevant building
• relevant steps taken or that might be taken in relation to a relevant defect in a relevant building.

5. The definition of ‘remediation contribution order’ to include costs incurred or to be incurred in remedying or ‘otherwise in connection with’ relevant defects to include:

• costs incurred or to be incurred in taking relevant steps in relation to a relevant defect in the relevant building
• costs incurred or to be incurred in obtaining an expert report relating to the relevant building
• temporary accommodation costs incurred or to be incurred in connection with a decant from the relevant building (or from part of it) that took place or is to take place;

1. to avoid an imminent threat to life or of personal injury arising from a relevant defect in the building
2. (in the case of a decant from a dwelling) because works relating to the building created or are expected to create circumstances in which those occupying the dwelling cannot reasonably be expected to live, or
3. for any other reason connected with relevant defects in the building, or works relating to the building, that is prescribed by regulations made by the Secretary of State.

Practical implications

If passed without amendment, the Leasehold and Freehold Reform Bill will increase leaseholder protections under the BSA 2022 in respect of ‘relevant buildings’ (buildings at least 11 metres high or with at least 5 storeys containing 2 or more residential units).

In particular:

• the widening of remediation orders, whereby interested parties can now apply for remediation orders to require a "relevant landlord" to remedy a "relevant defect". The newly introduced concept of "relevant steps" will also allow for the application to require the landlord to take mitigation measures, such as fire prevention or building collapse reduction
• amendments to Schedule 8 of the BSA will further limit the recovery of service charges for building safety issues which will include the cost of any "relevant step"
• the expansion of remediation contribution orders to cover costs of expert reports and temporary accommodation.