Guidance

Building Safety costs: factsheet for landlords & building owners

Updated 5 April 2022

This guidance was withdrawn on 25 July 2022

This guidance is withdrawn as it is no longer current. Please see the latest guidance on the Building Safety Act.

What are we going to do?

The Building Safety Bill establishes new legal duties for landlords and building owners of high rise residential buildings of at least 18 metres or at least 7 storeys to keep their building safe. There will be a cost associated with some of these duties, which can be passed to leaseholders through the service charge.

These costs do not include historical remediation costs, which must be paid by developers or landlords where possible. For more information on these, see the factsheet on leaseholder protections.

Who will pay for the Building Safety Charge?

Leaseholders with leases over 7 years or more, regardless of whether they are an owner occupier or renting to a tenant, in a high-rise multi-occupied building covered by the Bill will be liable to pay building safety costs through the service charge.

This element of the service charge will apply to a leaseholder regardless of whether their landlord is a private landlord, local authority or housing association.

What does these costs cover?

The list of the building safety costs that can automatically be passed through the service charge is narrowly defined in the Bill as ‘relevant building safety measures’. These measures include, for example, preparing a residents’ engagement strategy or preparing or revising a safety case.

In most circumstances they must not include the cost of fixing historical building-safety risks. The Bill sets out when these costs can be shared with leaseholders; those responsible must pay wherever possible, and there are statutory protections for leaseholders.

Why does the Bill need to make these changes to the service charge?

Existing service charge provisions vary considerably depending on the terms of the lease. These include, for example, differing provisions on landlords repairing covenants, what items can be included in the service charge and when estimates and demands can be delivered. It is therefore necessary to ensure that whatever is said in lease, the costs of building safety measures can be recovered so that the costs of the new regime can be met.

Ensuring building safety costs are recoverable under eligible leases will allow building owners to anticipate and be responsive to safety issues, providing clarity on what leaseholders are being asked to pay, without being restricted by pre-existing terms and rules which precede the new building-safety regime in mind.

What does this mean for landlords and building owners?

Those responsible for buildings will need to familiarise themselves with the new requirements concerning accounting for building-safety costs.

Landlords and building owners need to be aware of a new statutory definition that identifies Accountable Persons for occupied higher-risk buildings. Accountable Persons are landlords and freeholders who are legally responsible for repairing the building.

They will need to be aware of the circumstances in which costs cannot be passed on to leaseholders, whether because they enjoy statutory protection, or are short-term renters or social tenants. As with existing duties to maintain buildings for social tenants, local authorities and housing associations will need to fund the cost of fulfilling their obligations under the Building Safety Bill via existing revenue streams.

What are landlords and building owners required to do for building-safety costs in the service charge?

Where activities are defined by the Bill as a “relevant building safety measure” – that is to say, the costs of fulfilling duties under the new regime – the Bill allows them to be collected via the service charge.

There are also some costs that cannot be passed to leaseholders; these include costs that come about through fault on the part of the Accountable Person, such as where enforcement action is taken or due to negligence.

There will be certain expectations on landlords and building owners, which includes calculating and apportioning the building safety costs to be recharged through the service charge and providing a budget of estimated costs. Leaseholders will have the right to challenge the reasonableness of building safety costs, in the same way as they can currently challenge their [service charge].

Landlords and building owners should familiarise themselves with the service charge provisions in the Bill. You can access a detailed explanation of the clauses in the Bill. You should consider how best to communicate how building safety costs can be passed on to leaseholders and prepare them for the new arrangements.

How much will building safety costs cost?

The estimated average monthly cost to a leaseholder is estimated to be between £9 and £26 via the service charge. You can find more information on costs.

We would expect many building owners to already be undertaking a robust assessment and management of risk, engaging residents effectively, and managing information about their building well. Therefore, some of the costs that will now be charged as building safety measures may already be incurred as part of standard practice.

When will these service charge measures come into force?

The changes are intended to come into effect after the Building Safety Bill has been passed by Parliament and become law. Building owners can find out more about when the changes will come in.

The mechanism to collect building safety costs will come into force before the legal requirement to undertake any new duties. This means that building owners will be able to recover any costs incurred in undertaking their building safety duties as soon as the provisions of the Bill come into effect.