Ongoing Building Safety costs: factsheet for leaseholders
Updated 5 April 2022
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This publication is available at https://www.gov.uk/government/publications/building-safety-bill-factsheets/building-safety-charge-factsheet-for-leaseholders
This factsheet does not apply to historical building-safety costs. The government has put in place a system of leaseholder protections to ensure that developers and wealthy landlords who own buildings are required to pay for these wherever possible. See more information about the costs of fixing historical problems.
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 new duties, which can be passed to leaseholders through the service charge.
Who can these costs be passed on to?
Leaseholders with leases longer than seven years, 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 do 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 ‘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 the when these costs can be shared with leaseholders; those responsible must pay wherever possible, and there are statutory protections for leaseholders.
How much will it cost?
The average monthly cost to a leaseholder is estimated to be between £9 and £26 via the service charge. 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 measure costs should already be incurred as part of standard practice.
Why are leaseholders paying for building safety costs?
It is common for leaseholders to contribute to routine maintenance costs, building repairs and refurbishments through the service charge. Leaseholders will directly benefit from the building safety measures, ensuring that their building is safe.
What does this mean for leaseholders?
Someone with a lease of at least seven years on a property in a building of 18 metres or above or at least seven storeys will be required to pay ongoing building safety costs via the service charge.
These building safety costs will include the ongoing costs a building owner will incur as part of the new regime. As with other service charges, there will be statutory rights and protections for leaseholders which will work with the new regime.
Where works are necessary to meet essential safety requirements, they may form part of the service charge, depending on the terms of the lease and the statutory protections for leaseholders introduced by the Bill, which may apply. The Building Safety Regulator will have powers to ensure necessary works are carried out.
Why does the Bill 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 that can be included in 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 relevant leases will allow building owners to anticipate and be responsive to safety issues, while providing clarity on what leaseholders are being asked to pay.
What routes to redress are there for leaseholders?
Leaseholders will have the right to challenge the reasonableness of building safety costs, in the same way that they can already challenge the reasonableness of their service charge.
What protections are there for leaseholders?
Landlords will be obliged to provide details of building-safety costs in the service charge, together with a summary of leaseholders’ rights and obligations.
There are also rights for leaseholders to request further information about the service charge. Leaseholders will be able make a written request to the Accountable Person (or to any special measures manager) to supply them with a summary of the service charge.
Moreover, once a summary has been obtained, that person may request, in writing within six months of receiving the summary, reasonable facilities to inspect accounts, receipts, and other supporting documents and to take copies or extracts.
The Bill sets out what building safety costs cannot be passed on in the service charge. For example, the costs of enforcement action against a building owner by the Building Safety Regulator can never be passed to leaseholders, through any service charge. This provides leaseholders with further protection against unfair costs.
This will mean there is a clear audit trail setting out precisely how costs incurred are required by law. Leaseholders will be able to interrogate charges, voice their opinion on certain proposed contracts and challenge the reasonableness of costs incurred.
What happens if leaseholders don’t pay building safety costs?
Leaseholders who struggle to pay their service charge ought to speak to their landlord as soon as possible. Unless an individual lease provides otherwise, leaseholders may be pursued for payment in the same way as they can be pursued for non-payment of any other element of their service charge.