Amendments to the Building Safety Act introduced through the Leasehold and Freehold Reform Act 2024
Amendments to the Building Safety Act 2022 were enacted through the Leasehold and Freehold Reform Act 2024.
Applies to England
Amendments to the Building Safety Act 2022 were enacted through the Leasehold and Freehold Reform Act 2024 on 24 May 2024. The measures come into force automatically on 24 July 2024 and make the following changes:
Cost of litigation
Section 117 of the Leasehold and Freehold Reform Act 2024 will mean residents in a Right to Manage (RTM)/Resident Management (RMC) company who run their own buildings can apply for a Remediation Contribution Order and split the costs among a wider group of leaseholders (where the lease allows) by permitting these to be passed on via the service charge. This is a limited exemption to the leaseholder protections under the Building Safety Act which otherwise protects qualifying leaseholders from freeholders passing on the costs of litigation.
Repeal of section 125
Section 118 of the Leasehold and Freehold Reform Act 2024 resolves a conflict between Insolvency Law and section 125 of the Building Safety Act, which would have allowed amounts recovered through the courts for remediation costs under the Building Safety Act to be distributed to creditors in the first instance. It is Insolvency Practitioners’ legal duty to prioritise paying off creditors under the Insolvency Act. The new section 118 of the Leasehold and Freehold Reform Act 2024 repeals section 125 of the Building Safety Act and so prevents the Building Safety Act from being used to secure funds for creditors rather than being used for remediation
Notification of insolvency
The insolvency of an accountable person can have implications for the safe management of a building which is subject to the Building Safety Act regime. The new section 125A of the Building Safety Act (as amended by section 119 of the Leasehold and Freehold Reform Act 2024) puts a duty on Insolvency Practitioners who are appointed to the insolvency of the owner of leaseholder of a residential building, which is at least 5 storeys/11m+ high, to notify local regulators (local authorities and fire and rescue services). In the case of higher-risk buildings (buildings which are at least 7 storeys or 18m+ in height), the Building Safety Regulator must also be advised. This will ensure regulators have a route to engage with both the Insolvency Practitioner and/or residents to check the building is being safely managed during insolvency proceedings.
For more information, please consult the relevant sections in the Leasehold and Freehold Reform Act 2024.