An update for the Building Safety Act 2022
A few months ago I wrote about an unfortunate loophole in the Building Safety Act 2022 (‘BSA’). The BSA 2022 provides various statutory protections to leaseholders who own residential flats in certain buildings. But the BSA does not apply to leases created after 14 February 2022. Because a lease extension is technically considered to be the grant of a new lease this meant that any residential leaseholder who had extended the lease of their flat since 14 February 2022 may have lost certain statutory protections they would have otherwise enjoyed under the BSA.
Thankfully parliament has worked swiftly to close the loophole by amending the BSA as part of the Levelling-up and Regeneration Act 2023 which received royal assent on 26 October 2023.
The new section 119A of the BSA creates a new definition of ‘connected replacement lease’ which will enjoy the statutory protections of the BSA if the following criteria are met:
(a) the new lease is a lease of a single dwelling in a relevant building,
(b) the tenant under the new lease is liable to pay a service charge,
(c) the new lease was granted on or after 14 February 2022,
(d) the new lease replaces—
(i) one other lease, which is a qualifying lease, or
(ii) two or more other leases, at least one of which is a qualifying lease, and
(e) there is continuity in the property let (i.e. the new lease is effectively of the same property as in the previous lease).
What this should mean is that the overwhelming majority of leaseholders who extend their lease will not lose their statutory protections under the BSA. The amendment is retrospective, so leaseholders who have extended their lease after 14 February 2022 will enjoy the same protections.
Section 119A has been drafted quite broadly and there is always the possibility that landlords will seek to test the new legislation and argue that leaseholders have lost their statutory protections. However, the consensus among legal experts is that the legislation does effectively close the loophole so this should give leaseholders peace of mind.
We will provide any updates on this issue if the legislation is tested or amended again.
If you require any advice with regards to lease extensions, either from a landlord or tenant perspective, Taylor Walton have a designated commercial property department with experienced solicitors that will be able to help you. To make contact with one of the team please send us your details via our online form.
Disclaimer: General Information Provided Only
Please note that the contents of this article are intended solely for general information purposes and should not be considered as legal advice. We cannot be held responsible for any loss resulting from actions or inactions taken based on this article.
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