Leasehold and Freehold Reform Act 2024 - further amendments to the BSA 2022
While other parts of the legislation have received more attention, the Leasehold and Freehold Reform Act 2024 (“LAFRA 2024”) has made some important amendments to Part 5 of the Building Safety Act 2022 (“BSA 2002”).
Some of LAFRA 2024’s changes to the BSA 2022 came in force in July 2024, some have only just been commenced. For the changes brought into force in July, please see our insight: The Leasehold and Freehold and Reform Bill gains Royal Assent.
The first commencement order has now been published: The Leasehold and Freehold Reform Act 2024 (Commencement No.1) Regulations 2024 (“Commencement Order 1”), which provides that sections, 114, 115 and 116 of LAFRA 2024 come into force on 31 October 2024.
A brief overview of the some of the most pertinent changes introduced by these sections is as follows.
Section 114 of LARFA 2024 adds a new definition to the BSA 2022, that of a ‘relevant step’.
A ‘relevant step’ is defined as “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.”
This definition is introduced into Schedule 8 of the BSA 2022 to ensure the costs of carrying out ‘Relevant Steps’ cannot be charged to ‘Qualifying Leaseholders’ and is also now added to Section 120 BSA 2022 in connection with its application to Remediation Orders and Remediation Contribution Orders.
Section 115 of LARFA 2024 also incorporates the ‘relevant step’ definition into Section 123 BSA 2022. This is a potentially significant change to Remediation Orders. The change allows the Tribunal to order that the Landlord takes relevant steps instead of remedying the defect itself. This will presumably cover a situation where appropriate mitigations can adequately cover the risk, and it would be disproportionate to insist on remedying the same in full as a result. As such freeholders may welcome its introduction, though it remains to be seen how the Tribunal uses it in practice.
This change gives the Tribunal more flexibility when it comes to the Orders it can make, and also is a continuation of the shift to a more risk orientated approach, such as that taken by PAS9980, the current code of practice for assessing the risk from fire to already built blocks of flats, from cladding and external wall systems.
The costs of ‘relevant steps’ can also be recovered under Remediation Contribution Orders pursuant to amendments introduced by Section 116 LAFRA 2024. This section also expands the costs which can be claimed by making clear that costs such as obtaining expert reports and temporary accommodation costs can form part of such a claim. The Secretary of State is also given a power to widen the scope of costs which can be recovered at a later date by making regulations.
Section 116 LAFRA also ensures that Remediation Contribution Orders can be used to cover additional prospective costs beyond those of remedying ‘relevant defects’, in that the Tribunal has now the ability pursuant to the nearly inserted Section 124(aa) BSA 2022 to “determine that a specified body corporate or partnership is liable for the reasonable costs of specified things done or to be done”.
These changes provide the Tribunal with more discretion and flexibility with the orders it can make but will be of concern to those defending such claims, given the new categories of costs which can now potentially be claimed.
For the avoidance of doubt, Commencement Order 1 does not bring in any provisions of LAFRA 2024 dealing with enfranchisement, regulation of service charges and estate management charges or banning leasehold houses. It is concerned only with amendments to the BSA 2022.
We are tracking developments on our Essential Residential Hub. Please do not hesitate to contact Oliver Park, or your usual Charles Russell Speechlys contact if you have any queries.
