What Does New Building Safety Law Mean for Landlords?
While the new Building Safety Law appears to assist some landlords, others aren’t so lucky.
The cladding crisis, with landlords and homeowners worried about the impact on their investments, continues to rumble on. In light of this crisis, the new bill, which has been passed and is now law, relates to building protection and will help leaseholder landlords with one or two investment properties. Those with larger property portfolios will miss out on help.
Rent Guarantee Insurance
UK owners of up to three properties will qualify for the protections, including all properties and not just those requiring remediation, under the new legislation. This could include a landlord’s personal home, plus two rental properties, for example.
Breakdown of the new Building Safety Law
A detailed briefing from the National Residential Landlords Association says:
- Developers and building owners are expected to cover costs where possible, when it comes to non-cladding remediation
- It will be a legal responsibility for building owners to prove there are no other sources for funding before passing any costs to leaseholders
Building owners will not be able to pass costs onto qualifying leaseholders:
- Where they are, or are linked to, the developer
- Where they have sufficient net wealth to cover the costs themselves
In all other cases the cost of remediation of non-cladding defects and interim measures will be shared between the building owner and leaseholders.
Qualifying leaseholders will be protected by a cap:
- Outside London:
No cost for properties valued under £175,000
£10,000 cap for properties valued £175k-£1million
- Within London:
No cost for properties valued under £325,000
£15,000 cap for properties valued £325k-£1million
- Across England:
£50,000 cap for properties valued £1m-£2million
£100,000 cap for properties valued over £2million
Costs can be spread over 10 years, and if any payments have been made for non-cladding defects or interim measures in the last five years, they will count towards the cost cap. Any costs above the cap will be the responsibility of the building owner to pay.
The NRLA findings show:
- Buildings less than 11metres high, classified as having ‘no systematic fire risk’ by the government, won’t have any protections for leaseholders.
- The Building Safety Fund will continue to cover buildings over 18 metres high