Government sets out options for leaseholders facing costly building repairs

The government has issued guidance for leaseholders in buildings with non-cladding defects when their developer becomes insolvent.

In response to a parliamentary question, Homelessness Minister Florence Eshalomi outlined the options available to leaseholders facing the costs of remedial works.

The news comes as research by Propertymark reveals that 93% of leaseholders would not buy another leasehold property.

Buildings are safe

Ms Eshalomi said: “The government expects responsible persons to make sure their buildings are safe and undertake remedial works where necessary. The Leaseholder Protections under the Building Safety Act protect holders of qualifying leases from the costs of remediating relevant non-cladding building safety defects above a capped contribution.

“If the developer is insolvent, ‘interested persons’, which includes freeholders, leaseholders and regulators such as a local authority or fire and rescue service, can also apply to the Courts for: a Remediation Contribution Order to fund remedial works from a former owner, or company associated with either the owner or developer, or, where relevant; a Building Liability Order against a wider parent group.

“If the insolvent developer is also the freeholder, the office-holders, i.e. liquidators or administrators, appointed to the insolvency may look to undertake remedial works on the freeholder’s behalf, subject to the restrictions of the insolvency, and/or may seek to find a buyer willing to take on the building and associated remedial works.

“Where liabilities are relatively minor or circumstances allow, leaseholders may also choose to exercise their right of first refusal under the Landlord and Tenant Act 1987.

“Leaseholders may wish to seek independent legal advice on whether to pursue the options available to them.”

Speed up leasehold reform

The news comes as Propertymark has called on the government to speed up leasehold reform.

Its survey of more than 1,200 leaseholders and 200 Propertymark members found 86% had seen service charges rise during the past two years.

Another 89% said challenging unfair service charges was difficult, while more than 78% of estate agents had removed at least one leasehold property from the market because it was unsellable.