Recent building safety cases: Key developments under the Building Safety Act 2022

Over the last few months, two cases have been released by the First Tier Tribunal (FTT) and Upper Tribunal (UT) regarding the application of leaseholder protections under the Building Safety Act 2022 (BSA), which we consider below. 

Centre Point House (CPH), 25 March 2024

CPH is a building with a unique cladding system identified as unsafe. The case addressed the financial responsibilities for remediation of unsafe cladding at CPH under Schedule 8 of the BSA which provides protections for leaseholders’ liability under service charges. Specifically, the decision explored the distinction between ‘relevant defects’ and ‘unsafe cladding’. 

Pursuant to s.120 of the BSA a ‘relevant defect’ is one arising as a result of anything done (or not done), or anything used (or not used), in connection with relevant works, which causes a ‘building safety risk’, meaning a risk to the safety of people in or about the building arising from the spread of fire, or the collapse of the building or any part of it.

Schedule 8 of the BSA provides protection to qualifying leaseholders. Paragraph 8 of Schedule 8 applies to all leaseholders with respect to ‘unsafe cladding’ not limited by a 30-year relevant period. The FTT interpreted that the term ‘unsafe’ is not defined in BSA but must mean something more than simply out of disrepair. The FTT considered ‘unsafe cladding’ to be sufficiently wide to encompass a range of threats to the safety of the building, its residents or members of the public.

In reaching its decision, The FTT interpreted “cladding remediation” broadly to include not only the removal and replacement of unsafe cladding, but also comprehensive over-cladding schemes, i.e. applying a second skin. The FTT confirmed leaseholders were not financially responsible for those remediation works. 

Lehner v Lant Street Management Company Ltd, 17 May 2024

The case concerned Mr. Lehner’s appeal against the FTT’s decision, which held him liable for costs related to fire safety improvements in his building. 

Mr. Lehner acquired a long leasehold interest in in July 2019. The lease was granted by Wimpey with a term of 125 years less seven days from 1 January 2003, with an annual rent of £150. In 2018, a fire risk assessment deemed the Block's risk as low. A subsequent report in 2019 recommended inspecting cladding and balconies, leading to a proposal for replacing insulation and adding vertical cavity barriers. The management company proposed works costing £211,119 with leaseholders contributing £150,000, and the remainder covered by a sinking fund. Mr. Lehner received a demand for £1,244.85 which the FTT ruled him liable for. Mr Lehner appealed.

The UT allowed Mr Lehner’s appeal, concluding he was not liable for the service charge due to the landlord’s failure to comply with the Landlord and Tenant Act 1987 and because the works were classified as “cladding remediation” under paragraph 8 of Schedule 8, as considered in Centre Point House. 

The UT considered seven essential steps that the FTT must consider when determining whether leaseholder protections apply, including as follows: 

Step 1: Preliminary Conditions

• Is the Building a Relevant Building as outlined in section 117 of BSA?
• Does the disputed service charge relate to a relevant defect that qualifies for protection under section 120 of BSA?
• Is the disputed service charge linked to a relevant measure under paragraph 1(1) of Schedule 8 of BSA?

Step 2: Paragraph 2 Protection

• Did the disputed service charge become payable After 20 July 2022?
• Circumstances Listed in Regulation 6(1)- whether any circumstances listed in the Leaseholder Protections Regulations occurred between 20 July 2022 and the service charge payment date.
• Landlord’s Certificate Compliance - if the current landlord provided a certificate complying with regulation 6, the paragraph 2(2) condition is satisfied, and the service charge is not payable.
• Responsibility for the relevant defect - whether the landlord or any superior landlord was responsible for the defect. If not, the paragraph 2 protection does not apply.

Step 3: Qualifying Lease

• Lease Conditions (Section 119) - whether the lease satisfies the conditions in section 119(2)(a) to (c) of BSA. 
• Qualifying Lease Certificate - has the landlord taken reasonable steps to obtain a qualifying lease certificate from the tenant? If not, the lease may be treated as a qualifying lease, and protections under paragraphs 3 to 9 of Schedule 8 may apply.
• Conditions Met - if the landlord obtained a certificate or if the leaseholder certified that section 119(2)(d) conditions were met, the lease qualifies, and relevant protections may apply.

Step 4: Paragraph 3 Protection – Contribution Condition

• Landlord’s Certificate - did the landlord provide a certificate stating that the relevant landlord did not meet the contribution condition on 14 February 2022? If not, the contribution condition is deemed satisfied, and no service charge is payable.
• Relevant Landlord’s Compliance - if the relevant landlord did meet the contribution condition, no service charge is payable.

Step 5: Paragraph 4 Protection – Low Value Leases

• Lease Value - was the value of the qualifying lease less than £325,000 (Greater London) or less than £175,000 (elsewhere) on 14 February 2022? If so, no service charge is payable.

Step 6: Paragraph 8 Protection – Cladding Remediation

• Cladding Measures - are the claimed service charges related to the removal or replacement of any part of a cladding system?
• Cladding System Safety - does the cladding system form the outer wall of an external wall system, and (b) was the cladding system unsafe? If both conditions are met, paragraph 8 protection applies, and no service charge is payable for the removal or replacement works.

Step 7: Other Protections

• Maximum Payable - if the FTT determines that a service charge is payable for relevant measures, it must check whether the sum exceeds the maximum allowed under a qualifying lease (paragraphs 5 and 6 of Schedule 8) or the annual limit (paragraph 7).

The seven steps introduced by the UT provide a comprehensive framework for assessing leaseholder protections under the BSA and are likely to be followed going forward in similar circumstances.