BSA Leaseholder Protections – Welcome Guidance!

Piers Harrison picks up on the useful guidance provided by the recent case of  Lehner v Lant Street Management Co Ltd  [2024] UKUT 135 (LC).

In this case the UT had to consider the Leaseholder Protection provisions of the BSA 2024. Commenting on their complexity the UT suggested that it “may assist in other cases if we suggest a sequence of questions which a decision maker should address when determining whether service charges are payable in respect of work to which the leaseholder protections may apply.” It set out a headline list of questions relevant to the appeal and set out a fuller list in the appendix to the decision, which will, no doubt, become a much consulted document!

You can find a copy of the judgment here.

We include the appendix below:

Appendix

Step 1 – preliminary conditions

1. Is the building a relevant building ( s.117 )?

• Is it self-contained (i.e. structurally detached) or a self-contained part (as defined by s.117(5) ) of a building in England?
• Does it contain at least two dwellings?
• Is it at least 11 metres high (from the ground to the finished surface of the top floor), or has at least five storeys above ground level?
• Does it fall outside each of the excluded categories in s.117(3) ?

If all of these questions are answered affirmatively the building is a relevant building.

2. Does the disputed service charge relate to a relevant defect ( s.120 )?

• Did the defect arise as a result of anything done (or not done) or anything used (or not used) in connection either with the construction or conversion of the building, or with works undertaken or commissioned by a landlord or management company?
• If so, were the construction or conversion of the building or the works by the landlord or management company from which the defect arose completed between 14 February 1992 and 14 February 2022?
• If so, does the defect cause 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 (a building safety risk)?

If all of these questions are answered affirmatively the defect is a relevant defect.

3. Is the disputed service charge a charge in respect of a relevant measure relating to the relevant defect (para 1(1), Sch.8 )?

• Was the measure taken to remedy the relevant defect, or for the purpose of preventing a building safety risk that arises as a result of the defect from materialising, or for the purpose of reducing the severity of any incident resulting from the risk materialising?

Step 2 – paragraph 2 protection

4. Did the disputed service charge become payable before or after 20 July 2022?
5. If so, had any of the circumstances listed in regulation 6(1) , LP Regulations occurred between 20 July 2022 and the date the disputed service charge became payable?
6. If so, has the current landlord provided a landlord’s certificate which complies with regulation 6 ? If not, regulation 6(7) applies, the paragraph 2(2) condition is taken to be satisfied and the service charge is not payable.
7. If the current landlord has provided a landlord’s certificate, or if the disputed service charge became payable before 20 July 2022, was the landlord or any superior landlord on 14 February 2022 responsible for the relevant defect, or associated with a person responsible for the relevant defect? If so, the paragraph 2(2) condition is satisfied, and the service charge is not payable. If the landlord or any superior landlord or an associate was not responsible for the defect, the paragraph 2 protection does not apply.

Step 3 – qualifying lease

8. Does the lease satisfy all three conditions in section 119(2) ?

• Was it granted for a term of more than 21 years?
• Does it includes a service charge?
• Was it granted before 14 February 2022?

9. If so, has the landlord taken all reasonable or prescribed steps to obtain a qualifying lease certificate from the tenant (i.e. has the landlord asked the tenant if, on 14 February 2022, the dwelling was their only or principal home, whether they owned any other dwelling in the UK, and whether they owned not more than two other dwellings in the UK apart from the lease)? If not, the lease is to be treated as a qualifying lease.
10. If the landlord has taken all reasonable/prescribed steps to obtain a qualifying lease certificate, and either no certificate has been provided, or the tenant has certified that the conditions in section 119(2)(d) were met, were those conditions in fact met i.e. on 14 February 2022, was the dwelling the tenant’s only or principal home, did they own no other dwelling in the UK, or did they owned not more than two other dwellings in the UK apart from the lease? If any of the conditions is satisfied, the lease is a qualifying lease and the protections in paragraphs 3 to 9 of Schedule 8 are applicable. If not, none of those protections are applicable.

Step 4 – paragraph 3 protection – the contribution condition

11. Has the landlord provided a certificate to the tenant that the relevant landlord did not meet the contribution condition on 14 February 2022? If not, the contribution condition is taken to be satisfied and no service charge is payable.
12. If so, did the landlord in fact meet the contribution condition on 14 February 2022? If so, no service charge is payable.

Step 5 – paragraph 4 protection – low value leases

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

Step 6 – paragraph 8 protection – cladding remediation

14. Do the relevant measures in respect of which the service charge is claimed comprise the removal or replacement of any part of a cladding system?
15. If so, (a) does the cladding system form the outer wall of an external wall system, and (b) was the cladding system unsafe? If so the paragraph 8 protection applies and no service charge is payable in respect of the removal or replacement works. To the extent that the relevant measures comprise work other than the removal or replacement of any part of the cladding system, the protections in paragraphs 5, 6 and 7 will apply to the cost of that part of the work.

Step 7 – paragraph 9 protection – legal or professional services

16. Is the disputed charge in respect of legal or other professional services (including obtaining legal advice, proceedings before a court or tribunal, or ADR) relating to the liability or potential liability incurred as a result of a relevant defect? If so that element of the service charge is not payable.

Step 8 – paragraphs 5, 6 and 7 – other limits

17. What was the value of the qualifying lease on 14 February 2022?
18. What is the ‘permitted maximum’ as defined in paragraph 6 of Schedule 8 ?
19. When did the person who was the tenant on 28 June 2022 become the tenant under the qualifying lease?
20. What is the pre-commencement period (i.e. the period beginning on 28 June 2017 or, if later, on the day the tenant on 28 June 2022 became the tenant under the qualifying lease, and ending on 28 June 2022)?
21. What was the aggregate of the service charges in respect of relevant measures relating to any relevant defect which fell due under the lease during the pre-commencement period and which fell due after 28 June 2022 but before the disputed charge fell due (the relevant service charge)?
22. Does the sum of the disputed service charge and the relevant service charge exceed the permitted maximum? If so, the excess over the permitted maximum is not payable ( paragraph 5, Schedule 8 ).
23. Does the sum of the disputed service charge and the total service charges in respect of relevant measures relating to any relevant defect which fell due in the period of 12 months ending with the day on which the disputed service charge fell due, exceed one tenth of the permitted maximum? If so, the excess over one tenth of the permitted maximum is not payable ( paragraph 7, Schedule 8 ).

 

If you would like more information on Piers Harrison and/or Tanfield’s BSA expertise, please contact Richard Powell.

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