Thursday 4^th July sees the much-anticipated General Election in England.  All the major parties have now released their manifestos showing what they would do if elected (as have some of the minor ones…).  Alongside the NHS, the Environment and Immigration, Housing is (finally…) back on the agenda (albeit begrudgingly) and rightly so.  

We have had 17 Housing Minsters in the past 15 years, and 9 in the past 5 (going back to Kit Malthouse).  Alongside this we have had 10 Secretaries of State (since the last Labour incumbent, John Denham).  This is not conducive to a joined up or progressive housing policy.  In fact, Affordable Housing funding has gone backwards over the last 15 years.  In 2010, funding for affordable housing was reduced by 60% as part of the drive to cut the deficit.  At the time the budget was £3.3bn per year, while the current affordable housing grant per year is approximately £2.44bn.  For this grant to even remain at the same level as 2010 after accounting for inflation, this figure should in fact be £5.7bn (almost double). 

Also in 2010, funding for new social rented housing stopped completely and the “Affordable Rent” tenure was introduced, where homes are rented at up to 80% of market rent (though it is arguable that this in itself undermined the affordability of the sector).  This change, coupled with the drop in funding, had a huge impact: in 2010/11 nearly 36,000 social rented homes were started, but by 2011/12 (following funding cuts) this had reduced to only about 3,000.  Today, the sector estimates that only 5,000 such homes are being built each year.  The Department for Levelling Up, Housing and Communities’ figures reveal that homes for social rent are making up a declining proportion of overall affordable housing supply. In 2011/12, social rent made up around 65% of all new affordable housing, whereas this dropped to 15% in 2022/23 (Affordable Rent taking up 38% with Shared Ownership at 32%[1]).

In reality, though, what will each party offer?  Here, we at Sharratts run the rule over the offerings of each of the five main parties and provide our thoughts on each set of proposals and what they could mean for the sector. 

1) Conservatives:

• Build 1.6 million new homes over 5 years (protecting all Green Belt but establishing a planning fast track for some previously developed brownfield sites).
• Abolishing Nutrient Neutrality (replacing it with a one-off mitigation fee).
• Creating more urban development corporations.
• Renewing the Affordable Homes Programme
• Help first time buyers with a new Help to Buy Scheme requiring only a 5% deposit and scrap Stamp Duty for them for properties up to £425,000.00.
• Complete leasehold forms that will cap ground rent at £250.00 and support leaseholders affected by historic safety problems.
• Introduce a temporary measure that means landlords who sell their property to their tenants will not have to pay Capital Gains Tax.
• Ban so-called no-fault evictions as part of a wider Bill to reform the rental market.
• Bring in rules to evict tenants from Social Housing after 3 instances of anti-social behaviour such as noise disturbances or vandalism and introduce ‘Local Connection’ and ‘UK Connection’ tests for applicants.

Sharratts’ view:  We hope it is not a sign of things to come that you have to get all the way to page 53 of this manifesto to reach the section on Housing.  Overall, these policies have a distinctly underwhelming feel to them.  The highlights are the stated aim of building 1.6m homes over 5 years (though detail is light and this seems over optimistic in the first instance) and the abolition of Nutrient Neutrality (though a stated attempt to do this in 2023 already failed).  However, the stated policy to “Renew the Affordable Homes Programme” is particularly alarming, as this is considered a ‘given’.  Some of the policies also look to favour Landlords, though they are framed as benefitting tenants (such as the Capital Gains Tax allowance).  It is also disappointing to note further focus on helping first time buyers without a corresponding focus on renters.  There is no mention of any regulation or controls in the private rented sector, and only talk of anti-social behaviour of social tenants (which is a cliched view – what of such behaviour in private rented properties?).  A number of measures are proposed which also failed to be enacted in the current parliament (such as ground rent reform and no-fault eviction bans). 

Our rating: Lack of any real thought or imagination and while a promise to deliver 1.6 million homes in 5 years is laudable, the big numbers do not reflect reality, especially given current building rates.  A lack of modular housing, and the inclusion of a number of policies which the party were unable to get through during the current parliament makes this feel like “more of the same”.

3/10

2) Labour:

• Reform the Planning system (including the CPO process) and reinstate local targets to help build £1.5 million new homes over 5 years (while fast tracking brownfield sites and release some “low quality” green belt for housing).
• Make changes to the Affordable Housing Fund to deliver more from existing funding.
• SDLT surcharge for non-UK residents.
• Implement solutions to unlock nutrient neutrality affected sites without affecting the environmental protections.
• Build a new generation of new towns.
• Prioritise the building of social rented homes.
• Reviewing the Right to Buy scheme by reviewing the discounts and increasing protections on newly built social housing.
• Introduce a private mortgage guarantee scheme to help first time buyers and introduce prioritisation of them over investors.
• Make it easier and cheaper for leaseholders to extend leases and ban new leasehold flats whilst tackling unregulated ground rent charges.
• Ban so-called no-fault evictions and empower renters to challenge unreasonable rent increases.

Sharratts’ view: You would initially be forgiven for thinking you had re-read the Conservative manifesto here, so similar are most of the policies.  This is not necessarily a bad thing, as it encourages cross-party consensus.  However again we argue that this is not radical enough to fix a system so broken by chronic neglect and underfunding over many years.  Again a highlight is the stated aim of building 1.5m homes over 5 years (though again this seems over optimistic in the first instance).  The focus on a new generation of New Towns is a good one and mirrors the Tory promise to setup new Urban Development Corporations.  However, these generally favour homes for sale rather than rent, so could they also have their own affordable housing function, along the lines of Local Authority housing, perhaps?  We also applaud the stated focus on building of social rented homes and the mention of changes to the Affordable Housing Fund (hopefully to widen the range of schemes this fund can be spent on).  However, again we are disappointed to see no mention of the over-priced and under competitive (from a tenant’s point of view) private rented sector.  This manifesto can be forgiven for mentioning things which failed during parliament this time, as the party was not in power.  It is also good to see Housing get a higher billing – coming in at page 36 of 136 in this manifesto. 

Our rating: Good shift to focus on social rented accommodation and changes to the affordable housing fund (though these are not detailed in full) but otherwise as with the Conservative plans, not overly exciting or imaginative, and the big numbers do not reflect reality during what will be a difficult first 5 years.  No mention of Modular construction, which seems surprising.

6/10

3) Liberal Democrats

• Build 380,000 homes a year across the UK with at least 150,000 new social homes with ten new garden cities and community led developments.
• Give Local Authorities powers to end Right to Buy in their areas.
• Abolish residential leaseholds and cap ground rents at a nominal level.
• Ban so-called no-fault evictions and make three-year tenancies the default.
• Introduce a ten-year emergency upgrade programme to make homes warmer and cheaper to heat.
• End rough sleeping by 2029 and scrap the Vagrancy Act that criminalises many forms of homelessness in England and Wales.
• Introduce a new Rent to Own model (over 30 years).
• Encourage use of Rural Exception Sites.

Sharratts’ view:  Again, it is initially disheartening to see Housing only come in on page 71 of 117.  However, this manifesto offers some good and thought-provoking proposals.  As with the Conservative and Labour manifestos the housing numbers are arguably unrealistic given current building volumes.  However, the local autonomy for authorities to end right to buy is interesting (perhaps utilising existing Designated Protected Areas legislation).  The ten-year emergency upgrade programme is good, though this is arguably just the social housing decarbonisation fund in another form, and that is already grossly underfunded.  The most interesting of all are the new Rent to Own model (this has been utilised by RentPlus and others already very successfully in recent years) and the stated “full abolition of residential leaseholds”.  This last point was mooted by the conservatives but could not be pushed through legislatively.  It would be interesting to see how this would be enacted – arguably registered providers should still be allowed to grant social tenancies and shared ownership tenancies, but only registered providers.  Such a policy would negate the need for any rent cap on the private sector.  Though it would arguably cause a flight of capital out of the sector, this is arguably overdue to an extent within the private (and relatively unregulated) sector.  

Our rating: Some really good policy ideas in here, though lacking in the shift to focus on social rented accommodation from the Labour plans.  Again, the housing numbers look unrealistic, but the abolition of residential leaseholds and Rent to Own model are both very interesting (if we ignore the obvious paradox of having a residential tenancy policy while banning residential tenancies…).  It is likely that this would be “unfundable” unless additional revenue is directed from elsewhere.  No mention also of the Affordable Housing Fund and either increasing it or refining it (as per Labour).  Still, some radical proposals, but no modular housing.

8/10

4) Green Party

• Provide 150,000 new social homes a year by building or refurbishing older housing while protecting the Green Belt
• End the Right to Buy.
• Allow Local Authorities to introduce rent controls and give tenants more rights including an end to so-called no-fault evictions.
• Give Local Authorities, Social Landlords and Community Housing Groups the first option to buy certain properties at a reasonable rent.
• Insist Local Authorities spread small developments across their area and that they are accompanied by investment for local services.
• Require new homes to be built to the highest energy efficiency standards.
• Fund a Local Authority led programme to improve insulation and restore local heating systems such as heat points in homes.

Sharratts’ view:  A good start as Housing is picked up on page 6 of this ‘wordy’ manifesto.  They correctly grasp that housing has become viewed as an asset and this needs to change.  Their numbers for provision of housing a more circumspect – 150,000 a year (but entirely social) as they are “provided” not built, so include refurbishment as well (though the amount of units refurbishment will offer is arguably minimal).  Ending the right to buy is a good step in protecting the already scarce supply of social housing, and the autonomy for Local Authorities to introduce rent controls is a welcome proposal, which tallis with Sharratts’ longstanding calls for private rents to be capped or regulated more closely.  The further changes to building regulations to improve the energy efficiency of homes is also something which has been called for for some time, though the requirement for Passivehaus standards will further inflate build costs in the first instance (currently they are around 8%-9% higher than standard build).  However, there are also mixed messages.  The Greens want to reform planning so large-scale developments are reduced and fragmented into multiple smaller developments – the planning system already struggles with demand, this would place further strain on it and would arguably lead to developments being held up further.  Finally, the “Greener Homes Guarantee” talking of Investment over the next 5 years of £49bn is patently unattainable and, in reality, not helpful to the overall debate as a result.  

Our rating: As with the Lib Dems’ manifesto there are some more good policy aims in here, though again lacking in the express shift to focus on social rented accommodation from the Labour plans, and fewer ideas than the Lib Dems.  The housing numbers look unrealistic as they appear more based on refurbishment than development, but the abolition of right to buy is a good approach and rent control powers for Local Authorities are welcome.  However, it is likely that this manifesto would be “unfundable” due to the sheer costs of build standards proposed, and insulation improvement schemes.  There is also still no mention of modular housing, a disappointment from the Greens in particular.  

6/10

5) Reform Party

• Reform the Planning system with fast-track decisions and tax incentives to develop brown field sites.
• Increase use of new construction technology such as modular construction.
• Prioritise local people and those who have paid into the system for social housing, not foreign nationals.
• Encourage more people to become landlords by scrapping tax changes introduced in 2017 to 2021 known as Section 24.
• Make it easier and cheaper for leaseholders to extend leases and buy freeholds.
• Scrap the Renters (Reform) Bill and improve the monitoring appeals and enforcement process for the Renters (Reform) Bill.

Sharratts’ view:  Housing gets the mid-table entry into the manifesto for Reform, which is better than some.  However, the housing policies themselves feel like a backwards step and are limited in number.  The reference to modular construction, sadly lacking in all other parties’ manifestos, is to be applauded, as is the fast track for brownfield sites (in common with the other parties).  However, that is about as far as the celebration goes.  Policies to encourage more people to become private landlords, and to abolish the Renters (Reform) Bill are clear moves back towards inequality.  The policy to prioritise local people in housing registers is relatively empty as government data shows that 90% of social housing lettings already go to UK nationals[2].  In any case, Social Housing should be assessed by need not by nationality.

Our rating:  The only party to include reference to Modular construction (albeit fleeting and with little detail) looks to set Reform off to a good start, but their policies as a whole preserve the status quo or even add to disparities in the system.  There is no attempt to curtail the private sector, or to focus on any affordable homes, rather to simply manage the existing stock differently.  Also lacking any meaningful targets to be “measured”.  A disappointing offering. 

2/10

So what of these manifestos? 

In terms of policies the Liberal Democrat manifesto appears to offer more – which is surprising given the party’s approach to housing in the past.  It has more radical policies and looks to make more of an impact on the current crisis, though funding would be a serious issue if it were to come to pass.

The one lesson to take is that each and every manifesto has at least one good policy point, so a cross-party consensus beyond the lifetime of the parliament would seem to be the ideal solution – and would promote a long-term housing policy instead of the rampant short-term approach we currently have.

Sharratts (London) LLP’s recommendations for whoever is in power come 4^th July

So what would be our ideal policy programme come 4^th July.  The issues with the sector are of course many (too many to list here, though none of which are unassailable) but to have any hope of steering the sector on course, we would argue that the following are needed as a minimum:

1. Caps on private sector rent, based on a set percentage per week of localised average earnings.  The private sector rental market is out of control, and this is putting undue pressure on affordable housing, as well as making Affordable Rent “unaffordable” (as 80% of an extortionate rent is still too high).  The Social Rent formula frequently gets tinkered with or capped, but the private sector remains untouched.  This must be changed.  The knock-on effects this would have across many aspects of society (not just on social rent levels themselves) would make this our number one policy recommendation.
2. A Cross Party consensus and Working Group on Housing must be established: this is the only way that policy can be enshrined beyond a mere political term, so that the current short-termist approach is overcome and a coherent long-term strategy can be implemented to drive the sector forward.
3. More Local Authority development.  The sector is currently reliant upon private housebuilders to deliver a majority of its stock.  Sheer market economics require that these developers only construct and sell such housing at a rate they can sell them.  Local Authorities must provide a viable “non-profit driven” alternative alongside registered providers to rebalance the market.
4. Continue to encourage modular methods of construction.  The terrible inflationary pressure on the housing and construction market in recent years led to a failure of a number of modular models as they are still not fully established in the marketplace.  This should not make us afraid to pursue them further.  If we are truly to deliver the volume and quality of homes needed, modular homes will be a vital component of this.
5. Allow a wider scope for Homes England grant funding.  Homes England funding currently only allows for additionality outside planning requirements – this means that section 106 schemes are not eligible (unless a time-consuming variation to the S106 Agreement is enacted).  This should be changed to focus on delivery of tenure, rather than requiring additionality (especially when, in reality, we are well-behind delivery targets in any case, so the additionality is only ‘notional’)
6. Re-instate pre-2010 Affordable Housing funding levels.  The public have been fooled into thinking that spending on affordable housing is increasing in the past parliament, whereas in real terms it is almost 50% of what it was 15 years ago.  This goes hand in hand with drop-offs in delivery.  The next government must instigate a social housing grant programme funded at levels analogous to 2010 (with inflation adjustments) being circa £5.7bn as a minimum.

Any of these points would be well received, but if all were to be taken together the sector would arguably be set well on the road to recovery.  Is any party brave enough to take action on these points and create themselves a lasting legacy?  Here’s hoping…

[1] https://lordslibrary.parliament.uk/supply-of-affordable-housing/

[2] https://www.gov.uk/government/statistics/social-housing-lettings-in-england-april-2022-to-march-2023/social-housing-lettings-in-england-tenants-april-2022-to-march-2023#who-lives-in-new-social-housing-lettings

Following the recent appointment of Kevin Edwards Sharratts have further expanded their Development Team by appointing a new Partner to work within and strengthen its established Team. Ryan Campbell , has joined the Development Team to work primarily with the Firm’s existing RP and Developer client base and brings with him a wealth of specialist experience in the Affordable Housing Sector.

With over 10  years’ experience in new build development work in the Affordable Housing Sector, Ryan has an established reputation for guiding developer/land-owner and RP clients on the delivery of complex and large scale development and regeneration projects. After qualifying at Capsticks Ryan has been involved in numerous complicated schemes and transactions throughout the North West, the Midlands, London and across the South of the UK. Ryan also brings with him experience in the care sector assisting with the acquisition and redevelopment or renovation of private residential dwellings or institutions into care homes for public and privately traded companies in order to facilitate the use and occupation of facilities for specialist care for individuals with specialist care needs. Ryan further has brought his keen interest in developing and teaching others through his experience in training trainees, juniors along with clients and members of the Affordable Housing Sector through being a speaker for the delivery of a Chartered Institute of Housing accredited diploma for housing associations and developers

Ryan’ s experience will assist with the Firm’s continued growth plans and strengthen the existing services being offered to the firm’s impressive roster of clients – a list that includes a number of G15 Providers and other investors and partners working within the Affordable Housing Sector.

On joining Sharratts Ryan commented “I am delighted to be joining the team at Sharratts.  The firm is well known for its excellent client-led service and entirely Affordable Housing focussed work. The provision of affordable housing is an issue I am sure that is close to everyone’s hearts and I am overjoyed to be working with a team with such a great reputation and such enthusiasm for providing affordable homes in this country”

Following the recent appointment of Jo Evans Sharratts have further expanded their Development Team by appointing a new Partner to work within and strengthen its established Team. Kevin Edwards , has joined the Development Team to work primarily with the Firm’s existing RP and Developer client base and brings with him a wealth of experience.

With nearly 20 years’ experience in new build development work in the Affordable Housing Sector, Kevin has an established reputation for guiding developer/land-owner and investor clients on the delivery of complex and large scale development and regeneration projects. After qualifying at the Homes and Communities Agency Kevin has worked for a number of established Firms operating in the Affordable Housing Sector nationwide including Bevan Brittan (during which Kevin spent time on secondment within a London Borough’s property legal team), Devonshires (acting on various development and joint ventures, as well as DBOM contracts and larger redevelopment projects), Shakespeare Martineau and Birketts.

Kevin’ s experience will assist with the Firm’s continued growth plans and strengthen the existing services being offered to the firm’s impressive roster of clients – a list that includes a number of G15 Providers and other investors and partners working within the Affordable Housing Sector.

On joining Sharratts Kevin commented “I am delighted to be joining the team at Sharratts.  The firm is well known for its excellent client-led service and entirely Affordable Housing focussed work.  The sector as whole is going through an unprecedented period of change and challenge on many fronts (the Carbon agenda, planning challenges, Fire and Building safety issues, proposed leasehold reform, increased development costs, pressure on rental receipts and lack of government policy direction to name but a few!) and I am excited to start working with Sharrratts and their clients (and my existing contacts) to help steer through these issues and continue to deliver the affordable housing the country need,”

We welcome Kevin to the Firm and look forward to introducing to him our existing clients.

Sharratts have appointed a new Senior Associate to work within and strengthen its established Development Team. Jo Evans, previously of ASB Law Knights and Rix and Kay, has joined with the Development Team to work primarily with the Firm’s existing RP and Developer client base

With 20 years’ experience in commercial property and Development, Jo has an established reputation for guiding developer/land-owner and investor clients on the delivery of complex and large scale development and regeneration projects. During her career she has also worked in-house for Kent County Council, where she advised on high-value public sector projects, and global powerhouse Nabarro, before it merged with CMS and Olswang.

Jo’s experience will assist with the Firm’s continued growth plans and strengthen the existing services being offered to the firm’s impressive roster of clients – a list that includes a number of G15 Providers and other investors and partners working within the Affordable Housing Sector.

On joining Sharratts Jo commented “I am really excited about this fantastic opportunity to be part of Firm’s continued growth within the Affordable Housing Sector”

We welcome Jo to the Firm and look forward to introducing to her our existing clients.

Reinforced autoclaved aerated concrete (RAAC) is a cheaper alternative to standard concrete and was mostly used in flat roofing. It is aerated and less durable than standard concrete, and can be susceptible to structural failure when exposed to moisture

It is suggested that between 5-10% of all public buildings, which would include social housing, built in the 1950-1980s is likely to contain RAAC.

The Regulator of Social Housing has made it’s position clear that all RP’s need to be aware of the risks posed by this potentially dangerous form of lightweight concrete in its homes and must find a) find out if any of its home contain RAAC and b) if found, which risks it poses to the safety of its tenants.

Any homes which are considered to be unstable or otherwise pose a risk to tenant safety may potentially be considered under the Building Safety Act 2022 which prescribes a retroactive 30 year limitation period for pursuing claims against anyone who took on work in connection with those units.

Further updates are expected as more RPs assess their housing stock and report any findings to the Regulator.

The secondary legislation under the Building Safety Act 2022 will come into force on 1 October 2023 and this is also the deadline for registering existing Higher Risk Buildings (i.e. residential buildings which are at least 18m high or have at least seven storeys and contain two or more dwellings) with the Building Safety Regulator.

Registration must be made by the Principal Accountable Person or somebody authorised by them (e.g a managing agent or lawyer)  and an unregistered building cannot be occupied after this date.

The new suite of regulations impose obligations on dutyholders (including clients, designers and contractors) and an updated procedure for building regulations approval as well as amending the Building Regulations 2010 so that the Building Safety Regulator is now the sole building control authority for Higher Risk Buildings.

There are transitional arrangements for buildings that are in the course of construction and either full plans are deposited or initial notice given and accepted before 1 October 2023 and “sufficient progress” is made before 6 April 2024, in which case the previous Building Regulations will still apply.

On 17 May 2023, the Government introduced the long-awaited Renters (Reform) Bill to the Commons to “bring in a better deal for renters” in the rented sector  and make significant changes to the Housing Act 1988 (HA1988).

The Bill is making its way through Parliament  and is now unlikely to receive Royal Assent until the spring of 2024 and is unlikely to come into force before October 2024 at the earliest.  Therefore we are unlikely to see any immediate changes but when we do, those changes will be significant and, amongst others, include:

• Ending of certain kinds of assured tenancy.
• Changes to the grounds for possession in relation to assured tenancies.
• Changes relating to rent and other terms of the assured tenancy. Landlords will, for example, only be able to increase the rent annually by giving 2 months’ notice in accordance with section 13 of HA1988); these changes will apply to social housing and non social housing prodcuts and
• The introduction of a ‘landlord redress scheme” for prospective, current or former residential tenants to make a complaint against a member of the scheme to be independently investigated and determined by an independent individual.

The Bill is intended to address long stated concerns that some renters face a “ precarious lack of security”. These elements of the Bill have been well publicised in the media in the context of the proposed abolition of the Landlord’s right to terminate an assured shorthold tenancy (AST) which is often referred to as a ‘no-fault eviction’.

It is probably more accurate to say that the main thrust of the Bill  set out, under the heading ‘End of certain kinds of assured tenancy’, is the abolition of ASTs entirely and the removal of the ability to grant any form of fixed term tenancy. This is a significant change to the short-term lettings market and the balance of power between landlord and tenant. The Bill effectively proposes that all rental properties ( private and social housing tenancies)  will be under a periodic tenancy.

A further effect of these potentially far-ranging changes will be that any tenancy agreement entered into where the annual rent is between £750 (£1,000 in London) and £100,000 will be a full periodic (monthly) assured tenancy which may only be terminated by the landlord where one (or more) of the grounds for possession in schedule 2 HA1988 are satisfied.

To address the concerns around being able to recover possession of a property let on a full assured tenancy, the Bill proposes to amend the current grounds for possession which will allow landlords to recover possession in limited circumstances where:

1. the Landlord requires possession to occupy the property as their or their spouse’s/civil partner’s, or close family member’s only or principal home (Ground 1) or the landlord intends to sell the property (Ground 1A).

1. Grounds 1 and 1A will only be available where the tenancy has existed for at least six months and where the landlord obtains possession on these grounds the landlord will be prohibited from letting or marketing the property for three months from the date specified in the notice seeking possession.

1. Within a 3 year period at least 2 months’ rent is unpaid for at least a day on three separate occasions (Ground 8A). This will be a mandatory ground in addition to the current mandatory Ground 8 (two months’ arrears at the date of service of the notice and at the hearing for possession) and where these grounds are satisfied the court must make a possession order.
2. the tenant has been guilty of conduct causing or capable of causing a nuisance or annoyance as opposed to behaviour ‘likely to cause’ a nuisance or annoyance. This is a discretionary ground where the court must be satisfied that it is reasonable in all the circumstances to grant possession.

The explanatory notes to the Bill state that the private rented sector has doubled in size since 2002 with 4.6 million households or 11 million people renting from a private landlord.

In the private sector and the ever-expanding build to rent sector there is  some concern that the proposed changes, particularly the end of ‘no-fault evictions’, will make residential property less attractive as an investment.

Whilst the main elements of the Bill have been largely discussed in the context of the private rented sector the changes will also affect the social housing sector. RPs also of course also use assured and assured shorthold tenancies and will also lead to providers having to review the widespread use of starter tenancies.

Introduction:-

Under the Building Safety Act 2022 some leaseholders in qualifying buildings are protected from some costs associated with building safety defects.

On 6 April and 21 April 2023 there were updates to Government guidance, the second update in particular was a full admission that their lawyers made an error in the way that the Building Safety Act was written. The important issue to be aware of is that the Government’s mistake means that the protections mentioned above may be unintentionally removed if a leaseholder completes a lease extension.

What protections are offered by the Building Safety Act 2022.

The protection relates to building safety defects that were created by building (or refurbishment work) completed between 28 June 1992 and 27 June 2022.

Examples of the costs are those resulting from combustible cladding or some other safety defects such as those which could cause the collapse of some or all the building. It may also indemnify leaseholders against other related costs, such as their landlords professional service fees relating to the issue. Depending on the defect, this could provide leaseholders with protection against paying significant remediation costs for which they would otherwise be liable via their service charge.

Does the Building Qualify for Protection in the first place?

Only buildings which have 5 or more storeys OR are 11 metres or above qualify for protection under the Building Safety Act.   A “storey” includes the ground storey. When measuring the building you only measure from the ground on the lowest part of the building to the floor of the top residential storey. This means the top residential storey and anything above it (the roof) are excluded from the measurement.  The building must contains at least two dwellings and not be owned by the Leaseholders themselves.

If the property doesn’t qualify under the Building Safety Act 2022, the Lease hasn’t currently got any protections to lose – so Lease Extension is unaffected as a result.

The implications on Lease Extensions:-

When a Lease Extension is completed, it will provide the Lessee with a new lease which usually references the old lease. The new Deed will be dated on completion and invariably after the cut-off date for protections of 14 February 2022.  Due to the defect in the wording of the legislation, any Leaseholder who previously qualified for assistance under the Building Safety Act 2022 (in particular the protections afforded in Schedule 8) would lose the protection upon entering into the Deed. Meaning any defect in the building and the share of the cost of remediation may fall on the Leaseholder.

Although this is a potential problem for all types of long residential leases in relevant buildings, there is a particular focus on shared ownership properties. This is partly because older shared ownership leases may be reaching, or have already reached, the critical 80 year term point where it becomes harder to get a mortgage.

Are the Government planning to fix the flaw in the Legislation?

The Government have said that it was not their intention to exclude people extending leases from protection under the Building Safety Act.

They updated their guidance further on 21 April 2023 to state “We are looking to legislate to resolve this issue as soon as Parliamentary time allows.” 

The Government also stated:

“Leaseholders should seek legal advice to make sure explicitly in their agreements that their protections are extended as part of their lease. It was intended to work like this, and freeholders should make sure that lease extensions reflect this position.”

How to proceed:-

While we await the Governments amendments to the legislation, landlords are being urged to re-create the statutory protections by including equivalent contractual protections in any affected re-granted leases.

Although RPs who find themselves in this position are not obliged to do anything, but many will want to follow the government guidance and ensure that all qualifying leaseholders get the same protection.

Homes England updated the Capital Funding Guide on 29/07/2022 in respect of “Key Information Documents” (“KIDs”).

From the 15 September 2022, RPs will need to provide the Key Information Documents for Shared Ownership homes provided through the SOAHP 2016 to 2021 funding programme (as well as those funded under SOAP 2021-2026)c and all Section 106 developments.

This means from and including 15th September 2022, the Key Information Documents (now available on the Capital Funding Guide) must be completed for the sale of new Shared Ownership homes and resales. These will need to be completed by the sales/resales team.

Please note, it is a condition of grant funding that these documents are completed and provided to the proposed purchaser no later than at reservation stage for plot sales and the leaseholder upon consent for the resale. The completed documents should be sent to the buyer/leaseholder’s solicitor along with the Memorandum of Sale.

Going forward RPs/HAs should ensure that the appropriate Key Information Document pack is used dependent on the type of Shared Ownership home being provided and the relevant AHP programme it was funded through.

We are delighted to announce our appointment to the Housing Associations’ Legal Alliance (HALA) framework to provide legal services for property development (including acquisitions and sales) from 1 September 2022.

HALA currently comprises more than 35 Registered Providers and more details can be found at www.hala.org.uk.

This is in addition to our previous appointment to the Communities & Housing Investment Consortium (CHIC) legal services framework to provide similar legal services to over 50 Registered Providers and local authorities. More details can be found at www.chicltd.co.uk/chic-products/legal-services If you would like to find out more information about how to instruct us under a framework or information about frameworks, please contact Leo Stevens on Leos@sharratts-london.co.uk or 01959 568 018.