Landlords Archives

Building Safety Act: Leaseholder and landlord certificates

Posted on 20 February 202326 March 2025 by Sarah O'Sullivan

What is the Building Safety Act 2022?

The Building Safety Act 2022 is new legislation which has brought major changes to give homeowners and tenants more rights, powers and protection so that homes will be safer all over the country.

If you are a landlord, please refer to our article Building safely act and fire safety act 2022: implications for landlords

Building Safety Act 2022 summary

The Act came into force in June 2022, largely in response to the issues brought to light following the tragic Grenfell disaster, which left some leaseholders facing huge bills to remedy building defects to make buildings safe and preserve the financial value of their properties.

A key part of the legislation is to deliver strong protection for qualifying leaseholders from the costs of fixing historical defects and safety problems (such as unsafe external cladding). It makes sure those responsible for past faults are held accountable instead.

What are the leaseholder protections in the building safety act 2022?

The leaseholder protections came into force on 28 June 2022, with new financial protections for leaseholders in relevant buildings with relevant historical safety defects.

The law now requires those who constructed faulty buildings to take responsibility for fixing them, while also granting legal protection to leaseholders from exorbitant bills for historical safety problems.

The government is firm that developers must pay for repairing buildings they were involved in building or renovating, even if they don’t own the building anymore. The law holds building owners or those associated with the developer, responsible for paying for the remediation of historical safety defects.

Courts now have expanded powers to impose liability on related companies, so that legal cases for claims against defective buildings can be brought against companies linked to the developer, preventing them from escaping responsibility by using complex corporate structures.

In cases where a developer can’t be found or has not yet agreed to pay for their own buildings, funds will be provided directly, to cover the cost of fixing cladding systems and remediation, ensuring that no eligible leaseholder has to bear the expense.

Eligible leaseholders are protected from all external cladding system remediation costs. Leaseholders whose property is valued at less than £325,000 in Greater London (£175,000 in other parts of England) or whose building owner has a group net worth of more than £2 million per building as of 14 February 2022, are exempt from historical safety remediation costs.

The law sets a firm cap on contributions from eligible leaseholders for non-cladding defects and interim measures (including the costs of trained personnel to detect and respond to any potential fire hazards i.e: “waking watch” costs), spread over 10 years, with costs already paid since 28 June 2017 counting towards the cap. If the remediation costs exceed the cap, building owners must make up the difference.

The law includes strong measures to ensure those responsible finally rectify dangerous buildings they contributed to and to protect leaseholders from the unjust costs of remediation they previously faced.

If you’re a leaseholder in England, please refer to the Gov.uk link to check whether you’ll have to pay to replace cladding or to fix other safety problems with your building.

What leases qualify for protection?

There are criteria which must be met in order for a leaseholder to benefit from the protections created by the Act:

The lease must be for a single dwelling within a building of above 11 metres high or at least five storeys
The lease must be for more than 21 years
The leaseholder must pay a service charge
The lease must have begun before 14 February 2022 and as of 14 February 2022, either:

a) the dwelling must have been the leaseholder’s only or main home; or

b) the leaseholder did not own more than 3 dwellings in the UK.

What is a Leaseholder Deed of Certificate?

A lease must have satisfied each of these criteria as of 14 February 2022 to qualify for protection and, as evidence of this, the status of a lease on that key date must now be documented in a Leaseholder Deed of Certificate.

The Leaseholder Deed of Certificate will demonstrate whether the leaseholder can be responsible for paying for remediation works. Where the leaseholder can be asked to pay for these works, it enables building owners to calculate the cap on those costs.

The Leaseholder Deed of Certificate contains a series of questions and answers which assess whether the lease meets the required criteria for protection for example:

It must contain details of the current leaseholder,
who the leaseholder was on 14 February 2022,
the price the property was last sold for
and whether the lease is a shared ownership lease.

There may also be required additional documents that must accompany the Deed of Certificate, such as evidence of past sales of the property and the price paid.

Notwithstanding the importance of the Leaseholder Deed of Certificate for protecting leaseholders from repair costs, requests for deeds of certificate will become routine in conveyancing transactions and leaseholders planning to sell their properties should be aware of this and prepare in advance if possible.

What should I expect from my landlord or building owner?

The Leaseholder Deed of Certificate outlines the cap on costs the leaseholder can be asked to pay. Equally, a Landlord Certificate is a new requirement under the Building Safety (Leaseholder Protections) (England) Regulations 2022 and contains parallel information to calculate how much the landlord can charge leaseholders for building-safety works.

The Landlord Certificate acts as a permanent record as to the status of the lease on 14 February 2022 and must contain details about the current landlord, who the landlord was on 14 February 2022, their involvement in commissioning the defective work and any remediation works which have been carried out previously.

The landlord must provide leaseholders with a Landlord Certificate in the following circumstances:

When the landlord wants to pass on any costs for repairing defects onto a leaseholder through the service charge
Within four weeks from receiving notification from a leaseholder that the leaseholder intends to sell their property
Within four weeks of the landlord becoming aware of a relevant defect which was not covered by a previous Landlord Certificate; or
Within four weeks of a leaseholder requesting a Landlord Certificate.

As with the Leaseholder Deed of Certificate, the Landlord Certificate will also become a necessity in conveyancing transactions and requests for them will become routine.

Leaseholders that are planning to sell their properties should ensure they request a Landlord Certificate as early as possible in the transaction, if not prior to finding a seller, to minimise any potential delays while landlords deal with requests and preparation of the certificates.

If you have any queries arising from the points raised in this article, please contact Amy Barrington who will be very happy to help.

Considering a Buy to Let? Here’s what you need to know

Posted on 12 June 202027 March 2025 by Sarah O'Sullivan

There’s a lot to consider when deciding on whether to invest in a buy to let property. Eleanor Burroughs, Partner in the residential property team at Tees, outlines here some of the risks and benefits along with some key legal considerations.

What is a Buy to Let property?

Generally, Buy to Let refers to property which has been bought solely as an investment for letting to tenants whether that is single families or a group of students, but that is not always the case.

Sometimes a buyer may become a landlord by default, for example, they want to purchase the property for themselves to live in at a future date but must let it out in the meantime.

What are the benefits of a Buy to Let?

Landlords generally look for two things, capital growth and rental yield. In some areas of the country one of these may outperform the other so it is important you decide what you are looking for in terms of either a regular income or long-term gain and chose a property accordingly.

For some, being a professional landlord is their job and all their income derives from what they make on their rental properties, others may have just one property which they may have purchased as a pension for the future. Whatever your situation it is important you do your homework thoroughly before taking the plunge.

What are the risks in buying to

What are the risks in buying to let?

As with any investment, buying property does not come without risk and is not something you should engage in on a short-term basis as property prices go down as well as up.

You need to ensure you have enough capital behind you to pay for repairs to the property as and when they are needed
Ensure you can meet your obligations in void periods -when a property is empty
As well as loss of rent, keep in mind that you will still have to pay any mortgage costs
You must also pay council tax and utility charges in the absence of tennants

This is not always easy if the property is empty for some time. There are also the risks of tenants not paying the rent or causing damage and legal action being needed to gain possession.

You also need to be available to carry out repairs to the property. If that isn’t possible for you then you need to factor in the cost of employing someone to manage the property and for professionals to carry out repairs. These costs can quickly erode profit if your margins are tight.

What property should I buy?

The important thing is to take your time in deciding what is right for you and what is right for your potential tenants. Being a landlord is a business decision and you need to approach it that way.

You need to think about the type of tenant that would be attracted to the location and how adaptable the property is to the needs of the tenant group you are looking to attract.

There is no point buying a student let miles from a university or aiming to attract families with a one bedroom flat on the top floor of a tower block.

If you want something lower maintenance, a new build property or a flat in a professionally maintained block may be the answer.

Are there restrictions on the type of property I can let?

In order that you can let a property it must meet certain energy performance ratings. There are certain exceptions, but they are few and far between. For most properties, you can only let where the energy rating is E or higher.

If you are thinking of buying a leasehold property it is important that the terms of the lease are checked carefully to ensure there is no restrictions on lettings. Even if the lease does allow lettings to take place the landlord may have restrictions on the length of the term and is likely to require notice of this which may involve you paying a fee each time a new tenancy is agreed.

It is vital that you tell your solicitor of your intentions so as they can make sure everything is in order.

What are my legal obligations as a landlord?

There are many and they change regularly which is why a lot of buy to let landlords choose to use the services of a professional letting agent to manage the property for them and keep them updated of any changes.

If you don’t, then you need to ensure that you not only know the legal implications of letting when you first let the property but that you continue to stay abreast of changes throughout the entire letting period.

Amongst other things, you must ensure that the gas and electric are safe to use and that the property is well maintained. Additionally, you must ensure that your tenant has a right to rent and that any deposit provided by the tenant is properly protected and held in a government-approved scheme

Letting to students or letting a house in multiple occupation (HMO) requires licencing and there are more stringent controls on letting. Some local authorities now require you to have a licence even if letting to a single household.

What if I fail to comply with my obligations as a landlord?

This will depend on the type of breach, but failing to comply with your obligations can result in financial penalties and in the worst case a prison sentence so it’s important to seek the right advice and get it right!

Do I need a different type of mortgage for a Buy to Let?

The answer to this is yes. The fees and interest rates on buy to let mortgages tend to be higher than for a standard mortgage. You will need to advise the lender if you intend to let to students or on an HMO basis.

You can obtain interest only loans on buy to let as lenders will accept that the capital can be repaid on the sale of the property. Do remember if prices fall and the sale price does not cover the loan, you will have to make up the difference.

You will also generally need a higher deposit and your lender will want to ensure that the rental income you are likely to obtain will cover at least 125% of the mortgage costs. If the property is being bought by a company the legal costs for dealing with the mortgage are also likely to be higher. Buy to Let mortgages require properties to be let on an Assured Shorthold Tenancy basis.

Are the costs of buying to let higher than for buying my main home?

When you are buying a property for the purposes of letting it out there are tax implications you need to be aware of. Firstly, you will generally have to pay a stamp duty land tax surcharge of an extra 3% on the entire purchase price. Stamp Duty Land Tax is a complicated area but we can guide you to the right advice. Your rental income must also be declared in your annual tax return and there are capital gains tax implications when you come to sell if you have made a profit.

If you have chosen to set up a company to own the rental property, there are different tax considerations to consider. The rules around reporting and paying capital gains tax have recently changed and the timeframe is now limited to 30 days from completion of the sale.

Avoiding trouble at the end of a commercial lease

Posted on 24 February 201720 March 2025 by Sarah O'Sullivan

We are regularly contacted by landlords and tenants about business lease problems. This is often related to a breach of an obligation relating to the condition of the property and often comes to light at the end of a lease.

What can go wrong?

A landlord and tenant enter into a lease for ten years and throughout that period the condition of the property deteriorates. The landlord does not inspect the property during this time so doesn’t know about the deterioration. The tenant, who sees the property every day, does not notice the gradual deterioration. The term expires and the tenant leaves.

For the landlord: When the lease expires the landlord must incur significant costs in instructing a solicitor and surveyor to set out their claim against the tenant for the tenant’s breach of repairing obligations. What if the tenant cannot pay? The landlord may be left meeting the cost of the repairs themselves if they are to re-let the property. Or they may receive a reduced price in the event of the property being sold. Statutory limitations on lease-end claims also mean that landlords can be left out of pocket.

For the tenant: They are likely to receive the landlord’s claim and they too have little option but to incur significant costs instructing professionals to assess the landlord’s claim, to make sure it is not overstated. They may then be liable for the cost of repairs, consequential losses that the landlord suffers (for example loss of rent), plus the costs incurred by the landlord in bringing the claim, as well as their own costs.

What could they do differently to reduce the risk of all this?

On the landlord’s side – there are usually a number of options provided for in the lease to ensure that the property is not allowed to deteriorate during the term. However, all of them require the landlord to be proactive during the term of the lease. This means the landlord should instruct an appropriately qualified surveyor to inspect the property at regular intervals (for example every two to three years).

Options available to the landlord during the term of the lease

Specific performance / injunction: a claim at Court to seek an Order that the tenant carries out specific works, takes steps to remedy defects which threaten to cause further damage or refrain from acting in a way which is causing damage to the property.

Forfeiture: a process by which the lease may be brought to an end if the tenant remains in breach of the lease. It involves giving a notice specifying the breaches followed by a Court hearing.

Notice of breaches: a process which involves giving a notice to the tenant specifying the breaches and giving a period within which the tenant must complete the works. If they fail to do so the landlord may enter and carry out the works themselves and claim the costs back.

Correct procedure

These remedies are subject to many statutory hurdles and restrictions so it is important to seek advice and follow the correct procedure. Failure to do this can result in the notices being invalid, the claim being unsuccessful, or a claim by the tenant against the landlord or indeed mean that some or all of the costs incurred by the landlord are not recoverable against the tenant.

What can the tenant do during the lease?

A tenant ought to take surveying and legal advice before entering into the lease in order to understand the full extent of their obligations.

Given the potential impact on the tenant’s business of the landlord taking one of the steps available to them in the event of a breach, the tenant is also well advised to be proactive during the term of the lease. Where there are obligations which are periodic (such as an obligation to decorate in the fifth year) the tenant should make sure they remember to do this when the date comes around.

The tenant should also have the property inspected by a professional during the lease and again around a year before the end of the term. This is to review whether there has been any deterioration and what works are required to bring the property up to the required standard.

Another good idea is to set up a fund into which regular payments are made to ensure that money is available to carry out required works.

Be proactive is the message

Early advice and proactive repair management is the best way for both landlord and tenant to protect themselves from the misery that breaches of repair obligations can bring.