Moved by
Lord Greenhalgh
92: Before Schedule 9, insert the following new Schedule—
“SCHEDULE
REMEDIATION COSTS UNDER QUALIFYING LEASES
Interpretation
1_ In this Schedule—
“associated”: see section (Associated persons);
“building safety risk” has the meaning given by section (Meaning of “relevant defect”);
“qualifying lease”: see section (Meaning of “qualifying lease”);
“the qualifying time” has the same meaning as in section (Meaning of “qualifying lease”);
“relevant building”: see section (Meaning of “relevant building”);
“relevant defect”: see section (Meaning of “relevant defect”);
“relevant measure”, in relation to a relevant defect, means a measure taken—
(a) to remedy the relevant defect, or
(b) for the purpose of—
(i) preventing a relevant risk from materialising, or
(ii) reducing the severity of any incident resulting from a relevant risk materialising;
“relevant risk” here means a building safety risk that arises as a result of the relevant defect;
“service charge” has the meaning given by section 18 of the Landlord and Tenant Act 1985.
No service charge payable for defect for which landlord or associate responsible
2_(1) No service charge is payable under a qualifying lease in respect of a relevant measure relating to a relevant defect if a relevant landlord—
(a) is responsible for the relevant defect, or
(b) is or has at any time been associated with a person responsible for a relevant defect.
(2) For the purposes of this paragraph a person is “responsible for” a relevant defect if—
(a) in the case of an initial defect, the person was the developer or carried out works relating to the defect;
(b) in any other case, the person carried out works relating to the defect.
(3) In this paragraph—
“developer” means a person who undertakes or commissions the construction or conversion of a building (or part of a building) with a view to granting or disposing of interests in the building or parts of it;
“initial defect” means a relevant defect arising in connection with works carried out before completion (within the meaning of section (Meaning of “relevant defect”));
“relevant landlord”, in relation to a qualifying lease, means the landlord under the lease or any superior landlord.
Paragraph 2: extension of protection to superior leases
3_(1) This paragraph applies if, as a result of paragraph 2, an amount of service charge (an “unrecoverable amount”) that would otherwise be payable under a qualifying lease in respect of a relevant measure is not payable.
(2) Any superior lease has effect as if any liability of the tenant under the superior lease to pay an amount in respect of the relevant measure (“the relevant amount”) were a liability to pay an amount equal to—
(a) the relevant amount, minus
(b) the unrecoverable amount.
(3) In this paragraph “superior lease” means any lease which is superior to the qualifying lease.
No service charge payable if prescribed conditions are met
4_(1) No service charge is payable under a qualifying lease in respect of a relevant measure relating to any relevant defect if any prescribed conditions, relating to a relevant landlord or the value of the qualifying lease, are met.
(2) In this paragraph—
“prescribed” means prescribed by regulations made by the Secretary of State;
“relevant landlord” has the same meaning as in paragraph 2.
Limit on service charge in other cases
5_(1) A service charge which would otherwise be payable under a qualifying lease in respect of a relevant measure relating to any relevant defect is payable only if (and so far as) the sum of—
(a) the amount of the service charge, and
(b) the total amount of relevant service charges which fell due before the service charge fell due,
does not exceed the permitted maximum.
(2) In this paragraph “relevant service charge” means a service charge under the lease in respect of a relevant measure relating to any relevant defect that—
(a) fell due in the pre-commencement period, or
(b) falls due after commencement.
(3) In sub-paragraph (2) “the pre-commencement period” means the period—
(a) beginning 5 years before commencement or, if later, on the day the relevant person became the tenant under the qualifying lease, and
(b) ending with commencement.
“The relevant person” means the person who was the tenant under the qualifying lease at commencement.
(4) In this paragraph—
“commencement” means the time this paragraph comes into force;
“the permitted maximum”: see paragraph 6.
Paragraph 5: the permitted maximum
6_(1) In paragraph 5 “the permitted maximum”, in relation to a qualifying lease, has the following meaning.
(2) The permitted maximum is (subject to sub-paragraphs (3) to (5))—
(a) if the premises demised by the qualifying lease are in Greater London, £15,000;
(b) otherwise, £10,000.
(3) Where the qualifying lease is a shared ownership lease and the tenant’s total share was less than 100% at the qualifying time, the permitted maximum is the tenant’s total share (as at that time) of what would otherwise be the permitted maximum.
(4) Where the value of the qualifying lease at the qualifying time is at least £1,000,000 but does not exceed £2,000,000, the permitted maximum is £50,000.
(5) Where the value of the qualifying lease at the qualifying time exceeds £2,000,000, the permitted maximum is £100,000.
(6) The Secretary of State may by regulations make provision about the determination of the value of a qualifying lease for the purposes of paragraph 4 and this paragraph.
(7) In this paragraph “shared ownership lease” and “total share” have the meaning given by section 7 of the Leasehold Reform, Housing and Urban Development Act 1993.
Annual limit on service charges
7_(1) The Secretary of State may by regulations make provision limiting the total amount of service charges payable in any period of 12 months under a qualifying lease in respect of relevant measures relating to any relevant defect to one fifth of the permitted maximum.
(2) In this paragraph “the permitted maximum” means the permitted maximum as defined by paragraph 6 in relation to the lease.
No service charge payable for cladding remediation where tenant was resident
8_(1) No service charge is payable under a qualifying lease in respect of cladding remediation if the condition in section (Meaning of “qualifying lease”)(2)(d)(i) (resident tenant) was met at the qualifying time.
(2) In this paragraph “cladding remediation” has the meaning given by regulations made by the Secretary of State.
No service charge payable for legal expenses relating to relevant defects
9_(1) No service charge is payable under a qualifying lease in respect of legal expenses relating to the liability (or potential liability) of any person incurred as a result of a relevant defect.
(2) In this paragraph “legal expenses” means any costs incurred, or to be incurred, in connection with—
(a) obtaining legal advice,
(b) any proceedings before a court or tribunal,
(c) arbitration, or
(d) mediation.
Paragraphs 2 to 9: supplementary
10_(1) This paragraph supplements paragraphs 2 to 9 (the “relevant paragraphs”).
(2) Where a relevant paragraph provides that no service charge is payable under a lease in respect of a thing—
(a) no costs incurred or to be incurred in respect of that thing (or in respect of that thing and anything else)—
(i) are to be regarded for the purposes of the relevant provisions as relevant costs to be taken into account in determining the amount of a service charge payable under the lease, or
(ii) are to be met from a relevant reserve fund;
(b) any amount payable under the lease, or met from a relevant reserve fund, is limited accordingly (and any necessary adjustment must be made by repayment, reduction of subsequent charges or otherwise).
(3) In this paragraph—
“the relevant provisions” means sections 18 to 30 of the Landlord and Tenant Act 1985 (service charges) and section 42 of the Landlord and Tenant Act 1987 (service charge contributions to be held on trust);
“relevant reserve fund” means—
(a) a trust fund within the meaning of section 42 of the Landlord and Tenant Act 1987,
(b) an express trust of a kind mentioned in subsection (9) of that section, comprising payments made by the tenant under the qualifying lease and others, or
(c) any other fund comprising payments made by the tenant under the qualifying lease and others, and held for the purposes of meeting costs incurred or to be incurred in respect of the relevant building in question or any part of it (or in respect of that building or part and anything else).
No increase in service charge for other tenants
11_ Where—
(a) an amount (“the original amount”) would, apart from this Schedule, be payable by a tenant under a lease of premises in a relevant building, and
(b) a greater amount would (apart from this paragraph) be payable under the lease as a result of this Schedule,
the lease has effect as if the amount payable were the original amount.
Recovery of service charge amounts from landlords
12_(1) The Secretary of State may by regulations make provision for and in connection with the recovery, from a prescribed relevant landlord, of any amount that is not recoverable under a lease as a result of this Schedule.
(2) In this paragraph—
“prescribed” means prescribed by regulations under this paragraph;
“relevant landlord”, in relation to a lease, means the landlord under the lease or any superior landlord.
Information
13_(1) The Secretary of State may by regulations make provision requiring a tenant under a qualifying lease to give prescribed information or documents to the landlord under the lease or any superior landlord.
(2) The regulations may provide that the information or documents are to be given in a prescribed way.
(3) In this paragraph “prescribed” means prescribed by the regulations.
Anti-avoidance
14_ A covenant or agreement (whenever made) is void insofar as it purports to exclude or limit any provision made under this Schedule.”
Member’s explanatory statement
This new Schedule contains protections for certain leaseholders and others, relating to certain remediation costs, and imposes corresponding liabilities on certain landlords.