Relevant Buildings and Qualifying Leaseholders
The BSA 2022 Schedule 8 leaseholder protections apply to 'relevant buildings' (self-contained buildings containing at least 2 dwellings that are 11 metres or more in height OR have 5 or more storeys above ground level) and 'qualifying leaseholders' (long leaseholders who owned or had rights to own their lease on 14 February 2022 AND either: the dwelling was their principal residence on that date, OR they own no more than 3 UK dwellings including the flat). Leaseholders who own 4 or more UK properties (including the flat) are non-qualifying. The leaseholder deed of certificate is the prescribed form by which a leaseholder confirms qualifying status; it transfers with the lease on any assignment after 14 February 2022.
- Relevant building threshold: 11m height OR 5 storeys; below this threshold the Sch.8 protections do not apply
- Qualifying leaseholder: long leaseholder; owned (or had right to own) the lease on 14 February 2022; principal residence OR 3 or fewer UK properties
- Three-property investor exclusion: 4 or more UK properties (including the flat) = non-qualifying leaseholder; protections do not apply
- Leaseholder deed of certificate: prescribed form; transfers with the lease on assignment; confirms qualifying status to the landlord and the Tribunal
Schedule 8, Cladding Defects, Non-Cladding Defects, and the Service Charge Cap
Schedule 8 draws a fundamental distinction between cladding system defects and non-cladding defects. Cladding system defects: qualifying leaseholders CANNOT be charged for any cladding remediation costs, full stop; no exception regardless of the landlord's identity or financial position. Non-cladding defects (defective fire doors; compartmentation; balcony decking; structural defects): where the relevant landlord's net worth is £2 million or more per relevant building in the group, the landlord must absorb ALL non-cladding costs; cannot charge qualifying leaseholders. Where the relevant landlord is worth less than £2 million per building; non-cladding costs can be charged through service charges but subject to a cap of £10,000 per qualifying leaseholder (£15,000 in London).
- Cladding defect costs: cannot be charged to qualifying leaseholders in any circumstances, absolute protection
- Non-cladding defect costs: depends on landlord net worth; £2m+ per building = landlord absorbs all; below £2m = service charge cap applies
- Service charge cap: £10,000 per qualifying leaseholder outside London; £15,000 in London for non-cladding defect costs
- Developer liability (30-year lookback): developer/contractor who caused the defect is liable; landlord can pursue via remediation contribution order (s.124)
The Landlord Certificate and Its Role in Property Sales
The relevant landlord must provide a 'landlord certificate' on request by a qualifying leaseholder, potential purchaser, or First-tier Tribunal. The certificate confirms the landlord's net worth position (above or below the £2 million per building threshold), which determines whether non-cladding costs can be charged and whether the service charge cap applies. Failure to provide the certificate allows the leaseholder to apply to the Tribunal for a determination. The landlord certificate (together with the leaseholder deed of certificate) is essential due diligence for any flat sale in a relevant building, conveyancers and mortgage lenders require both documents.
- Must be provided on request: by qualifying leaseholders; potential purchasers; First-tier Tribunal; no automatic periodic issue obligation
- Confirms net worth position: £2m+ per building = landlord absorbs non-cladding costs; below £2m = cap applies
- Failure to provide: leaseholder can apply to Tribunal for a determination that the landlord must absorb non-cladding costs
- Essential for flat sales: conveyancers and mortgage lenders require both the leaseholder deed of certificate and the landlord certificate for any flat in a relevant building