Leaseholders' court victory over fire safety costs

A court has said that building owners and developers cannot recoup costs from leaseholders for fire safety remediation work.

The Court of Appeal ruling on two separate cases earlier this month could have far-reaching implications for who bears the costs of building safety-related costs in the future.

In the wake of the Grenfell Tower tragedy, safety issues were discovered in buildings constructed years or decades before.

The court's ruling means that building owners can't charge leaseholders for fire safety defects that were discovered before 2022.

The judges ruled that parts of the Building Safety Act 2022 (BSA) can be applied retrospectively, favouring leaseholders and residents.

The law came into force in June 2022 in response to the issues raised by the Grenfell Tower fire in 2017, according to the Local Democracy Reporting Service.

The retrospective nature of the law was a key factor in its creation, and the Secretary of State for Housing, Communities and Local Government Angela Rayner made written submissions to the court attesting to this.

She said: "A retrospective approach provides for effective routes to redress against those responsible for historical building safety defects that have only recently come to light, whatever level of the supply chain they operated at."

The court decisions relate to disputes about Hippersley Point in Abbey Wood, south east London and five residential blocks in the East Village Estate in the Olympic Park in Stratford, east London.

In the Hippersley case, the tower block's owner Adriatic wanted to charge leaseholders the costs incurred during a tribunal process in which it asked to do away with certain regulations so it could charge residents more than £250 each to carry out remedial fire safety works.

In the East Village case, judge looked at an application from the social housing provider and long leaseholder Triathlon which wanted to make the East Village developers pay for remedying fire safety defects via remediation contribution orders (RCO).

The East Village RCOs were the first to be made under the BSA, with the developers appealing the First Tier Tribunal's original decision to allow the orders.

Fire safety defects at Hippersley Point and in the East Village Estate were both discovered prior to when the BSA became law.

In both cases, the Court of Appeal ruled in favour of leaseholders over developers, deciding that parts of the BSA do have retrospective effect.

Lawyer Nitej Davda, a partner at law firm Cripps, said it was "quite unusual" for such legislation to have retrospective effect.

He said: "If you take a step back and you think about what happened with Grenfell, which is where all of this emanates from ultimately, and then you think about what is the intention behind the legislation and what is it intended to do.

"The BSA is intended to do two things fundamentally.

"It is intended to give leaseholders protection and it is intended to make developers pay.

"If it doesn't have retrospective effect then you are trying to make the act work with at least one hand tied behind your back."

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