Our August 2024 summary of the latest developments in Property law and practice is as follows:

From 24 July 2024 Sections 114 to 119 of the Leasehold and Freehold Reform Act 2024 have made changes to the Building Safety Act 2022.

The definition of a “relevant defect” is added – being a defect in a building that arises as a result of anything done (or not done), or anything used (or not used), in connection with “relevant works” (as defined by section 120(3) BSA 2022), and which causes a building safety risk. This new definition is then applied in connection with the leaseholder protection provisions of Schedule 8 BSA 2022. Under the leaseholder protection provisions of the BSA 2022, no service charge is payable in certain circumstances in respect of a “relevant measure” relating to a “relevant defect”. Relevant measures now include both measures taken to remedy the relevant defect and also “relevant steps”.

In relation to remediation orders under section 123 BSA 2022, an order of the First-tier Tribunal can require the remedying of relevant defects specified in its order, and also the taking of specified “relevant steps” in relation to a relevant defect. Further, a remediation contribution order under section 124 BSA 2022 may require a contribution towards costs incurred or to be incurred in taking “relevant steps” in relation to a relevant defect.

Other amendments include a removal of the restriction on charging legal costs through the service charge in qualifying leases incurred as a result of a relevant defect where the legal costs are incurred by a residents’ management company (or RTM company) relating to an application for a remediation contribution order under section 124 BSA 2022.

The Energy Performance of Buildings (England and Wales) (Amendment) Regulations 2024 (SI 2024/640) are in force from 24 June 2024. The 2024 regulations facilitate the sharing of information obtained during the assessment process with building owners, landlords and occupiers, and also with other third parties such as buyers or intending tenants (such sharing to be with consent from either the owner, landlord or occupier). They provide greater access to data about the energy performance of a building, including data collected during the assessment process which is not available on the EPC register.

Sections 112 and 113 of the Leasehold and Freehold Reform Act 2024 have made changes to the law relating to rent charges.

One of the aims of the Rentcharges Act 1977 was to limit the circumstances in which new rent charges could be created. Section 2 of that Act prevented the creation of new legal or equitable rent charges unless they fell within one of five permitted categories, the most significant of which for property lawyers is the estate rent charge, which enabled the rent charge owner to enforce covenants against the landowner for the time being, or for meeting or contributing towards the cost of services, maintenance and repairs. Estate rent charges are commonly used in new freehold developments to create a system whereby positive service charge obligations can be made to run with the land affected.

Section 112 LAFRA 2024 has expanded the definition of an estate rent charge to make it clear that the rent charge may enable recovery not only of costs relating to repairs but also to the costs of “improvements”. This is an odd choice as it seems to create the potential of more costs for affected freehold property owners, rather than less.

However, under a new section 120B LPA 1925, no action to recover or compel payment of arrears under a regulated rent charge arrears can at least be taken unless the rent charge owner has served on the landowner a notice, payment of the arrears and at least 30 days have passed without payment. The notice demanding payment must be accompanied by evidence of the rent charge owner’s title to the rent charge, although this is not necessary if such evidence has accompanied a previously served demand.