Landlord certificate

What is it?

The principal purpose of the Landlord Certificate is to inform the leaseholder of whether or not:

1.    the landlord’s group meets the “contribution condition”, ie. it has a net worth of N x £2 million (N being the number of buildings over 11 metres with fire safety defects, in the landlord group); or 

2.    the landlord (or an associate of the landlord) is responsible for the fire safety defect in that it undertook or commissioned works relating to the defect. 

In either case, the landlord cannot recover service charge to remedy the defect from residential leaseholders. Where the landlord is responsible for the defect, it will not be able to recover service charge to remedy the defect from commercial tenants in a mixed use setting either.

When do I have to serve it?

A current landlord must provide a Landlord Certificate (which is in a prescribed form) in the following circumstances:

1.    when the current landlord makes a demand to a leaseholder for payment of service charge to remedy fire safety defects;

2.    within four weeks of receipt of notification from the leaseholder that the leasehold interest is to be sold;

3.    within four weeks of becoming aware of a fire safety defect not covered by a previous landlord’s certificate; or 

4.    within four weeks of being requested to do so by the leaseholder.

What happens if I do not serve it?

Failure to serve a Certificate could result in leaseholders applying to the First Tier Tribunal for an Order against the landlord. If that is not incentive enough, there is a presumption, where a landlord fails to provide a certificate, that the landlord (a) meets the “contribution condition”; and (b) is responsible for the defect, meaning that the landlord will be unable to recover any costs associated with the defect via the service charge.  Given the changing legislative landscape related to fire safety, that is a presumption that a landlord may wish to avoid. 

Many landlords will be dealing with fire safety defects which they were already aware of before the Building Safety Act came into force. Those landlords should consider serving Landlord Certificates now if they wish to preserve any rights to recover costs under the service charge. 

Leaseholder Certificate

What is it?

A Leaseholder Certificate confirms (amongst other things) whether the dwelling was the leaseholder’s only or principal home and whether the leaseholder owned any other dwellings in the United Kingdom on 14 February 2022. A landlord requires this information in order to establish whether the lease is a Qualifying Lease, being a lease that benefits from enhanced leaseholder protections (including service charge caps) under the Act.  Like the Landlord Certificate, there is a prescribed form. 

When do I have to serve it?

Whilst is open to a leaseholder to take the initiative to serve a Leaseholder Certificate, the Act places the responsibility on the landlord to invite the leaseholders to provide one. 

Landlords should consider whether they have any long leases (21 years+), granted before 14 February 2022, of single dwellings in buildings over 11 metres with fire safety defects.  If they have, the Act requires them to serve notice on the leaseholders, enclosing a copy of the form of Leaseholder Certificate and warning the leaseholder of the consequences of failing to return it. 

The notice must be served within five days of the day on which the landlord becomes aware that the interest in the property owned by the leaseholder is to be sold or that there is a fire safety defect in relation to the building. 
The Act contains detailed provisions as to the content of the notice and efforts that landlords must go to, to bring it to leaseholders’ attention. Landlords are required to serve a reminder to the leaseholders if they do not respond and invite them to request up to four additional weeks to respond; a request that the landlord is obliged by the Act to accept.                                                     

What happens if I do not serve it?

A lease is presumed to be a Qualifying Lease under the Act until the landlord has taken all reasonable steps to obtain a Leaseholder Certificate and no such certificate has been provided. Landlords may perhaps not appreciate that, despite what the name may suggest, the onus is very much on them to collect Leaseholder Certificates. 

Key takeaway

Landlord and Leaseholder Certificates are part of the new regime for the management of fire defects under the Building Safety Act 2022. However, unlike the fire safety duties imposed on building owners elsewhere in the Act, the rules in relation to certificates are in force now.  The Department of Levelling Up has demonstrated a willingness to act where landlords are not being proactive enough: 

https://www.gov.uk/government/news/first-legal-action-launched-to-keep-residents-safe
  
Landlords would be well advised to stay abreast of the changes imposed by the Building Safety Act 2022.

Authored by Katie Dunn.