On 5 July 2021, the Government introduced the new Building Safety Bill into Parliament.
The Bill is not yet law, however it is expected to introduce significant changes to the regulation of building safety. If the Bill does become law, much of the detail will need to be supplied by regulations made by the Secretary of State.
Some of the most important provisions of the Bill include
- The limitation period for property owners or occupiers to make a claim against developers will be increased from six years to fifteen years;
- The provisions affect ‘higher-risk buildings’, being those buildings over eighteen metres or at least seven stories and containing at least two residential units;
- There will be a new building safety regulator; and
- Higher-risk buildings will need to have a principal accountable person and a building safety manager.
Building safety charges
The relevant landlord may require a relevant tenant to pay a building safety charge in a similar manner to the law of residential service charges. One of the key differences is that the tenant must pay any demand within twenty eight days.
Building safety charges are to be held by the landlord either
- In a single trust fund or;
- In two or more separate trust funds.
The landlord must hold any trust fund
- On trust to defray costs incurred in connection with the matters for which the building safety charges were payable and;
- Subject to that on trust for the contributing tenants for the time being.
On the termination of the lease of any of the contributing tenants, the tenant is not entitled to any part of the trust fund.
On termination of the lease of the last contributing tenant, any trust fund is dissolved as at the date of the termination of the lease and any assets comprised in the fund immediately before the dissolution are to be retained by the landlord for their own use and benefit.
Written request of building safety costs
A relevant tenant may, by written request, require the relevant landlord to supply them with a written summary of the building safety costs incurred.
The written summary of building safety costs must be certified by a qualified accountant.
As the Bill proceeds through Parliament and becomes law, M+A Partners will provide regular updates on the accounting implications to the changes in Building Safety.
The M+A Partners Property Management Accounting team will be pleased to discuss the accounting issues of the Building Safety Bill with you, please get in touch using the contact details below.