The government has issued guidance for leaseholders in buildings with non-cladding defects where the developer has become insolvent. Homelessness Minister Florence Eshalomi outlined the available options in response to a parliamentary question.
Ms Eshalomi stated that the government expects responsible persons to ensure building safety and undertake necessary remedial works. Leaseholder Protections under the Building Safety Act are designed to protect holders of qualifying leases from the costs of remediating relevant non-cladding building safety defects above a capped contribution.
If a developer is insolvent, 'interested persons' such as freeholders, leaseholders, and regulators can apply to the courts for a Remediation Contribution Order to fund works from a former owner or associated company, or a Building Liability Order against a wider parent group. If the insolvent developer is also the freeholder, liquidators or administrators may undertake remedial works or seek a buyer for the building and associated works. Leaseholders may also consider exercising their right of first refusal under the Landlord and Tenant Act 1987 for minor liabilities.
Propertymark has called for accelerated leasehold reform, noting that its survey of over 1,200 leaseholders found 86% had experienced service charge increases in the past two years, and 89% found challenging unfair charges difficult. More than 78% of estate agents surveyed had removed at least one leasehold property from the market due to it being unsellable.