Registered Providers – Do you need to review your stock to be ready for the four week turn-around time to produce a Deed of Certificate?

What is the new legislation?

The Building Safety Act 2022 introduces new rules meaning that when your teams receive notification of a sale of a property (flat) located in a building which is 11 metres high or five storeys or more, there is a requirement in this instance to produce a Landlord’s Deed of Certificate which sets out costs associated with remediation at the building which you intend to pass on via the service charge. The 11 metre rule could apply to buildings of less than five storeys depending on the height of the individual dwellings.

It should be noted that there is a need to produce and send to the leaseholder, a Landlord’s Certificate if the leaseholder serves a Leaseholder’s Deed of Certificate on you which they can do at any time and not just when they are selling.

Leaseholders of properties valued under £175,000 outside of London or £325,000 in London will not have to contribute anything towards the costs of building safety defects. The idea is very much passing on costs to those with the deepest pockets.

What should you do?

It is important to assess your housing stock and identify properties that could be sold, that will fall into these categories as the four week period is set from the date you receive notification of a sale and therefore time will be of the essence to serve the Landlord’s Deed of Certificate. Even if you do not intend to pass on costs, it would be worthwhile producing the Deed of Certificate as a record as this will become harder to deal with in future years.

It may be the case that post Grenfell, relevant housing stock has already been assessed to analyse the safety of the building and the data has largely been collated already but it is recommended that you have safety remediation costs information to hand so that you can act when the need to produce a Landlord’s Deed of Certificate is triggered.

The requirement will only apply to higher rise stock (not all housing stock) but a certain amount of organisation will be required as the timescales are short for producing Deeds of Certificate.

We will be working closely with our colleagues from the Housing and Asset Management Team, led by Gary Ekpenyoung in providing practical advice to clients where the requirement for a Deed of Certificate is triggered.

Attached is an example Landlord’s Deed of Certificate to review and the Government Guidance is also very useful.

For completeness, a Leaseholder’s Deed of Certificate is also attached.

Please note that 49 of the largest developers have pledged to remediate critical fire safety risks (especially cladding) in existing buildings of 11 metres or more.

They were due to sign a binding contract by 13 March 2023 which includes registered providers but registered providers may be able to work with the other developers on their sites.

If a developer has failed to sign the contract by that date, the Department for Levelling Up Housing and Communities has threatened to prevent such developers from becoming a ‘Responsible Actor’ under imminent secondary legislation under sections 126-129 BSA 2022. This will mean they may no longer get building control approvals for new projects and public “blacklisting”.

This is something that development colleagues should certainly be made aware of so that action can be taken in this regard, if it hasn’t already.

The team will work with you to guide you through the process where an applicable property requires a Deed of Certificate. This certificate will become an integral part of the sale process and there are draconian measures for failing to supply certificates in circumstances where one is required.

We will be regularly reviewing government guidance and advising on best practice to implement these new and very novel regulations.

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Stewart acts exclusively for housing association clients and completes a large number of property transactions to assist clients in achieving their goals.

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Published: 17th March 2023
Area: Social Housing

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