Part 5: Other provisions about safety standards, etc. Remediation of Certain defects Section 117 – Meaning of "relevant building" Background
The problems associated with historical building safety defects in multi-occupied residential buildings are concentrated in medium- and high-rise buildings. There is a greater risk to life in taller buildings when fire does spread, and so defects in taller buildings are more likely to need to be remediated, and it is leaseholders in those buildings that have found themselves more likely to face significant remediation costs. Section 117 defines a relevant building (one that is within scope of the protections) as a building containing at least two or more dwellings and which is at least 11 metres in height or has at least five storeys.
	Buildings which are below 11 metres in height, and which have fewer than five storeys are not within the scope of the leaseholder protections as evidence shows that there is no systemic issue with historical fire safety defects in these buildings. Costly remediation is unlikely to be needed, and there are likely to be more proportionate mitigations, such as the installation of fire alarms. It is not, therefore, necessary for low-rise buildings to be included within the definition of relevant building.
	The ownership structures of multi-occupied residential buildings are discussed in the explanatory note for section 116 and set out that (in simple terms) in most cases the building and the land on which it sits is owned by the freeholder, and the long leases of the individual dwellings are owned by the leaseholders. The freeholder (that is, the owner of the freehold) can be, for example, a private company, an individual, a local authority, or a charity.
	It is also possible for some or all of the leaseholders to purchase their building’s freehold; this is known as collective enfranchisement. Where enfranchisement occurs, the leaseholders become the owner of the freehold. There are several statutory routes to collective enfranchisement. The statutory routes are under Parts 1 or 3 of the Landlord and Tenant Act 1987, and under Chapter 1 of Part 1 of the Leasehold Reform, Housing and Urban Development Act 1993. It is also possible for leaseholders to purchase the freehold of their building through non-statutory means.
	An alternative to the leasehold model of ownership of multi-occupied residential buildings is commonhold. When a building is on commonhold land, each unit-holder (owner of a dwelling) within the building also owns the freehold of the unit. Commonhold is a different model of ownership to leasehold, but commonhold buildings are similar to those which have collectively enfranchised in the sense that the building, and the land which the building is on, are collectively owned by the owners of the dwellings contained within the building in both circumstances. The legal framework which governs commonhold is the Commonhold and Leasehold Reform Act 2002. There are far fewer commonhold buildings in England than multi-occupied leasehold buildings.
	The leaseholder protections measures work at a fundamental level by limiting or preventing the costs that can be passed through the service charge to leaseholders by the freeholder. When costs cannot be passed on through the service charge, the freeholder, who is responsible for undertaking works to maintain the building, becomes liable for these costs. In situations where the building is collectively owned by the leaseholders, there is no separate entity to bear the costs – the leaseholders are the freeholder. Consequently, the definition of "relevant building" does not include leaseholder-owned buildings.