Part 5: Other provisions about safety standards, etc. Remediation of Certain defects Section 122 – Remediation costs under qualifying leases Background
The explanatory note to section 116 sets out the context of the leaseholder protections provisions. Most flats in multi-occupied residential buildings in England are owned on long leases, where (in the simplest cases) a freeholder owns the building and the land it sits on, and the leaseholders own the units within the building on long leases. The freeholder is responsible for the maintenance and upkeep of the building. The leases, which are contractual agreements between the leaseholder and freeholder, allow the costs associated with maintenance to be passed by the freeholder through the service charge to the leaseholders. Since the Grenfell Tower fire in 2017 it has become apparent that a large number of multi-occupied residential buildings have serious building safety defects which need to be remediated, often at significant cost to the leaseholders.
	Schedule 8 makes provision for service charge payments in respect of relevant defects not to be payable by leaseholders in certain circumstances. By limiting or preventing altogether the amounts that are payable in respect of these defects from being passed on to the leaseholders through the service charge, leaseholders are protected from the costs associated with their remediation.
	Schedule 8 removes the existing legal presumption under most leases that leaseholders are liable in full for the costs associated with remediating relevant defects. The Schedule and powers contained within it make provision for liability to sit in the first instance with landlords who are deemed to be responsible for the creation of those defects, and then with landlords that can afford to meet the costs in full. Where neither of these circumstances applies in respect of any relevant landlord, the Schedule provides for an equitable spread of costs, commensurate with a party’s likely ability to contribute to costs, by allowing for capped leaseholder contributions to be recovered (up to "the permitted maximum") in certain circumstances; and for relevant landlords to be liable for any amounts that are not recoverable from leaseholders.
	The Schedule sets out that, in relation to historical building safety defects, "no service is payable" in certain circumstances, and in other circumstances that the service charge is only payable if it "does not exceed the permitted maximum". These provisions in the Schedule apply from commencement (two months after Royal Assent of the Act, or 28 June 2022): from that date, the service charge protections apply. The protections apply equally irrespective of when any service charge demands were issued by landlords or managing agents. This means that, even if a valid service charge demand was issued prior to commencement, provided that the service charge had not already been paid by the leaseholder, the demand is no longer valid after commencement insofar as it does not comply with the provisions set out in the Schedule. In practice, this means that managing agents and landlords will need to rescind service charge demands issued prior to commencement where they relate to historical building safety defects. Where landlords are entitled to recover some costs from leaseholders according to the Schedule, they will need to issue new service charge demands which comply with the provisions set out in the Schedule.
	Further detail on the provisions contained within Schedule 8 are set out in the explanatory notes to the Schedule.