Schedule 8: Remediation costs under qualifying leases Paragraph 10: Paragraphs 2 to 4, 8 and 9: supplementary Background
This is a new provision.
	Paragraph 10 ensures that where the relevant cost protections apply, the costs cannot be passed on to leaseholders, either by means of service charge demands or met from a reserve fund.
	The law relating to service charges in multi-occupied residential buildings is set out in sections 18 to 30 of the Landlord and Tenant Act 1985. Section 18 of that Act defines "relevant costs" as costs incurred by the landlord in connection with matters for which the service charge is payable. This paragraph provides that, where the relevant cost protections under the Schedule apply, those costs cannot be passed through the service charge.
	It is common practice for multi-occupied residential buildings to maintain reserve funds. Leaseholders pay into the reserve fund, which is set aside to pay for the costs of major works. These funds are usually held on trust. The law governing service charge contributions held on trust is set out in section 42 of the Landlord and Tenant Act 1987. Paragraph 10 sets out that, where the relevant protections apply, those costs cannot be met from a reserve fund. This provision applies equally to reserve funds which are caught by section 42 of the Landlord and Tenant Act 1987, as well as to any other types of funds into which leaseholders have paid.