We own the freehold — why do the building safety protections not apply?

The leaseholders own the freehold, so the Act does not protect us

Because the protections work by stopping someone else passing costs to you, and in a leaseholder-owned building there is no someone else. The statutory scheme protects leaseholders from a separate building owner. Where the leaseholders have bought the freehold — by collective enfranchisement or otherwise — the building falls outside the definition of a relevant building, and the cost of fire safety work falls on the leaseholders collectively.

From the e-ROT archive

This scenario is drawn from Report on Title material dealing with this specific circumstance.

Lexsure master Report on Title paragraph: Building Safety Act 2022 - Freehold owned by Leaseholders · See the wording

The logic of the exclusion

The leaseholder protections regulate what a building owner may recover from leaseholders. They are a cap on one party's ability to charge another. Where the leaseholders are the building owner, there is nobody for the cap to operate against.

The same reasoning excludes commonhold buildings, where each unit holder is a member of the association that owns the structure and common parts. In both cases the conclusion follows from the design of the scheme rather than from a judgement that these leaseholders need less help.

What it means in practice for your flat

Any fire safety remediation required on the building is funded by the leaseholders collectively, through whatever mechanism the leases and the company constitution provide.

That makes two things much more important than they would be in a building with an external freeholder. First, what is actually known about the building's external walls and fire safety — because there is no statutory backstop if something is found. Second, what money exists: reserves, and the realistic capacity of a handful of flat owners to fund works.

It is not a reason to avoid share-of-freehold buildings, most of which are small and low-rise and will never engage any of this. It is a reason to ask the question specifically where the building is tall enough for the regime to have been relevant.

What to ask before you exchange

Whether any fire risk assessment or external wall survey has been carried out, and to see it. Whether any remediation has been identified, costed or started. What the reserve fund holds, and what the leases allow the company to demand.

Whether the enfranchisement happened before or after the building safety issue emerged — a building bought by its leaseholders in the knowledge of a defect is a different proposition from one where the problem arrived afterwards.

Whether any government remediation funding scheme has been applied for, and with what result.

Building Safety Act 2022 - Freehold owned by Leaseholders

Master precedent Lexsure e-ROTScope Leaseholder-owned buildingWord count 82Status Current master paragraph

The Building Safety Act has made changes to the way high rise buildings are managed and kept safe from any risks that may compromise the building.

Leaseholder-owned buildings however are not deemed to be relevant buildings under the act and therefore do not benefit from the protections of the act.

This is due to the fact that there is no separate building owner to whom costs can be passed. Therefore the leaseholders collectively are responsible for any works required for fire safety.

Dealing with this on a current conveyancing matter?

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