Service Charge Demand changes due to the Building Safety Act

What are Higher Risk Buildings?

You are probably already aware what constitutes a HRB, but for the avoidance of doubt, the qualifying criteria is:

• A building that is at least 18 meters in height or has at least seven storeys
• Contains at least two residential units

Current Sections 47 and 48 LTA 1987 requirements

Managing agents will be familiar with the requirements under Section 47 and 48 of the LTA 1987. To ensure a service charge demand is valid, it must include:

• Section 47: The freeholder’s name and an address where they can be found (usually the freeholder’s registered office).
• Section 48: An address where notices may be served on the freeholder (commonly the managing agent’s address).

Failure to include this information means the service charge demand is not enforceable until the omission is corrected, though it can be fixed retrospectively. For more information see the Brady Blog here.

What’s changing?

When passed, Sections 47A and 49A will introduce new requirements for HRBs. These changes state that service charge demands must also include relevant building safety information, without which the demand will not be payable.

What is Relevant Building Safety Information?

Under Section 49A, relevant building safety information includes:

1. Confirmation that the property is part of a HRB.
2. The names, email addresses, phone numbers, and postal addresses for:

• The principal accountable person for the building.
• Any special measures manager (if appointed).
• The regulator.

1. The regulator’s postal address.
2. Any additional information required by future regulations.

Preparing for Compliance

As nearly every managing agents’ systems are currently designed with the present requirements in mind, it is vital for managing agents to update their systems and processes ahead of the change to requirements, and here is how to do so:

1. Review Templates and Systems
   Inspect your existing service charge demand templates and any software you use to create them. Assess whether the building safety information can be added into your current template using your current software, and if it can’t, consider adding an additional page containing the further information required.
2. If needed, create a supplementary page.
   Add a further page containing the relevant building safety information. Ensure that the main service charge demand references this page to ensure compliance with Sections 47A and 49A.
3. Accompanying Letters
   Include a note in any covering letter that highlights the attached building safety information. This minimises disputes from leaseholders claiming they did not receive it.
4. Training and communication
   Ensure your team understands the new requirements and that they’re ready to implement these changes once the legislation comes into force.

Why is it important to get ahead of the changes?

Although failing to include building safety information will not permanently invalidate a service charge demand (as the missing details can be added at a later date), delays can hinder recovery and lead to unnecessary administrative and legal costs, which may not be recoverable from leaseholders. Therefore, being ahead of the changes and preventing this occurrence is a much better solution.

Summary

Whilst we do not have a date for the introduction of the changes to the requirements for Sections 47A and 49A LTA 1987, as previously mentioned, we expect them to be some of the earliest reforms by the new Government. We therefore advise managing agents to take proactive steps to ensure that they are ready to incorporate building safety information into service charge demands for HRBs. With preparation, these changes can be made efficiently and avoid any potential disruptions.  

Jonathan Whittle, Head of Arrears, Brady Solicitors