22 August 2024

Building Safety Charge

The Building Safety Charge is a specific financial mechanism introduced under the Building Safety Act 2022 in the UK.

The purpose of the Building Safety Charge is to allow building owners to recover the costs associated with the safety measures needed to comply with the new building safety regulations.

This charge is applicable to residents or leaseholders in high-rise and multi-occupancy residential buildings, particularly those deemed to be at higher risk (buildings over 18 meters in height or those with at least seven storeys).

Purpose of the Building Safety Charge

The Charge allows building owners (who are often freeholders or property management companies) to recover costs associated with ensuring the safety of the building, as mandated by the Building Safety Act.

These costs can cover a range of safety-related expenses, including but not limited to:

• Conducting building safety assessments and inspections
• Maintaining or upgrading fire safety systems (fire doors, alarms, sprinkler systems, etc.)
• Addressing structural safety concerns
• Installing or improving emergency evacuation routes
• Remediation work on cladding or other fire safety hazards
• Administrative costs associated with complying with safety regulations (such as the preparation of safety case reports or maintaining the “Golden Thread” of safety information).

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Key Features of the Building Safety Charge

Transparency and Accountability

Building owners must provide a clear breakdown of the costs that the Building Safety Charge will cover.

They must give residents a full accounting of what the charge will be used for and how the money is being spent. This is intended to promote transparency and ensure that residents or leaseholders can see how their money contributes to maintaining or improving the safety of the building.

Separate Charge from Service Charge

The Building Safety Charge is separate from other charges such as the service charge. While service charges cover general building management and maintenance costs (cleaning, repairs, utilities, etc.), the Building Safety Charge is specifically for costs related to complying with the new safety requirements under the Building Safety Act.

Cap on Charges

Charges are capped to protect leaseholders from excessive financial burden. This means that property owners cannot charge an unlimited amount to residents for safety-related works.

The government has stipulated that charges must be “reasonable” and proportionate to the actual safety improvements being carried out.

Notice Periods

Building owners are required to give leaseholders or residents a minimum of 28 days’ notice before demanding payment of the under the terms of the Charge. This is to ensure that residents have adequate time to review the costs and prepare for any financial obligations.

Leaseholders have the right to request further information if they believe the charge is unclear or if they want more details about the work being undertaken.

Dispute Mechanism

If a resident or leaseholder disputes the Charge, they can challenge the charge through a tribunal or another formal dispute resolution process. This is to prevent building owners from unfairly levying high costs or using the charge for non-safety-related purposes.

Costs Covered by the Building Safety Charge

The Building Safety Charge is designed to cover costs that are directly related to the safety of the building and to ensure compliance with the new regulations.

Typical costs that may be included are:

• Fire safety inspections and risk assessments
• Installation or repair of fire safety systems, such as alarms, sprinklers, and smoke control systems
• Structural assessments and repairs to ensure the building’s stability
• Removal or remediation of unsafe cladding or other fire hazards
• Safety audits and preparation of reports for the Building Safety Regulator
• Ongoing safety management costs, such as the salary of a Building Safety Manager
• Emergency evacuation systems, signage, and equipment

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Building Safety Charge Resident Protection Measures

Affordability Protections

The act has introduced limits and protections to ensure that leaseholders are not unfairly burdened by the costs.

This includes capping charges and ensuring that building owners bear a significant portion of the remediation costs. This particularly applies when historical safety failings are due to defective construction or substandard materials.

The government has also introduced some funds to assist with the remediation of unsafe cladding, reducing the need for leaseholders to cover the full costs themselves.

Transparency and Consultation

Building owners are obligated to consult with residents on major safety-related works before imposing the charge. This consultation process allows residents to raise concerns, offer feedback, or request alternative approaches.

If residents feel that the safety measures are unnecessary or excessively expensive, they can raise objections. Owners must provide justifications for the proposed work and associated costs.

Regulated Process

The act introduces a regulated process for implementing the Building Safety Charge. This means that all costs must be documented and justified.

If building owners fail to comply with the regulation, they could face penalties or lose the right to recover certain costs.

Building Safety Charge in Practice

In practice, the cost will vary from building to building, depending on the type and extent of safety works required. High-risk buildings, such as those with unsafe cladding or significant fire safety concerns, are likely to see larger costs due to the scale of necessary remediation work.

For many buildings, costs may include ongoing safety management. This could include regular fire safety inspections or structural assessments for instance, to prevent potential hazards.

Retroactive Charges

Some charges may be retroactively applied. This could occur in instances where emergency remediation work was required to address an immediate safety hazard, for instance.

In these cases, building owners must still provide notice and transparency around costs.

Impact on Property Owners and Residents

For Property Owners

The Building Safety Charge provides property owners with a legal mechanism to recoup some of the costs they incur in meeting the safety obligations outlined by the Building Safety Act.

This is crucial for owners, especially those managing large portfolios, as safety upgrades can be expensive.

Owners must be mindful, however, to ensure that the charge is reasonable. It should not exceed what is necessary for compliance. Owners may face legal challenges from residents if the charge is viewed as excessive.

For Residents

Leaseholders and tenants must pay the Charge as part of their obligations to maintain a safe living environment. However, with caps in place and clear channels for transparency, residents are afforded protection against excessive or arbitrary charges.

The charge can impact residents financially, especially in buildings requiring major safety upgrades. However, the government’s provision for funds (such as the Building Safety Fund) helps to offset the costs in cases where cladding or other historical construction issues are involved.

Building Safety Charge Conclusion

The Building Safety Charge is a critical component of the UK’s Building Safety Act, designed to ensure that building owners can fund the necessary safety improvements to protect residents.

While it introduces additional financial obligations for residents and leaseholders, the charge also comes with clear protections to ensure that costs are reasonable, transparent, and directly related to building safety.

This charge helps to ensure that the new, higher standards of safety required under the Building Safety Act are met, while balancing the financial responsibility between property owners and residents.

Contact

For more information on the Building Safety Charge, or for help fullfilling your obligations under the Building Safety Act, please call our Enquiry line on 020 4534 3130

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