New Clause 33 - Recovery of legal costs etc through service charge

Leasehold and Freehold Reform Bill – in the House of Commons at 6:00 pm on 27 February 2024.

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“(1) Schedule 8 to the BSA 2022 (remediation costs under qualifying leases etc) is amended in accordance with subsections (2) and (3).

(2) After paragraph 9(1) insert—

“(1A) Sub-paragraph (1) does not apply to the extent that the service charge is payable to a management company in respect of legal or other professional services provided to the company in connection with an application or possible application by the company for or relating to a remediation contribution order under section 124.”

(3) After paragraph 9(2) insert—

“(3) In sub-paragraph (1A) “management company” means—

(a) a resident management company, or

(b) an RTM company within the meaning of Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002 (right to manage).

(4) “Resident management company” means a body corporate which is party to a lease of a building where—

(a) the body corporate is limited by guarantee and the members of that body are tenants under leases of dwellings in the building (“leaseholders”), or

(b) the majority of the shares of the body corporate are held by leaseholders.”

(4) The amendments made by this section do not apply in relation to legal or other professional services provided before this section comes into force.”—(Lee Rowley.)

This new clause amends provision in the Building Safety Act 2022 which prevents legal costs etc relating to liability for building defects being passed onto leaseholders via the service charge. The change allows the recovery of such costs via the service charge if they are incurred by a resident management company in connection with obtaining a remediation contribution order.

Brought up, and added to the Bill.