Leaseholder contribution caps guidance updated for in-force protections

The Ministry of Housing, Communities and Local Government updated its guidance on leaseholder contribution caps on 24 July 2024, to reflect amendments to the leaseholder protections that are now in force¹. The guidance was first published on 21 July 2022 and applies to England¹.

Under the Building Safety Act 2022, leaseholders are only required to contribute towards remediation costs in limited circumstances¹. Where building owners can legally pass on a share of non-cladding remediation costs to qualifying leaseholders, "these contributions must be firmly capped and spread over 10 years"¹. Any costs charged must be spread over a 10 year period, and the maximum charged in one year will be no greater than one-tenth (10%) of the cap¹.

The caps depend on the location and uprated value of the leasehold property¹:

The higher caps in Greater London reflect the proportionately higher property values and building work costs in the region, the guidance states¹. Shared owners have their cap reduced in proportion to their equity: the guidance gives the example that someone owning 50% of a property in Greater London could be charged a maximum of 50% of the contribution cap, that is £7,500 spread over a 10-year period¹.

Costs paid since 28 June 2017 towards remediation of building safety defects or interim measures count towards the capped amount, and must be deducted from the total capped amount that can be charged¹. Interim measures include steps taken to mitigate a building safety risk, such as waking watches patrolling a building until historical safety issues are resolved¹. The guidance notes that no compensation is available if a leaseholder has paid more than their contribution cap¹. Any additional costs required to complete remediation works must come from the building owner¹.

The protections and caps are tied to the lease, so they automatically transfer to future buyers of the property¹. Where a property was not the leaseholder's main home on 14 February 2022 because they had to move or sublet, it is still covered if they owned 3 or fewer UK properties in total on that date, including the leasehold property¹.

Why it matters for households

The caps set the maximum that qualifying leaseholders in England can be charged for non-cladding remediation over 10 years, with annual charges limited to a tenth of the cap¹. For leaseholders whose buildings need such work, the figures determine what they can be billed and when. Amounts already paid since 28 June 2017 towards remediation or interim measures reduce the remaining amount that can be charged, and the guidance's worked examples show a £15,000 Greater London cap falling to £10,000 after £5,000 of interim payments, and a £10,000 cap outside London falling to £7,000 after £3,000¹. Because the protections attach to the lease, they pass to future buyers of an eligible property¹.

What happens next

The guidance was last updated on 24 July 2024¹. No further changes have been reported. Leaseholders can use the Leaseholder Protections Checker or work out their lease value manually using the multipliers set out in the guidance¹.