Building Safety Act 2022 – A Landlord’s Perspective

The Building Safety Act 2022 was brought into force on 28 April 2022. Designed to provide a safer living environment for tenants of high rise buildings, it imposes various obligations on a landlord. If you are the landlord of a building that is taller than 18 metres (or has at least seven storeys or more) and which contains at least two residential units, then you need to be aware of the implications the Building Safety Act could have.

The implications for a landlord fall into two categories – for new builds and for those buildings which are already in existence.

Building Safety Act 2022 requirements for new builds

If you are in the process of constructing a building which falls within the above criteria then right from the start of the design and planning process you need to be aware of your obligations. The Act creates a framework within which a “dutyholder” must work and creates a “gateway” procedure.

The “dutyholder” system is to focus on improving competency and places a duty on those that produce plans, manage and undertake building work. Those duties involve monitoring work, providing relevant information to authorities, making sure that records are kept and maintained so as to be available to end users. If the requirements are breached a criminal act will be committed.
Three gateways have been introduced:

• The Planning Gateway (which was actually introduced previously) which must be passed before being able to proceed any further. This includes having to deal with fire safety requirements
• A second gateway which must be passed before building work starts. This replaces building control full deposit of plans and means that designing as you build will fall away. Not being able to provide the information needed to satisfy this gateway could introduce significant delays
• A third gateway for when work is completed. This must be passed before a building can be occupied

At each stage, if requirements are not met, a developer will not be able to proceed to the next gateway. If, therefore, the correct documentation and procedures are not followed a developer could find itself in a position where it is not able to move forward and meet funding requirements/sale projections.

If the requirements are not complied with a developer might find itself prohibited from applying for planning permission and obtaining building regulation approval, even where a planning permission has been obtained.

A far reaching part of the new regime is the extension of liability with the limitation period for bringing a claim for defective premises being extended from 6 years to 15 years for construction work being completed in the future. It should also be noted that liability could be passed to sister or parent entities, making them jointly and severally liable for any defect. Developers should look at their indemnity insurance to ensure that effective and relevant cover is in place.

Another change is in relation to new build warranties that are given on completion of a unit. These provisions will put an obligation on a developer to provide a new build home warranty for a 15 year period. At the moment, new build home warranties must only last for 10 years. There will no doubt be a cost implication with higher premiums being charged by the warranty providers for the longer warranty period.

Building Safety Act 2022 requirements for existing buildings

Once constructed, the management and repair of a building must continue. Risks must be assessed and identified, with defects being remedied. A key aspect of the risk assessment is identifying the potential spread of fire, structural failure plus any other matter that the Secretary of State considers appropriate.

The responsibility for ensuring compliance and carrying out assessment will be allocated to an “accountable person” which can be an individual or a corporate entity. There could be more than one accountable person for a building. For clarity a tenant under a long lease will not be deemed an accountable person. It is more likely to be the freehold owner, but this should not be taken as an absolute rule. This will need to be determined on a building by building basis.

Once risks are identified they must be managed. The requirement to assess and manage is not a one off obligation. It is a continuous obligation. Any strategy to manage the risks determined must be made available to the occupiers of the building.

If risks are identified and a strategy put in place to manage those, there will be associated costs – replacing defective cladding or sprinkler system by way of example. Who is to pay for those? In the past costs of replacing such items have been passed onto tenants through service charge contributions, resulting in crippling costs and unsaleable properties. Going forward, if specified requirements are met, provisions will be implied into service charge clauses of leases regulating how and what can be recovered from the tenant. Caps will also be in place on amounts that can be recovered and for certain items (dangerous cladding being one) no cost can be recovered. It will also be possible to recover costs from original owners/developers.

It should be noted that the above regime in relation to assessment of risks and contribution to costs of remedying defects will also be relevant to a new build once it is constructed and up and running.

There can be no doubt that the new regime will have a wide impact. It will undoubtedly slow the build process whilst everyone gets used to the new system and way of dealing with things, leading to an increased number of questions being raised throughout a conveyancing transaction and potentially giving rise to higher build and administrative costs. Given the tragic instances which have occurred and the unfair payment demands that have been made, the new provisions would seem to be a big step in the right direction to trying to improve a broken and wrongly weighted system.

How can Morr & Co help?

If you have any questions or would like any further information on the content of this article, please do not hesitate to contact our Commercial Property team on 01737 854500 or email info@morrlaw.com and a member of our expert team will get back to you.

Disclaimer
Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.