Cathryn Pernstich looks at some of the issues and unanswered questions facing property owners and occupiers in the immediate aftermath following the tragedy at Grenfell Tower.
Not too distant past events have led recently to offices and high rise buildings checking the materials used in construction of buildings are fire compliant and schools confirming that fire regulations and requirements have been reviewed and actioned. They have also seen the launch of an independent review of building regulations and fire safety.
The independent review will look at (amongst other things) the regulatory system around design, construction and ongoing management of buildings to manage fire safety, compliance with regulations and now enforcement for non-compliance will be enforced. The outcome of the review is expected to be published in Spring 2018, with an interim review at the end of 2017. Whilst concentrating primarily on high rise buildings, the review and the events preceding it, are a timely reminder to all property owners or occupiers of the importance of considering and abiding by fire regulations.
Fire risk assessment
Each property occupied for a commercial purpose or where there are elements used in common in residential buildings should have a fire risk assessment carried out under The Regulatory Reform (Fire Safety) Order 2005. The fire risk assessment should be carried out by a “responsible person”. It is worth noting that the “responsible person” does not have to be the freehold owner. If the property is occupied by a tenant for its business or the common parts are managed by a management company or tenant’s association, then it is those persons/entities which are responsible for carrying out a fire risk assessment.
If a fire risk assessment is not carried out, then it could invalidate the insurance policy at the property. It could also be a sticking point on the sale of the property if no fire risk assessment can be provided. Not to mention the serious consequences if a fire were to happen and no fire risk assessment was carried out. All in all a relatively easy and inexpensive assessment to commission can have a big impact, so worth considering putting in place if there is none or even updating if one exists.
Who bears the costs?
Another point to consider on fire safety, is what happens if a fire inspection or assessment identifies that there are deficiencies. The obvious answer is that they need to be rectified. Who, however, pays for that rectification? If a freehold building that is unoccupied, then it will be the freehold owner. If that building is in the process of being sold, then a savvy buyer could use this as a price chipping exercise. If the building is occupied, can the cost be passed onto the tenant? Is it a legitimate expense for service charge purposes? Does it fall under the obligation that is often inserted into a lease for the tenant to comply with all statutory obligations that effect a property?
Another possible angle is the insurers of the property requiring any works to be done. If the works are not done, then the insurance policy will arguably be rendered void. Again, if the freehold owner of an unoccupied building, then the cost of doing those works will fall on the freehold owner. For an occupied building, many leases will state that the tenant will comply with the requirements of the insurer. Is it, therefore, for the tenant to carry out these works? Can the tenant argue that as the landlord has the responsibility to insure, it should do them? If the landlord does them, can they be recovered from the tenant? The position comes back full circle.
Particularly, if the property is occupied, there is no one clear cut answer. It will depend on the terms of the lease and possibly of the relationship between the landlord and the tenant. For a freehold owner of an unoccupied building, it might be that external funding is the only way in which the works can be done. That brings with it, its own nuances.
These are complicated issues and difficult circumstances. However, close attention should be paid and owners and occupiers alike need to be aware of their obligations and rights. If you need advice or want to discuss any property related matters, please contact Cathryn Pernstich on 01737 854521, or by email to Cathryn.Pernstich@morrlaw.com