Building Safety Act 2022 continues to evolve

Decision paves the way for leaseholders to recover historic service charges associated with fire safety defects

Summary

The Building Safety Act 2022 (“BSA”) introduced several remedies against those responsible for buildings of at least eleven metres which suffer from fire safety defects or serious structural failure. Remedies included the power to make a Remediation Contribution Order (“RCO”), requiring those responsible to make payments to a specified person to meet costs incurred or to be incurred in rectifying defects.

On 13 January 2023, the First-Tier Tribunal Property Chamber heard one of the first applications for an RCO, on behalf of Arjun Batish and other leaseholders of a property in Sutton (“the Property”) -  See Batish and others v Inspired Sutton and others LON/00BF/HYI/2022/0002.

Background

Inspired Sutton converted the Property in 2017 from offices into residential apartments. Following the tragedy at Grenfell Tower, Inspired Sutton and the leaseholders became aware that the materials used in the construction and design of the development constituted a significant fire safety risk. Remedial works were undertaken to rectify these defects, which involved the removal of unsafe cladding, replacement of the render and rectification and replacement of unsafe balconies. Remedial works commenced in February 2021 and the costs ran to approximately £193,000, which were funded by service charge requests levied against the leaseholders by Inspired Sutton.

Mr Batish, together with seventeen other leaseholders made an application under section 124 of the BSA for an RCO against Inspired Sutton. Leaseholders sought the entirety of the service charges paid in relation to the defects, adhering to the provisions contained within Schedule 8 of the BSA, limiting the service charge payable by leaseholders in respect of ‘relevant defects’.

Decision

Whilst section 124 of the BSA was not the subject of full argument as Inspired Sutton were debarred from taking part in proceedings, due to their failure to provide a statement of case, the Tribunal granted an RCO.

The Tribunal found that the Property was a ‘relevant building’ under the BSA as it was structurally detached and had at least five storeys.  In granting the order the Tribunal held: -

1. The leaseholders were also ‘interested persons’ as they held legal interests in their properties and Inspired Sutton was a ‘relevant specified body corporate’ as defined within the BSA.
2. The service charges paid by the leaseholders related to ‘relevant defects’ involving the remediation of the cladding and balcony defects that were found to be fire hazards. The Tribunal concluded that these were ‘building safety risks’ under the BSA.
3. That it was just and reasonable for the order to be issued.
4. Paragraph 2 of Schedule 8 states that no service charge is payable in respect of works relating to a relevant defect where the landlord is responsible for the 'relevant defect’. As a result, service charges should not have been levied against the leaseholders of the building, with Inspired Sutton expected to pay for these works, because of defects within their construction of the building.
5. The granting of the RCO was ‘just and equitable’ in the circumstances.

Commentary

The BSA does not provide guidance on what constitutes ‘just and equitable’ and whilst it is unfortunate that the Tribunal did not take the opportunity to provide guidance; the decision arguably paves the way for leaseholders to recover past service charges.

The latest step to have developers take responsibility for fire safety defects.

Published 31 January 2023

As of 9 August, 49 developers had signed a pledge committing to remediate life critical fire safety works in buildings over 11 metres that they had played a role in developing or refurbishing over the last 30 years in England. Following today’s publication of the Development Remediation Contract between Participant Developers and DLUHC, developers have six weeks to sign, failure to do so will be made public.
 
This is the latest step to have developers take responsibility for fire safety defects.
 
The publication has led to the announcement that legislation will be brought forward giving the Secretary of State powers to prevent developers from operating freely in the housing market if they fail to sign and comply with the remediation contract.
 
A positive move for those exposed to fire safety defects in buildings over 11 meters high; however, at what costs and to whom as the need for reimbursement is at the core of the contract.

Further obligations placed on responsible persons for buildings

Published 9 January 2023

The Fire Safety (England) Regulations 2022, due to come into force on 23 January 2023, place further obligations on responsible persons for buildings, to provide information to fire and rescue services, as well as providing additional safety measures to residents to mitigate the risk of and spread of fire.

The nature of the obligations imposed will vary, depending upon whether a development (i) comprises buildings containing two or more domestic areas with common parts, (ii) is between 11 and 18 metres (i.e., high rise buildings), and (iii) is 18 metres or over. Key obligations, which will be welcomed by residents, placed upon responsible persons are as follows: -

General obligations

• Provide residents with an evacuation strategy and information as to how to report a fire
• Provide residents with information about the operation of fire doors

Buildings between 11metres and 18 metres

• Undertaking checks on fire doors - must be undertaken in communal areas at least every three months
• Undertaking checks on all entrance doors at periods not exceeding 12 months and remedial works must be undertaken

Buildings over 18 metres

• The design of the external walls of the building, including details of the materials used, must be prepared and provided to the local fire and rescue services and revised when any significant changes occur
• A plan for each floor of a high-rise residential building must be prepared which identifies the location of all lifts and key fire-fighting equipment within the building
• The design of the building and floor plans must be provided electronically to the local fire and rescue authority
• A secure information box must be installed in or on the building accessible to the fire and rescue authority which contains the design of the building and floor plans as well as contact details for the person responsible for the building, and all people permitted to access the building
• Monthly checks must be undertaken of firefighting or evacuation lifts and key fire-fighting equipment, and if a fault has been identified and cannot be rectified within 24 hours, notice must be given to the local fire and rescue authority
• The building must have clear signage of floors and identifications of domestic premises.

Whilst welcomed by some, the cost associated with compliance will no doubt prove to be a contention moving forward.

Evidence session to take place in 2023 to discuss perceived gaps within the BSA - what will be covered?

Published 29 December 2022

The Levelling Up, Housing and Communities (“LUHC”) Committee and Lee Rowley MP (Parliamentary Under Secretary of State (Local Government and Building Safety)), have confirmed that they will convene in early 2023 at an evidence session to discuss perceived gaps within the BSA.

The agenda for this important meeting will be of interest to all impacted by the BSA. Of note the topics up for discussion include: 

• the building safety repairs pledge to which developers have voluntarily signed up to remediate critical fire safety works in buildings over 11 metres for which they are responsible, which to date has not yet been enforced;
• the liability of professional freeholders;
• the remediation fund that has recently been announced for mid-range buildings 11-18 metres in height and whether residents in buildings less than 11 metres in height should be protected; and
• the funding for non-cladding building safety works.

The funding or non-cladding building safety defects was the subject of previous discussion within the ‘Building safety: remediation and funding – government response to the Select Committee reports’ published on 16 May 2022, in which the cap on non-cladding costs for leaseholders was called to be scrapped. The Government’s response was that due to the other caps in place, and protections for leaseholders from the costs of the liability of the developer/landlord, the situation where a leaseholder would have to contribute to non-cladding building safety works was proportionate and would ensure that the necessary remediation works took place. 

Revisiting issues such as funding reflects the true impact of the BSA as an evolving environment, which continues to spawn novel issues for policyholders, insurers, landlords and developers. 

Further iteration coming into force on the 1 December 2022

Published  28 November 2022

As anticipated the Building Safety Act 2022 (‘BSA’) continues to evolve, with a further iteration coming into force on the 1 December 2022. Of note and of interest are:

• Hostels, hotels and boarding houses now fall within the scope of the ban on the use of combustible materials;
• Certain metal composite materials (metal composite materials with an unmodified polyethylene core) are now banned from being incorporated into external walls on all buildings as well as specified attachments of buildings (such as balconies or solar panels);
• Solar shading devices/products will not be subject to the ban, however their components such as the slats or curtains will be;
• The latest British Standard Fire classification has been inserted into the Building Regulations;
• The ban on the use of metal composite materials will apply where there has been a material change of use to a building of 11 metres in height (previously 15 metres), but will only apply to existing buildings of 18 metres above ground level;
• New definitions of ‘building’ and ‘building work’ have been inserted into the Building etc. (Amendment) (England) Regulations 2021, and Building etc. (Amendment) (England) (No.2) Regulations 2021.