Building Safety Act 2022 - A Practical Guide for Solicitors and Licensed Conveyancers

This is up to each firm to decide. In my view a firm can act, but you must:

1.  have staff qualified and experienced to deal with matters
2.  have a workflow or system for acting on a sale or purchase
3.  be cautious about scoping the retainer and what you state, explain or advise in your report on title
4.  watch out for the scope of your lender instructions
5.  speak with your broker in advance to understand how your insurer is likely to view matters.

Scope the retainer to explain to your client that Schedule 8 protection may apply to some leases in some buildings in connection with some remediation work for some defects.

Explain that you will not be able to confirm that the lease is protected by the BSA 2022 against remediation costs being included within service charge as -

a) you will not be able to confirm whether the building where the property is situated is a relevant building or verify that the building exceeds 11 metres or is of more than five storeys when advised by the landlord, seller, surveyor or third party; and

b) you will be unable to confirm that a Landlord Certificate or Leaseholder Deed of Certificate contains correct information and so can be safely relied upon.

Also explain the BSA 2022 could increase service charge costs for leaseholders, particularly in higher risk buildings.

In conjunction with Tanfield Chambers, IQ Legal Training produce flowcharts for conveyancers acting on sales and purchases and for landlords. We have also produced wording for the retainer, report on title and an information sheet for clients. These are available for purchase from IQ Legal Training. For further information please contact [email protected]

Caution is required. Parts of the BSA 2022 are in force. The Welsh Government has created and is creating its own Regulations with some differences to the Regulations in England. For example in Wales a building over 18 metres in height needs only to have one residential unit within it to be defined as a higher risk building.

The BSA 2022 refers to a “Relevant Building” and section 117 provides that a Relevant Building is “a self-contained building, or self-contained part of a building, in England which contains at least two dwellings and:

1.  is at least 11 metres high or
2.  contains five storeys

But this is subject to a proviso in section 117(3).

Parts of the Act apply to any building containing two or more residential units.

The concept of 'dwelling' as it applies under the Landlord and Tenant Act 1985 (LTA) is likely to apply (i.e 'a building or part of a building occupied or intended to be occupied as a separate dwelling, together with any yard, garden, outhouses and appurtenances belonging to it or usually enjoyed with it').

No

Let’s clarify the height issue.

1. In theory the BSA 2022 applies to any building that contains two or more dwellings.
2. Specific provisions of the BSA 2022 apply if a relevant building exceeds 5 storeys or 11 metres in height.
3. Additional provisions of the BSA 2022 apply if the building exceeds 18 metres in height – it becomes a higher risk building

Section 117(2) BSA 2022 is the relevant section which states:

A relevant building means a self-contained building or self-contained part of a building that contains at least two dwellings and 

1.  Is at least 11 metres high, or
2.  Has at least 5 storeys

Section 118 (2) of the BSA 2022 provides further insight on the issue of height:

The height of a building is to be measured from ground level to the finished surface of the floor of the top storey of the building, ignoring any storey which is a roof top machinery or plant area, or consists exclusively of machinery or plant rooms

Section 118(3) BSA 2022 provides insight into the number of storeys by stating:

1. Any storey below ground level is to be disregarded
2. Any mezzanine floor is to be regarded as a storey if its internal floor area is at least half of the internal floor area of the largest storey in the building which is  not below ground level.

Helpfully the BSA 2022 explains in Section 118 (4) that ground level for the purposes of S118(2) means

1. The level of the surface of the ground immediately adjacent to the building; or
2. Where the level of the surface of the ground on which the building is situated is not uniform, the level of the lowest part of the surface of the ground immediately adjacent to it.

Schedule 8 is likely to apply on the part of the building that exceeds 5 storeys.

The building could be a higher risk building in which case parts of the BSA 2022 will apply, but not Schedule 8.

It applies, but does not impact on commercial units, subject to checking how service costs are apportioned as between commercial and residential units.

Yes

Schedule 8 would not apply, but the remainder of the BSA 2022 could apply and will certainly apply if the building is a higher risk building.

Yes

Yes

Guidance is provided by the Department of Levelling Up on the 21.7.22.

A leaseholder owned building is described as being a separate building where there is no separate building owner to whom costs can be passed and could include –

1. Collectively enfranchised buildings, where some or all of qualifying leaseholders have bought the building
2. Any building where leaseholders directly own the freehold , including a company where there is no separate freeholder
3. Other circumstances where the freehold is owned 100% by one or more leaseholder.

It does. The BSA 2022 and Schedule 8 in particular, both concern building safety issues, not just fire safety or cladding issues.

Schedule 8 refers to Relevant Defects. Some assistance as to what are Relevant Defects has been provided in the Guidance from the Department of Levelling Up, Communities and Housing on the 21st July 2022 which states –

“4. For a defect within a building to be defined as a ‘relevant defect’, it must meet all of the following criteria:

a. it puts people’s safety at risk from the spread of fire, or structural collapse

b. it has arisen from work done to a building, including the use of inappropriate or defective products, during its construction, or any later works (such as refurbishment or remediation)

c. it has been created in the 30 years prior to the leaseholder protections coming into force (meaning the defect had to be created from 28 June 1992 to 27 June 2022), and

d. it relates to at least one of the following types of works:

• the initial construction of the building,
• the conversion of a non-residential building into a residential building, or
• any other works undertaken or commissioned by or on behalf of the building owner (the definition of ‘building owner’ can be found in What are my building owner’s legal obligations?), or management company.”
  
  Definition of ‘relevant defect’ - GOV.UK (www.gov.uk)

Section 120 (2) BSA 2022 defines a Relevant Defects as being a defect which arises as a result of works which:

(a) were undertaken in the last 30 years and

(b) cause a “building safety risk” – that is, a risk to the safety of people in or about the building arising from the spread of fire or collapse.

When acting for a buyer a TA 7 should be expected from the seller and a LPE 1 from the landlord.  If the building is a relevant building (two residential units, 18 metres in height or more than 5 storeys) then in order to take advantage of the presumption in Para. 13 of Schedule 8 you should ask the seller to provide a Landlord Certificate and Leaseholder Deed of Certificate.

Whether a landlord is absent or not does not matter. If a landlord cannot be traced this could be a problem.

A relevant landlord for the purposes of Schedule 8 of the BSA 2022 is defined as the landlord under the lease on 14 February 2022, or any superior landlord at that time.

The fact that the landlord retained some flats would not prevent other flats being subject to qualifying leases, which would be protected by Schedule 8. A lease granted after the 14.2.22 will not be a qualifying lease, but has some protection under Schedule 8 as Part 2 of Schedule 8 applies to any lease if the defect is a relevant defect   and provides that no service charge is payable for a defect for which landlord or associate is responsible.

It is impossible to verify if questions are not applicable or to compel a meaningful response. All that a conveyancer can do is report to the client and the lender that no meaningful reply has been received in the LPE 1 or TA forms. A seller or landlord might contend the BSA 2022 does not apply and so certain questions are not applicable. It is reasonable to challenge this if you think the Act does apply.

Yes.

.... and therefore the fall-back position (that the Landlord cannot claim any costs from the leaseholder) applies?

It would seem it is for the landlord to provide a complete certificate containing correct information and it would not be for the buyer’s conveyancer to refer back to the landlord or to challenge the certificate. However, this is yet to be tested before the FTT. Where the certificate appears to be obviously incomplete or defective it might be reasonable to challenge it. Given the potential for this document to be complicated and containing technical accountancy and or construction information, I would scope the retainer if acting for a buyer so the client is aware that I cannot verify the accuracy of the information in a Landlord Certificate nor confirm it is a valid certificate. I would report to the client that specialist advice would be required.

Report your findings to the client. Explain the Landlord Certificate may be defective and that this could mean the landlord cannot transmit those costs into service charge assuming defects are relevant defects under the lease, the building is a relevant building and the lease is a qualifying lease.  Advise the client of the known defects and explain that it is likely that the landlord will not be able to recover remediation costs if the defects are relevant defects.

The safe thing to do is to limit the scope of the retainer to explain that you cannot advise on the accuracy or otherwise of the answers given.  Clients could be told to instruct other professionals such as a building surveyor, fire safety consultant, or forensic accountant where appropriate, to obtain information.

The landlord cannot recover historical remediation costs for relevant defects in this scenario.

Yes. A landlord can serve a Landlord Certificate in the future if it discovers relevant defects that require remediation.

... and would the 4 week time limit within which the landlord needs to provide a Landlord Certificate, start to run from the date of deemed service? 

No the leaseholder would need to notify the landlord of an impending sale or make a formal request for a Landlord Certificate (recording the date of that formal notification to calculate when the four week period commences).

A leaseholder could serve a Leaseholder Deed of Certificate on a landlord at any time and that would not trigger the need for the landlord to produce a Landlord Certificate.

A Leaseholder Deed of Certificate need only be provided to the landlord if the landlord requires it and if a landlord requires it they must notify the leaseholder by pre-paid first class letter or email and give the leaseholder at least 8 weeks to provide which can be extended by four weeks if the leaseholder requests it.

No.

... We cannot get any response from the landlord, but the lender wants it. What options do we have?

There are limited options. Advise the lender that the failure to provide a Landlord Certificate protects a leaseholder against historical remediation costs if buying a qualifying lease in a relevant building.

For Schedule 8 purposes we need to identify a Relevant Building and a Qualifying Lease. A company can be a qualifying tenant where it acquires a qualifying lease or it meets the criteria set out by the Act if it was the leaseholder as at the 14.2.22.

The Department of Levelling Up has stated:

“The government wrote to major house builders and other large developers on 30 January 2023 saying that it expected them to sign the developer remediation contract by 13 March 2023.

Once signed, the contract requires developers to:

• Take responsibility for all necessary work to address life-critical fire-safety defects arising from the design and construction of buildings 11 metres and over in height that they developed or refurbished in England over the 30 years prior to 5 April 2022.
• Keep residents in those buildings informed about progress towards meeting this commitment.
• Reimburse taxpayers for funding spent on remediating their buildings.

These requirements reflect a public pledge signed by 49 developers last year. Once signed, the contract makes the pledge commitments legally binding.

As of 20 September 2023, 50 developers have signed the contract.

Four developers who signed the pledge were subsequently found not to have developed buildings within the scope of the contract. Those developers have therefore not been required to sign the contract at this stage. They may be asked to sign the contract in future if information emerges indicating that they did in fact develop buildings which are in scope.

The government has made clear that eligible developers who refuse to sign the contract or fail to comply with its terms face significant consequences.”

(Developer remediation contract - GOV.UK (www.gov.uk))

The problem is that the consequences for developers are not yet clear and might not generate sufficient protection for leaseholders and lenders that are not otherwise protected under the BSA 2022.

... The seller's solicitors claim that as their client (the tenant) has requested a Landlord Certificate and that Certificate has not been produced in the set time that the tenant cannot be charged for historical remediation works defects.  Is this correct?

Partly correct. Schedule 8 will provide some protection for leaseholders holding non-qualifying leases in this situation.

In my view it doesn’t, but this will depend on the planning status of a park home and whether it could be defined as a dwelling. You need to review how a dwelling is defined in other landlord and tenant legislation. 

 As noted above, the concept of 'dwelling' as it applies under the Landlord and Tenant Act 1985 (LTA) is likely to apply (i.e 'a building or part of a building occupied or intended to be occupied as a separate dwelling, together with any yard, garden, outhouses and appurtenances belonging to it or usually enjoyed with it').

If a Leaseholder Deed of Certificate does not exist, the executor can execute one.

The deceased is the leaseholder as at the 14.2.22 and an executor can complete the leaseholder deed of certificate.

If the building is a Relevant Building and the seller has a Qualifying Lease, you would need to provide a Leaseholder Deed of Certificate to a buyer, and if asked by the landlord to provide it irrespective of the question on cladding.

... However, the developer has signed the Self-Remediation Terms and as far as they can ascertain, this means that the leaseholders, whether qualifying or not, will not be on the hook for the cost of remedying life-threating defects.  The client’s lender has asked my colleague to clarify this point, but they are struggling to determine absolutely that the developer cannot pass on costs to the non-qualifying leaseholders in this situation.  What would be the advice in this situation?

The landlord can pass on costs subject to the limited protection afforded by Schedule 8 Para. 2, which prevents landlord from transmitting costs into service charge for remediation work for relevant defects where the landlord or associates did the work that requires remediation. However the protections afforded by LTA 1985 as amended still apply – reasonableness, consultation etc.

Lenders instructions vary from lender to lender and from time to time. Check your instructions carefully, and check them again in readiness for and before exchange of contracts. If asked to verify the height of a building or the content of a landlord certificate or leaseholder deed of certificate you cannot do so.

Check the lender’s instruction, but (as above) if they are asking you to confirm or verify height of a building, whether a building is a Relevant Building, or the content or accuracy of information in a Leaseholder Deed of Certificate (as to ownership or occupation as of the 14.2.22) or Landlord Certificate, then my view is that you cannot act.

When a seller in a reply to a TA7, or a landlord in a Landlord Certificate or replies to an LPE1, provide an opinion, this should be reported to the lender.

A surrender and re-grant would be a new lease, so Schedule 8 of the BSA 2022 would not apply. We are still awaiting amending regulations which will change the position which may be retrospective.

The landlord should complete the LPE 1. If the landlord says it does not have a Leaseholder Deed of Certificate and does not produce a Landlord Certificate, then if you are acting for a buyer, do not ask the landlord for either. The lack of a Landlord Certificate protects a buyer from past remediation costs and if a landlord doesn’t have, or has not asked for, a Leaseholder Deed of Certificate, the presumption in Para 13 of Schedule 8 BSA 2022 protects the buyer assuming the building is a Relevant Building and the lease is a Qualifying Lease.

Plumbing issues and risk of flooding are not relevant risks for the purposes of the BSA 2022.

... Our understanding was that the Fire Safety Act 2021 changed the requirements for a Fire Risk Assessment so that all residential buildings required a Fire Risk Assessment, whether or not there were internal communal areas, because the structure, external walls, and flat entrance doors are considered common parts. Are you able to clarify the position?

Your understanding is correct.