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The Building Safety Act 2022 (‘BSA’) is set to undergo further amendments by virtue of the Leasehold and Freehold Reform Act 2024 (‘LFRA’), which obtained Royal Assent just two days after the announcement of the General Election. Some of these amendments will be in force from 24 July 2024 whilst other commencement dates are expected to be confirmed shortly thereafter; irrespective of the hue of our incoming government.

The current remedies available to parties applying to the First-tier Tribunal (‘FTT’) to resolve building safety defects under the BSA will increase due to these amendments. These amendments clarify and extend protections in specific areas to further prevent freeholders and developers from escaping their liabilities to fund building remediation work and to put an end to cases where the landlord failed to carry out certain steps before and during the remediation process, causing leaseholders to bear a financial burden.

Remedies under the BSA

The BSA introduced four key remedies for remedying defects in buildings. Three of these were limited to ‘relevant defects’ in ‘relevant buildings’. A relevant defect is defined in Section 120 of the BSA as (principally) anything done, or not done, to a building in the thirty years up to 28 June 2022 which caused a risk of the spread of fire or collapse the building (or part of it). Relevant buildings are buildings, comprising of at least two residential units and which are measured as at least 11 metres from the ground floor to the floor level of the highest storey or five storeys high from the ground floor upwards.

The four key remedies are:

  1. Remediation Orders (‘ROs’), which can order landlords to remedy relevant defects in relevant buildings by a specified time. Paragraph 997 of the Explanatory Notes to the BSA explains that the policy behind ROs is to ‘redress the balance of power in favour of leaseholders’ where landlords are not fulfilling their obligations to ensure the relevant building is safe.
  2. Remediation Contribution Orders (‘RCOs’) require a specified person to make a contribution towards “meeting costs incurred or to be incurred in remedying relevant defects”. A person may only be specified as a target of an RCO if they are a current or former landlord, the developer of the building, or a party ‘associated’ with one of those classes. RCOs enable freeholders and landlords to recover costs already paid in respect of remedying relevant defects, allowing the movement of funds from better-capitalised associated companies where the freeholders or landlords were deliberately structured to have few assets.
  3. Building Liability Orders (‘BLOs’), which are orders providing that any relevant liability of the original body relating to a specified building is also a liability of another body corporate, or a joint and several liability of two or more bodies corporate, who are associated with the original body. In practice, this will mean that certain companies or partnerships are jointly liable for liabilities relating to relevant defects, liabilities under the Defective Premises Act 1972, or liabilities under section 38 of the Building Act 1984 (i.e. breach of building regulations).
  4. Section 125 Orders, which enables a court, on the application of an insolvency practitioner to receive remediation costs for relevant defects from any company or partnership associated with a company which is a landlord of a relevant building, where during the course of the winding up of the landlord it appears to be under an obligation to remedy or to pay the costs of remedying any relevant defects in the relevant building.

Amendments introduced by the LFRA

The Relevant Landlord is responsible for taking ‘Relevant Steps’

A new definition of ‘relevant steps’ in relation to the remediation of relevant defects is to be introduced to Section 120 of the BSA by virtue of Section 114 of the LFRA. ‘Relevant steps’ are defined as steps which have as their purpose:

a) preventing or reducing the likelihood of a fire or collapse of the building (or any part of it) occurring as a result of the relevant defect; or

b) reducing the severity of any such incident; or

c) preventing or reducing harm to people in or about the building that could result from such an incident.

In practice, relevant steps can include waking watches and/or fire detection and alarm systems. In Triathlon Homes LLP -v- Stratford Village Development Partnership and others (‘Triathlon’), the Respondents argued that the BSA definition of a ‘relevant measure’ does not extend to the costs of installing an alarm system or engaging a waking watch, as it only applies to a measure taken to remedy a relevant defect, or for the purpose of either preventing a relevant risk from materialising, or reducing the severity of any incident resulting from a relevant risk materialising. The FTT held in favour of the Applicant that orders for payment may cover such preventative steps to counteract the harm or risk caused by relevant defects, such as waking watch and alarm installation as well as the works required to remedy the relevant defects. Section 114 of the LFRA mirrors and effectively endorses the Triathlon judgment by redefining ‘relevant measure’ in Section 120 of the BSA to mean both (a) a measure taken to remedy a relevant defect and (b) a relevant step taken in relation to a relevant defect. This new ‘relevant steps’ definition will enable the FTT to order a landlord to take ‘relevant steps’ under an RO; similarly, the costs of ‘relevant steps’ will be recoverable under RCOs. The commencement date for the coming into force of this provision is yet to be confirmed.

Widening the scope of costs recoverable by way of an RCO

The scope of recoverable costs which can be recovered by an RCO is to be further widened to also include costs in obtaining an expert report relating to the relevant building and temporary accommodation costs in connection with a decant from the relevant building (or part of it) for reasons connected with relevant defects. As is the case regarding the ‘relevant steps’ amendment above, the commencement dates for this further widening of the scope of recoverable costs are yet to be confirmed.

These amendments are retrospective, applying in relation to RCO proceedings pending when the amendments come into force, such proceedings commenced after that date and in relation to costs incurred before as well as after the amendments come into force. Accordingly, the amendments made by the LFRA further endorse and replicate the judgment in Triathlon in that Section 124 of the BSA applies retrospectively to costs incurred before as well as after it came into force.

Recovery of Legal Costs through Service Charges

There are further amendments addressing a problem with the drafting of Schedule 8 of the BSA which prevented Resident Management Companies (‘RMCs’) and Right To Manage companies (‘RTMs’) to be on the same footing as leaseholders in respect of being able to recover the legal costs of applying for ROs and RCOs through service charges.

RMCs and RTMs can recover legal and professional costs incurred in the application of an RCO, where the lease permits due to the amendments outlined in Section 117 of the LFRA. This change will therefore only apply where the lease already permits legal and professional costs incurred in connection with an application or possible application for an RCO to be recovered.

Nonetheless, this is a significant change, which will be welcomed by RMCs and RTMs that will require these funds to be able to apply for RCOs. This change will not be retrospective, so it will not apply to professional fees incurred before the amendment comes into force, which is confirmed to be on 24 July 2024.

Abolishment of Orders made under Section 125 of the BSA

The abovementioned Orders that can be made pursuant to Section 125 of the BSA are to be repealed by virtue of Section 118 of the LFRA, which will come into force on 24 July 2024. The Explanatory Notes do not explain why the Department for Levelling Up, Housing and Communities had repealed Section 125 of the BSA. In practice, however, such orders would have been of limited utility, as where you could have used a Section 125 Order, applications could instead be filed for either an RCO or BLO.

Notifications by Insolvency Practitioners

New duties are to be imposed on insolvency practitioners who are appointed in relation to a ‘responsible person’ for a ‘higher-risk building’, i.e. a building over 18 metres or 7 storeys which contains at least two residential units, or a ‘relevant building’ (as defined above) to provide specified information, e.g. the name of the insolvent party, address of the building, and the details of the insolvency practitioner.

As of 24 July 2024, such an insolvency practitioner will be under a statutory duty to provide the specified information within 14 days of their appointment to the local authority, the fire and rescue authority, or if the insolvency practitioner is appointed in relation to an accountable person to give the required information to the Building Safety Regulator.

Conclusion

The amendments should both clarify and strengthen the scope of protections under the BSA. The introduction of relevant steps, and changes to allow recovery of legal costs by residents, are likely to particularly increase the number of claims for ROs and RCOs. These remedies are likely to remain an important part of the building safety landscape.

As is the case with most provisions contained with the LFRA, many of these provisions will not be enacted until a later date to be specified by the Secretary of State. Whilst we cannot confirm the dates in which all of the above amendments are to be commenced, it is likely that the commencement dates will be confirmed after the General Election.

Matthew Davies is a member of our Building Safety Group.

If you have a query concerning how you may be affected by the Building Safety Act, then please contact our expert Building Safety Group by email to: buildingsafety@bishopandsewell.co.uk

The above is accurate as at 02 July 2024. The information above may be subject to change. The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis.

Matthew Davies Trainee Solicitor   +44(0)20 7079 2412
Mark Chick Senior Partner   +44 (0)20 7079 2415


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