A recent decision of the Upper Tribunal has confirmed that a manager of flats appointed by the First Tier Tribunal (the "FTT") pursuant to Part 2 of the Landlord and Tenant Act 1987 cannot be an accountable person for the purposes of the Building Safety Act 2022 ("BSA"). This is of real importance for appointed managers or owners of buildings that are managed by an appointed manager. Not only does it determine who has the various obligations to manage building safety risks set out in the BSA but it can also affect who is the proper party to make an application to the Building Safety Fund for assistance with funding remedial works.
First, a quick recap. Part 2 of the Landlord and Tenant Act 1987 gives the FTT the power to appoint a manager of blocks of flats to carry out management and maintenance functions (an "Appointed Manager"). This is typically done where there has been some form of mismanagement by the freeholder or previous entity responsible for the management.
Separately, the BSA provides that responsibility for managing building safety risks in higher-risk buildings falls on the "accountable person(s)" for that building. In brief, an accountable person is an entity which either owns or has an obligation to repair the common parts of a higher-risk building.
Upholding the FTT decision, the Upper Tribunal in Solomon Unsdorfer v Octagon Overseas Limited & Others [2024] UKUT 79 (LC) ruled that an Appointed Manager cannot be an accountable person under the BSA. No managers appointed since the coming into force of the BSA can therefore be ordered to undertake management of building safety risks that fall within the scope of the duties of accountable persons and nor will any Appointed Manager assume any obligation of an accountable person by virtue of the BSA. However, this did not have retrospective effect. Appointed Managers already appointed when the BSA came into force will therefore still need to carry out the management functions prescribed in their appointment order even if some of these may be obligations imposed upon an accountable person under the BSA. An existing Appointed Manager will not, however, have any requirement to carry out any of the duties imposed on accountable persons unless they are expressly required to do so in the terms of their appointment order.
The Upper Tribunal acknowledged that this created a potentially unsatisfactory position, with the "potential for an uncomfortable and impractical overlap between the responsibilities of the manager and the landlord". The Upper Tribunal's answer to this was that this overlap would continue only for a temporary period: until the appointment order expires or a further order is made. The point was made expressly that a manager could apply to the FTT to vary an existing appointment order to clarify the division of the responsibilities. An application has been made in this case on this issue, which is due to be heard by the FTT in the next few weeks, which should provide further guidance on that issue.
If you are a freeholder, landlord or management company having to deal with issues caused by defective cladding or, you have any concerns or questions about the impact the BSA may have on you or your business, please do not hesitate to get in touch with our Real Estate Disputes team or your usual Brodies' contact.
For more of our industry insights on the impact of the BSA right across the built environment, please visit our Building and Fire Safety hub here.
