The Building Safety Act 2022 (BSA) was recently introduced to help remedy the problems created by defective cladding on high-rise buildings. Its aim is to afford protection to certain leaseholders in blocks of flats in England from the costs associated with remediating historical building safety defects, together with a statutory framework for dealing with those remedial works and future schemes of work. For owners of multi-dwelling buildings, landlords and management companies, it is important to understand how the BSA is going to impact your responsibilities to leaseholders, as well as the associated risks involved in implied terms being read into existing leases.
BSA: Key points
- The BSA applies to tenants who qualify for redress, which will be the case if the tenant lives in their own home or holds no more than 3 UK properties (qualifying leaseholders).
- The BSA sets out a formal redress scheme, which will be the starting point for liability (not the terms of a qualifying leaseholder's lease).
- The landlord will not be entitled to charge remedial costs to remove or remediate defective cladding to a qualifying leaseholder via the service charge (or otherwise) and even if the lease would permit it, in circumstances where the building is over five storeys or eleven metres tall; and including non-cladding defects costs or interim measures such as "waking watches".
- An independent regulator will be responsible for hearing unresolved concerns from leaseholders (thereby side-stepping any third-party determination provisions in a lease).
- The statutory limitation to claim compensation for sub-standard construction work is increased to 30 years looking backwards pre 28 June 2022 and 15 years looking forward (previously generally 6 years).
BSA: Key risks
While bringing the necessary clarity sought by industry and individual leaseholders to the problem of defective cladding on residential flats, the BSA is a specific purpose instrument and which, as drafted, has the potential to give rise to further issues.
Some examples might include, a situation where remedial works impact on existing services being provided to leaseholders in the building, which would not be likely to fall under the BSA, there also is uncertainty about what might happen if the remedial works were themselves defective... In all cases, the fall-back starting position is likely to be the provisions of the individual leaseholder's lease.
Throughout any BSA process, the terms of the existing lease (specifically the service charge provisions) remain in-play, which might not sit comfortably with the BSA regime or enforcement options. Interpretation of modified provisions by implied terms in respect of "higher risk" buildings might also prove contentious. Part 2 of our BSA landlord and tenant blog takes an in depth look at the risk associated with implied terms being read in existing leases.
Finally (and remembering always) a tenant's entitlement to quiet enjoyment of their property for the period of remedial works, remains alive. Any landlord breaching this with noisy or messy remedial works, may find they are subject to a claim for damages by their tenant.
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.
Contributors
Partner
Legal Director
