Building Safety Bill Update
26 Jan 2022
Following the Grenfell Tower Fire of 2017, many multi-storey residential buildings have been identified as having external cladding.
The costs associated with establishing cladding safety and carrying out remedial work have been a matter of concern to leaseholders, who have found themselves in the unenviable position of having either having to pay for these costs, or being unable to sell or re-mortgage.
The Regulatory Reform (Fire Safety) Order 2005 (SI 2005/1541)Article 9(1) places the responsibility for assessing the need for remedial works on the owner of the building (defined as the person who is receiving the rack rent for the building).
However, who is responsible for the costs of remedial works has become a contentious issue. Although The Building Regulations 2010 amended by the Building (Amendment) Regulations 2018 (SI 2018/1230) place an obligation on whoever has carried out the building worksto ensure that safe materials are used, they do not have retrospective effect. Additionally, the 2010 Regulation appeared to have the effect of limiting any remedial action to buildings over 15 metres, a position which seemed to be further supported by restricted access to the Government’s building safety fund.
With this backdrop, leaseholders have turned to freeholders and/ or any management company to cover these costs; and in turn freeholders and management companies have pointed to service charge provisions on leases to recover costs from leaseholders. In a further complication, lenders were reluctant to lend to leaseholders and purchasers without a certificate denoting whether cladding was flammable or not (commonly known as the EWS1 certificate), a process which also costs many £1000’s.
Difficulties in establishing liability arising from the time limits on claims, or a contractual obligations between current parties to any dispute (the original builder may no longer be there, and the current lessees would not have necessarily be contracting parties to the original build) has led to calls for clarification from all stakeholders.
To help deal with these manifold problems the proposed Building Safety Bill suggests, amongst other things, a 4% tax on the largest most profitable developers to raise funds for the Building Safety Fund, and extending the time limit for building owners and leaseholders to bring claims against developers for safety defects up to 30 years old. The Government has also withdrawn previous guidance to deal with the blockages caused by lenders’ demands for EWS1 certificates, allowing a common sense approach to prevail.
Royal Assent to the Building Safety Bill is due this year, and you can access the current draft and follow its progress here: https://bills.parliament.uk/bills/3021.
We act for building owners, developers and managing agents. Please feel free to contact Bhavini Kalaria on 0208 422 5678 should you have any questions.