It’s sometimes hard to remember that amongst all of the Covid-19 and Brexit related work that the government is contending with there is still other business to be undertaken. In July of this year, the government released a draft “Building Safety Bill” which aims to introduce a “new era of accountability … for the design, construction and occupation” of those buildings to which the legislation will apply. Although the government insists that a reform of the building safety legislation was always a priority, there is absolutely no doubt that the Grenfell Tower tragedy brought these issues to the forefront of everyone’s minds so as to ensure that events such as those which devastated Grenfell Tower and the lives of its residents never happen again.
The effect of the Bill is two-fold. Firstly, it seeks to improve the existing building safety regime, and secondly, it introduces new provisions which are targeted specifically at protecting residents of high rise buildings, like the Grenfell Tower. In this blog, we will be looking at some of the new obligations contained in the draft Bill and consider the impacts that these will have on future developments and on those parties who have an interest in them should the Bill be enacted in its current form. The draft Bill is likely to become law towards the end of 2021, but landlords of existing buildings which are likely to be classified as higher-risk and those parties involved in the development of new residential dwellings which will fulfil the proposed criteria will need to start giving consideration now as to how these obligations will be fulfilled and managed once the legislation is in force and applicable to that building.
Proposals for “higher-risk buildings”
The proposed new regime introduces the concept of a “higher-risk building”, which is subject to a more rigorous safety and reporting procedure. Whilst the definition of a “higher-risk building” has not yet been finalised (and will be made by way of secondary legislation), the explanatory notes to the draft Bill explain that the government proposes to define a “higher-risk building” as one containing:
- two or more dwellings (ie house, flat or serviced apartment),
- two or more rooms for residential purposes (but excluding rooms in residential care homes, hotels, hospitals and prisons); or
- student accommodation;
and in respect of which, the floor surface of the building’s top storey is 18 metres or more above ground level, or where the building contains more than six storeys above ground level.
As such, even with the proposed exclusions for hotels, residential care homes and the like, one can see how broad an application the new regime would be in respect of existing and new residential developments.
Once a higher-risk building is occupied, certain new statutory obligations will apply, and are to be complied with by an “accountable person”. Broadly speaking, this will be the person who owns the title to the common parts (including the exterior of the building), or who is under a repairing obligation in respect of such areas. Amongst other obligations, the accountable person will have to register the building as a higher-risk building, must appoint a building safety manager before the building becomes occupied and take all reasonable steps to prevent a major incident occurring as a result of a building safety risk materialising. Correspondingly, residents in a higher-risk building are under statutory obligations to keep any electrical or gas appliances belonging to them in repair and to provide information requested by the accountable person as part of their duties.
Given the obligations on the accountable person to maintain appropriate levels of safety, there is a corresponding right to recover the costs of doing so, by claiming a building safety charge from tenants of the higher-risk building. This regime will therefore require a landlord bound by these provisions to treat the building safety charge much as it would a service charge under a lease. The landlord is to apportion the costs between all the dwellings, hold any amounts received in a designated account and provide a reconciliation in respect of the operation of the charge within 28 days of the end of each accounting period. As such, if the Bill is enacted in its current form, landlords are potentially looking at operating two different “service charge” regimes; one for the “regular” services it provides, and another in respect of building safety charges.
Where a resident has been granted a “long lease” (meaning a lease of more than 21 years in this context) certain terms will be implied into the lease by virtue of the new Bill, such as a covenant by the landlord to comply with the building safety charge regime outlined above, and an obligation on tenants to pay any reasonably demanded building safety charges within 28 days of a demand. Any attempt to contract out of these implied terms will be void.
Whilst no-one can reasonably object to the enhanced safety measures which are to come into effect, this legislation will have a significant impact on those parties that own, manage and occupy higher-risk buildings … hopefully a beneficial one.
A more detailed briefing on the above and other aspects of the draft Bill will be released shortly.