The Draft Building Safety Bill and Higher-Risk Buildings.
In this article, Professor of Land Law at Oxford University, Susan Bright, focuses on the provisions that relate to the occupation phase of residential buildings, contained in Part 4 of the draft Building Safety Bill, and sets out her initial, tentative, understandings of how they will work.
The draft Building Safety Bill was published on 20 July 2020. The intention of the Bill is to “deliver the principles and recommendations for reform set out by Dame Judith Hackitt’s Independent Review of Building Regulations and Fire Safety.” with the stated outcome that the “overall effect of the Bill will be to deliver a stronger regulatory system and a stronger voice for residents which delivers better performance of all buildings across the built environment and better management of fire and structural safety risks in new and existing buildings.”
It is a big document, with 119 clauses in five parts, plus eight schedules and as is often the case, much of the detail on application will be contained in regulations which have yet to be produced. There are, therefore, many uncertainties, although the direction of thinking for some of this is mapped out in the accompanying Explanatory Notes (EN) and Impact Assessment (IA).
The broad outline has been known for some time. The idea is that the “golden thread” of fire safety and building information that Hackitt spoke of will be digitally held to specific standards and carry through from the design and construction stages into the occupation and management phase. At the occupation stage there will be duties imposed on the “accountable person” and “building safety manager” to ensure that the building is safe and that any risks are thought about in advance and, where possible, steps are taken to reduce them. The Hackitt review noted potential complexities with how some of the practical measures would map onto the law and management of leasehold properties but eschewed detailed discussion. With the publication of the Bill, it is clear that implementation will be challenging, and several issues remain obscure, but also that there will be new and significant costs falling on leaseholders in higher-risk buildings.
Reference to “golden thread”
Dame Judith Hackitt’s final report explained that there was “almost unanimous concern surrounding the ineffective operation of the current rules around the creation, maintenance and handover of building and fire safety information. Where building information is present, it is often incomplete or held in paper form and is not accessible to the people who need to see it.
“The interim report identified the need for a ‘golden thread’ of information for all higher-risk residential buildings (HRRBs) so that their original design intent is preserved, and changes can be managed through a formal review process. Equally, access to up-to-date information is crucial when effectively carrying out a fire risk assessment of a building and determining whether any action is required.”
The Bill does not say anything specific to the issue that has concerned many leaseholders: how will the cost of defects stemming from historical regulatory and build failures be met? The IA provides estimates of costs of bringing existing buildings up to standard. Further, the EN report a policy intention that “as far as possible leaseholders should not have to face unaffordable costs” and that the Government is “conducting further work to explore appropriate funding models that would mitigate” these, with the promise of an update before the final Bill is introduced. Nor does the Bill address the potential liability of those responsible for defects, or do anything to remove some of the key obstacles to bringing litigation to hold them to account (such as removing the common law bar to recovery of “pure economic loss” for negligence based building defect actions or extending the inappropriately short limitation period under the Defective Premises Act 1972).
There is a number of key terms that are crucial to the application of part 4.
In scope higher-risk buildings
The first is to explain those buildings in scope (i.e. covered by the regulations), referred to as “higher-risk” buildings.
Clause 19 simply refers to the “prescribed description” in regulations yet to be seen, but the (initial) proposed use of this power is set out in para 228 EN. This explains that there will be both a height and use condition. A higher-risk building will be one which:
• meets the “height condition” (the floor surface of the building’s top storey is 18 metres or more above ground level or where the building contains more than 6 storeys) AND
• is a building that has two or more dwellings, or 2 or more rooms used for residential purposes, or student accommodation. A room will not count as being used for residential purposes if it is a room in a care home, prison, hotel, hospital, etc. The IA notes (paras 28, 78) that initially it is anticipated that there will be approximately 13,000 buildings in scope, with an estimated growth of 400-500 buildings per year.
The EN explain that other buildings may be brought within the definition in the future. The definition of building (cl 35(3)) includes “any … structure or erection of any kind” and can also include movable objects, which means that even a boat or caravan could come within it. Examples of what might later come within scope given in the EN are purpose-built blocks of flats regardless of height (para 230), and office blocks which meet the trigger height threshold (para 248). The approach is based on levels of risk, yet events in the last 18 months have shown that buildings housing people who would not count under the EN approach as using rooms for residential purposes also present high risks to the occupiers (as shown in the Crewe care home fire), as well as buildings not meeting the height threshold (as with the Worcester Park fire, and the Bolton “Cube” student block). Indeed, the benchmark spoken about now for many purposes is not 18m but 11m (based on Fire Service external access capability), see for example the ADB changes in May 2020.
Residents
Another key concept is the idea of “resident of a dwelling”. As mentioned further down, residents are subject to duties but are also owed duties by the accountable person, for example in relation to information that will help them feel safe. The definition of resident is almost non-existent, however. Cl 60 (3) simply says that a resident is a “person who lawfully resides there”. Other housing legislation tends to focus protection around the question of whether the property is an “only or principal home” (for example, the Housing Act 1988). Hopefully “resident” would be understood much more broadly in the context of higher-risk buildings: there are many classes of occupiers who will be lawfully present but for whom this will not be the main home (such as commuter using the flat as pied-à-terre), and, of course, occupancy can be fluctuating, intermittent or short term.
The accountable person
The accountable person (AP) will be responsible for meeting the various statutory obligations for occupied higher-risk buildings. The effect of the somewhat complex definition in cl 61 is that this will be the person who “holds a legal estate in possession in any part of the common parts” (let’s call this person L) unless another person is under an obligation to repair or maintain common parts in long leases (of more than 21 years) to which L is lessor, in which case that other person will be the AP. The common parts are defined in cl 61(3) as meaning the “structure and exterior of the building” except those included in the demise of a single dwelling or occupied for business purposes, or “any part of the building provided for the use, benefit and enjoyment of the residents of more than one dwelling”.
It is not, therefore, always the freeholder who will be the AP and it may be a long leaseholder (for example a housing association) or, seemingly, a management company under a tripartite lease. In the IA (para 61) it is said that for most buildings the AP is the “individual, partnership or corporate body with the legal right to receive funds through service charges or rent from leaseholders and tenants in the building”. However, the reference to legal responsibility for the upkeep and maintenance of the building, given complex ownership structures, means that the AP may include: “freeholders, the head lessees, management companies, commonhold associations or a (sic) Right to Manage Companies”.
AP duties
The AP is placed under a number of key duties:
- to register the building with the Building Safety Regulator (cl 62)
- to appoint a Building Safety Manager (BSM) with appropriate skills, knowledge, and experience (cl 67)
- to assess building safety risks (cl 72)
- to take steps to prevent a major incident (cl 73)
- to prepare a “safety case report” that both assesses the building safety risk (cl 74) and frames how the BSM is to manage the building (cl 76)
- to produce a residents’ engagement strategy that promotes “the participation of relevant persons in the making of building safety decisions” (cl 82)
- to provide prescribed information (to the regulator, residents, and flat owners – cl 80)
- to establish a system for investigating complaints (cl 84).
A building safety risk (cl 16) is a risk to the safety of persons arising from fire or structural failure (and other matters that may be prescribed). A major incident is one occurring as a result of a building safety risk which results in a significant number of deaths or serious injury to a significant number of people (cl 17(6); note, “people” here is not limited to residents). The duty placed on the AP is to take “all reasonable steps” to prevent a major incident happening and to reduce the severity of any such incident. The definition of “major incident” is critical and yet linked to the non-defined term “significant”. Why only trigger the duty if a “significant” number of people are affected? The risk-based Housing, Health and Safety Rating System (discussed here) looks at both likelihood of occurrence and degree of harm: is one death not always sufficient harm?
The IA explains (para 263) that the safety case report will “broadly include a full building description, a hazard and risk assessment, a summary of mitigation measures, and the approach to risk management. Compiling this might require contracting a team of technical experts such as structural engineers, fire engineers and safety experts.”
An illustration is given (para 560 EN) of how clauses 72-74 work: the AP needs to identify hazards (perhaps changes to front doors reducing fire resistance, combustible materials in the common corridors, etc.) and decide what measures are needed to lower the risks to an acceptable level and to mitigate the risk of harm to residents in the event of a major incident. The relationship between the AP duties and the responsibilities of the BSM is important: it is the AP who is placed under the clause 62-75 duties, and the BSM who has to “manage the building” in accordance with the safety case report and provide prescribed information to the regulator; the AP has to establish a complaints system, the BSM operates it.
Collectively, the things that the AP is required to do appear to be referred to as the “building safety measures” (cl 88, inserting s 17G(4) into the Landlord and Tenant Act 1985).
Duties to engage with residents
Often there can be a hostile relationship between the freeholder (or their appointed agent) and leaseholders; little information reaches those whose lives are most affected. For example, there have been cases where residents have been refused copies of the Fire Risk Assessments for their homes (against the specific advice of UK Information Commissioner, Elizabeth Denham). Within days of the Grenfell tragedy, stories emerged of tenants being ignored by the management company.
The draft Building Safety Bill attempts to address these concerns:
• The Building Safety Regulator must work with a residents’ panel to provide advice on strategy, policy systems and guidance of particular relevance to residents of higher-risk buildings (Cl 11). This panel must include occupiers and may also include non-resident leaseholders and groups representative of residents and/or non-occupying leaseholders.
• The AP must prepare a residents’ engagement strategy for promoting “the participation of relevant persons in the making of building safety decisions” (cl 82). This strategy must explain what information will be provided and how consultation will occur. A copy of the strategy must be given to each resident (back to the problematic question of who is a resident).
• Residents and flat owners can request “prescribed information” (cl 83; note that an “owner” is defined in cl 105). The list of what this is likely to cover, given in para 638 EN, is long (e.g. “full, current and historical fire risk assessments”, “information on the maintenance of fire safety systems” etc.). This duty to supply the long list of information listed may appear onerous but being available digitally should make this easier.
Delivering these goals will not be easy. Residents come and go: how can the AP be certain who the “residents” are? Should the same term, “resident”, be used to cover the scope of all of the duties owed by the AP (and also owed by residents, see next heading) or does there need to be more nuance within the Bill? Will these proposals be effective: what will participation look like, will it be a tick box exercise much like the s20 consultations?
Duties on residents (cl 86)
Residents are also subject to duties: to keep in “repair and proper working order” all relevant resident’s items (any electrical or gas safety installation or appliance in the dwelling), to take reasonable care to avoid damaging safety items in the common parts, and to comply with requests from the AP for information in connection with the AP’s duties relating to building safety risks and to prevent a major incident. If it appears to the AP that a resident breaches one of these duties, the AP can serve a notice on the resident requiring it to be remedied, and this can, in turn, be enforced by an order from the county court.
There appears, however, to be a mismatch between the wording of the Bill and the explanation of what these duties will cover (and remember, it is the wording of the legislation only that matters). Echoing wording found in the Hackitt review, both the EN and IA state that leaseholders are to cooperate with the AP (para 661, and 20 respectively) but, the legislation refers more narrowly to these specific duties, not a general duty of cooperation. Further, the IA states that “residents have legal responsibilities to avoid actions that could pose a risk to the fire and structural safety of the building, for instance removing or replacing compliant fire doors or windows” (para 84). This is not what cl 86 states: unless the fire doors or windows are “common parts” and regarded as “safety items” there is no such duty. It is often unclear in leases whether flat entry doors are demised to tenants or not, likewise windows. Internal doors would clearly not be “common parts”. Further, although it is clear from the Grenfell Tower Inquiry that windows (and the surrounds) can be important for fire safety, it may be better to be explicit than run the risk of arguments as to what counts as a “safety item”.
Access to dwellings (cl87)
As I have pointed out in my previous publications here and here, access has been a big problem, particularly for social landlords seeking to enter flats in order to inspect for potential building safety risks, and also in order to carry out works to improve fire safety. Under most existing leases rights of entry are limited and often unclear.
Cl 88 inserts new sections into the Landlord and Tenant Act 1985 that will imply various terms into a long lease (more than 21 years) of a dwelling in a higher-risk building. These include an implied covenant by the tenant to allow entry for the purposes of “carrying out prescribed building safety measures”. Cl 87 enables the AP to apply to the county court for access to dwellings (at a reasonable time on a specified date or within a specified period) where the resident has been asked to give entry but refused. The reason for access is tied to the need either to perform a cl 72 or 73 duty (assessing risks, preventing a major incident) or where the AP considers the resident’s duties have been breached (to keep electrical/gas items in repair). A crucial question which is not at all clear from my reading of the Bill or the EN is whether this right is limited only to access or whether it is more extensive and carries with it a right to do work to the flat itself (cl 73 says that steps may involve works to any part of the building). This could include, perhaps, replacing fire doors, installing new fire detection sprinklers, and retrofitting sprinklers.
Access is often strongly resisted by residents; it is their home, their privacy, that is being intruded on. Yet there is clearly a need for a balanced approach, recognising the complexity of shared buildings which entail interconnectedness and interdependency, and that the safety of the whole depends on the safety of the individual parts. If entry rights do include a power to do works, there should be checks and balances to ensure the work is necessary and that it is of high quality, including meeting aesthetic concerns. For example, as photos in this post show, some of the work done by Oxford City Council as part of major refurbishment includes deeply unattractive sprinklers. But there is nothing in the Bill about any of this so, perhaps, the right is the more limited one of simple access.
Recovery of costs (clauses 88 and 89)
These clauses have caused considerable disquiet amongst lawyers and leaseholders. In outline they provide that the tenant of a long lease must pay the “building safety charge” (BSC) within 28 days of demand. It works by inserting the new sections into the Landlord and Tenant Act 1985, mirroring much of the existing machinery that apply to variable service charges. So it requires consultation if the costs exceed a specified amount (not yet prescribed) with the possibility of dispensation (and seemingly no requirement of consultation if it is urgent or the building is in “special measures”), enables the payability to be challenged (costs must be reasonably incurred, works done to a reasonable standard), and there can be no recovery if there is no demand for payment, or notification, within 18 months of costs being incurred. The application of these limits will presumably draw on the case law already developed in relation to service charges, but this does not provide much protection against potentially major charges landing on leaseholders, as can be seen with how leaseholders in social housing have faced massive bills for major work programmes.
The BSC covers the costs of the building safety measures, including overheads. The EN explain (para 674) this could include producing the safety case, appointing the Building Safety Manager, building safety works, compliance costs etc., although recovery of some costs are excluded (for example, penalties etc. imposed on the AP by the regulator, and where the AP is getting “financial support” for those works, such as a grant). It is the IA that highlights just how extensive these charges could be.
Collectively this is all going to be very costly.
First, putting together the safety case. IA para 241 explains that information must be held digitally and it is assumed that buildings that don’t currently have plans will “carry out a two-dimensional Computer-Aided Design (CAD) plan and evacuation drawing, costing between £10,000-£19,000 per building.” (this is the least costly option). In other circumstances the creation of the key dataset will be between £600 and £1200 per building (para 244). Keeping the building information up to date is estimated to cost £300-£500 per annum (para 242), and keeping the key dataset updated £200-£300 per annum (para 244). These costs fall within the building safety charge.
Secondly, the appointment of the Building Safety Manager (BSM). The appointment itself is estimated at around £3000. In relation to the tasks of the BSM the IA states (para 321) that if the BSM was to undertake all designated activities (reviewing supporting evidence, writing the safety case and reviewing and checking the safety cases) the cost per building is between £6,400-£10,000 per annum. It is estimated that a BSM can manage between 7-11 buildings, and that on average it will take 28 days of BSM time per building, per year.
Later in the IA the impact on leaseholders is explained. Para 312 states that the costs of compliance (presumably the items discussed above, plus registration and other duties) are estimated, using a range of 35-100 leaseholders per building, as averaging £100-£400 per leaseholder, noting that there will be considerable differences between buildings, depending on the complexity and the number of leaseholders.
There is, however, the big-ticket item of the cost of any new building safety measures required. As noted earlier, there is nothing protecting leaseholders from the costs of measures necessary to put things right where there has been a failure by others (whether the government due to the lack of clarity in the Approved Document B, and a poor building control regulatory system, or developers breaching building regulations). The IA notes that there will be costs of bringing existing buildings up to standard. Table 36 on page 64 contains some eye-watering estimates, with the maximum cost per leaseholder shown as being £78,000. It is also noted at para 314 that it is the government’s intention that leaseholders should not face unaffordable costs and that they are exploring options to mitigate these. It has been suggested by some that the current wording of the Bill, in the new 17O(3) to be inserted into the 1985 Act, indicates that the costs of remedying construction defects cannot be passed on. This is not what that clause says: it prevents only costs attributable to misconduct by the current AP. So, leaseholders therefore may have to bear the costs of remedying misconduct by others, such as the developer, the builder, or those producing the government’s own advisory documents.
Mixed-use and complex buildings
Another area of difficulty is understanding how the Bill will apply to mixed-use buildings. In relation to the recovery of costs, it is said that the building safety charge is to be split “between all dwellings in the building in accordance” with any specific provisions in the lease, failing which, following the method used in the lease for other service charges “or” any methods agreed in writing with the tenant for apportioning building safety costs. There can be an appeal to the First Tier Tribunal if the approach adopted is not considered a “fair method”. But what happens if the building contains other dwellings not let on “long leases” or other non-residential units? A higher risk building need only have 2 dwellings in it, and yet there appears to be no mention of how costs are apportioned to other users of the building. This is really important and yet very unclear on the current wording.
Elsewhere the Bill does make some provision for mixed-use buildings. To support the “whole building” approach cl 102 requires the AP to “cooperate” with a “responsible person” (as defined under Art 3 of the Regulatory Reform (Fires Safety) Order 2005) who, within the same building, also has responsibilities for fire safety. In practice, how these two regimes interact is likely to be extremely complex, yet there is little provision for it. Under the current regulatory system there has been a distinct lack of clarity about jurisdictional boundaries between the Fire Service and local authorities in relation to enforcement. Indeed, the complexity is acknowledged in the IA which notes that the government intends to consult on how the duties of cooperation will work (para 62).
Thoughts
This article has been a quick reflection on some of the key issues in the Bill, and obviously, there is much that is very good in the Bill. No-one can doubt the importance of making people safe in their homes. But there are potentially deeply problematic areas which hopefully will be clarified and addressed during the Parliamentary process. There must be very careful scrutiny of the Bill, and hopefully, the offer made by Clive Betts MP that the Housing, Communities and Local Government Committee will undertake this task will be taken up.
Susan Bright
Sue teaches land law, contract law, regulation, and housing and human rights. She has been teaching at Oxford University since 1992, after a period as a solicitor in London and teaching at Essex University. She is also a Fellow of the Academy of Social Sciences, Fellow of the South African Research Chair in Property Law, and an academic member of the Chancery Bar Association, Property Bar Association and Property Litigation Association.