2022 has certainly provided a dizzyingly rapid series of political, social and economic changes. Within the last quarter alone, the country has a new Prime Minister, Chancellor and seen the re-appointment of Michael Gove at the Department for Levelling Up, Housing and Communities (DLUHC). Alongside these, the energy crisis, rising interest rates and volatility in the markets continue to add strain to businesses and households.
The year has also brought significant change through the introduction of new legislation that will have significant t and long-lasting implications for the property management sector, perhaps most notably the Leasehold Reform (Ground Rent) Act and Building Safety Act.
Recent months have continued to see further detail emerging to support the Building Safety Act (BSA) introduced on the 28th of April. Much still remains to be clarified and we are still very much in the early days of supporting information and secondary legislation that is anticipated to be provided over the next 18 months to two years. With the recent parliamentary changes and introduction of the new Building Safety Regulator, the government has stated it remains committed to pressing ahead with implementation.
Interpreting the BSA continues to be a source of considerable debate. Much has been said on topics such as service charges not payable due to the BSA (and the specific subject of one of our previous articles on Schedule 8 and qualifying leaseholders), however one of the many additional areas of discussion is the subject of remediation orders.
It is generally accepted that liability (or potential liability) of landlords has increased drastically since the implementation of The Building Safety Act 2022 (“BSA”) on the 28th of June 2022. We have seen various ways upon which Government have sought to ensure that leaseholders will not be responsible for footing the bill for costs associated with building remediation and to reduce risk where building safety issues are present; one of which is the expansion of the First-tier Tribunal’s jurisdiction to make a Remediation Order. This will require a “relevant landlord” to remedy specified relevant defects to a building within a specified time.
An application for a Remediation Order can be made by any ‘interested person’ which includes 1) the Regulator, 2) a Local Authority i.e., the Council, 3) a Fire and Rescue Authority, 4) a person with a legal or equitable interest in any part of the building and 5) any other persons as per the Regulations. It is apparent that the scope of the ‘interested person’ is purposely wide so as to include most persons or entities that have an interest in compelling a landlord to undertake remedial works to a building.
In terms of who an application for a Remediation Order can be brought against, s123 BSA states that a “relevant landlord” includes a landlord of any part of the building who is responsible to maintain and / or repair the defect in question. Crucially, reference to landlord also includes any person who is party to the lease otherwise than as landlord and tenant i.e., a named management company or resident’s management company (“RMC”).
Procedurally, the ‘Application for a Remediation Order, Building Safety Act 2022’ Form BSA1 requires an Applicant to provide contact details for the ‘relevant landlord’ and to specify the defects to the building for which a remediation order is sought. In addition, the Tribunal seek reasons for the application together with details of the order sought. It is envisaged that the process will allow for parties to submit statements of case, witness evidence, etc and there will also be the option for the matter to be determined on the papers or by way of an oral hearing.
Government Guidance states that, should the “relevant landlord” fail to remediate the building in the timeframe specified within the Remediation Order, it could be held to be in contempt of Court and liable for criminal sanctions. Further information as to this will likely be published in Regulations however one initial thought is that undoubtedly there will be circumstances where funds are simply not available to pay for the works within the specified timescale. This is likely to be of particular concern where RMCs are the subject of the Remediation Order.
It is important to note, that at the time of writing, the threshold for awarding a Remediation Order is unclear and further guidance and / or Regulations are required. Otherwise, the current broad discretion of, “if it is just and equitable to do so” is likely to lead to the already overrun Tribunal system being inundated with applications.
Looking ahead, early 2023 is scheduled to see more detail and guidance emerge. We will watch and report as these further changes are introduced. In the meantime, on behalf of the entire team at JB Leitch we wish you a happy and peaceful festive break.
Katie Edwards, Senior Associate at JB Leitch
