Building safety legislation: what needs to change

The devastating 2017 Grenfell Tower fire and subsequent public inquiry exposed the widespread use of hazardous cladding on buildings across England and Wales.

Many thousands of flat owners living in potential fire traps faced the worry of huge bills to manage and rectify life-threatening cladding issues affecting their homes. Most who wanted to sell their homes were left unable to do so.

The Law Society of England and Wales raised concerns about leaseholders who live in unsafe buildings. Through no fault of their own, leaseholders are left with the risk of bearing the brunt of the costs of cladding remediation, facing increases in insurance premiums or having to cover the costs of safety precautions, such as waking watches.

Since the fire and the subsequent inquiry, a complex new regime of building safety legislation has been introduced.

The Building Safety Act 2022 is intended to improve the design, construction and management of higher-risk buildings. It came into force on 1 April 2023.

The Building Safety (Leaseholder Protections) (England) Regulations 2022 and Schedule 8 of the Building Safety Act address how remediation costs are to be borne by some long leaseholders.  

The legislation sits alongside other measures introduced in response to the Grenfell Tower Inquiry. This includes the Fire Safety Act 2021, which requires all responsible persons to assess, manage and reduce fire risks in residential buildings, including in relation to external walls and cladding. Valuation guidance for higher-risk buildings by the Royal Institution of Chartered Surveyors (RICS) has also been introduced, along with changes and potential changes to the UK Finance Mortgage Lenders’ Handbook and the Building Societies Association’s mortgage instructions.

One of the government’s key aims is to enable long leaseholders, whose flats are affected by these types of safety issues, to sell their properties.  

We understand why this new legislation and these changes have been causing some confusion and difficulties in the home buying and selling market.

The complex implications of the legislation and the potential requirements it places on solicitors could be significant.  

We have been listening to members’ concerns and making sure their views are heard by decision-makers in government and by relevant stakeholders.

We share many of the concerns that have been raised by our conveyancing and land law committee, and more widely by members, such as obligations in Part 1 and Part 2 of the UK Finance Handbook and the expectation for conveyancers to take on additional risks. Solicitors are expected to explain complex requirements from the legislation to lender and lay clients, which may fall outside their current expertise.

There are possible implications for the availability and cost of professional indemnity insurance (PII).  Referring clients to suitably qualified persons (if they can be found) will add expense and delays to the process.

Another concern we share with our members is that buyers’ solicitors cannot verify sellers’ claims that leases qualify for leasehold protection. For example, they cannot check whether a leaseholder qualifies because they cannot check how many properties the seller or the previous seller held on 14 February 2022.

We are talking to a number of key stakeholders, including the Department for Levelling Up, Housing and Communities (DLUHC), PII brokers and insurers, regulators and UK Finance, to make sure members’ concerns are understood.  

We want to ensure that Law Society members are not exposed to unnecessary risk and to see that the legislation is amended to clarify those provisions which concern members.

Members have told us it is not possible to satisfy the handbook’s requirements without taking on an unacceptable level of risk and confirming information that conveyancers are not capable of checking.

Since December 2022, we have met and been in communication with UK Finance to discuss members’ concerns about the handbook.  

The changes we’re asking for are:

• Building safety provisions are to apply only where the lender advises in the ‘instructions to solicitors’ that the flat is in a ‘relevant building’ (over five storeys or 11 metres in height);
• The lender is required to satisfy itself that the flat is in a ‘relevant building’ without requiring the conveyancer to verify this;
• The lender’s valuer is required to see and take account of the leaseholder deed of certificate and the landlord’s certificate when valuing the flat;
• The lender is to confirm it is not looking to the conveyancer to warrant or verify the validity or status of the leaseholder deed of certificate or the landlord’s certificate.

UK Finance amended the handbook very recently to make it clear that the provisions of clause 5.14.17 only apply to ‘relevant buildings’ rather than all leasehold properties.

Members have also told us their concerns about the instructions from some individual lenders in Part 2 of the handbook. We have been raising these with lenders.

We have recommended technical amendments to help address members’ concerns about building safety legislation, which includes correcting the definitions used in the amendment regulations. Clarification is also needed on the status and protection for long leaseholders who have enfranchised since February 2022. We also want a fixed time limit to be introduced, during which landlords can challenge the validity of leaseholder deeds of certificate.

Some changes are being implemented in draft regulations and some require primary legislation, while others are still under discussion.  

The burden of explaining building safety issues to clients sits with the conveyancer, which may create additional risk. Members are also concerned about the risks involved in explaining the various payment schemes and how they interact with each other, the impacts on day-to-day life, working from home, likely service charges for works not covered by the various payment schemes and financial liability generally.

We are in discussions with the DLUHC and the Home Buying and Selling Group about creating consistent guidance for clients on building safety issues.

We have also published information on building safety for flat buyers that members can share with their clients. This guidance was issued before the Building Safety Act 2022 became law, but it sets out some of the practical issues that clients will need to consider.

 

Lubna Shuja is president of the Law Society of England and Wales