Building Safety Act 2022 and Residential Conveyancing: What law firms should be aware of

The Building Safety Act 2022 was introduced in the wake of safety concerns for occupants of high-rise buildings after the 2017 Grenfell Tower tragedy and has been in force since April 2023. The legislation was updated with the intention of improving the design, construction, and management of higher-risk buildings.

One of the government’s key aims is to enable long leaseholders, whose flats are affected by these types of safety issues, to be able to sell their flats. The Act also places the responsibility of fixing safety issues in older buildings – including cladding-related issues – primarily on building owners (freeholders, management companies, etc,) rather than on ‘qualifying leaseholders.

A qualifying leaseholder is someone who:

• Owns property in a ‘higher-risk’ building (one that is above 11 metres or five storeys and contains at least two dwellings)
• Owns the property as their main home or owns no more than three UK residential properties
• Owned their leasehold property on 14 February 2022.

Under the act, some leaseholders can be protected from paying for remediation work on their property when the defect being remedied has been caused as a result of a fire or the partial or total collapse of the building which is defined as a “relevant defect” and was the responsibility of the landlord or property owner. However, this only applies where a lease was granted prior to 14th February 2022 or was granted for more than 21 years for a single dwelling contained within a “higher risk” building as defined above.

However, the implementation of the Building Safety Act 2022 has introduced new challenges for law firms and property lawyers involved in conveyancing, and there remains real concern from many practitioners over the expectation to explain the complex requirements, potential risks, and possible financial liabilities to clients, even though they may not have the expertise to do so.

The Law Society and the Council for Licensed Conveyancers are pushing for changes to parts of the Act and related regulations to provide further clarity and to ensure liabilities do not fall automatically to property lawyers, so that conveyancers can feel confident when dealing with transactions that fall under the provisions of the Act.

It is comparatively new legislation so advisers, landlords and tenants will have limited knowledge of their respective requirements surrounding the discharge of duty and the protection of clients. It is, crucial, therefore, for law firms to stay informed, ensure their regulatory obligations are being met and take necessary precautions regarding risk management.

As of yet, there has not been any published guidance from the Law Society or the SRA but we have highlighted some of things that law firms should consider. Please note that this is not a definitive list but hopefully it will be helpful. Please also note that some of these won’t apply where there is no mortgage on a property:

• You have a responsibility to provide sufficient advice to your clients regarding what constitutes a 'Relevant Property' and to ensure that your clients are fully aware of all the associated risks of acquiring a building protected under the Act.
• Your clients should also be made aware of the potential challenges in identifying whether the Act and its regulations apply to the lease being sold or purchased and to manage expectations.
• Engagement letters should clearly state the possibility of such challenges and any potential delays they may cause.
• You should check lender instructions for any specific requirements.
• Ensure the seller provides the landlord’s certificate if required by the Building Safety Act 2022 and ask to see the Leaseholder Deed of Certificate - if acting for a buyer of a relevant flat or apartment, ensure a Deed of Certificate is provided. Where a building owner does not provide a valid landlord’s certificate, it is unlikely that the costs of remediation can be passed to the leaseholder.
• You should advise the leaseholder/buyer of the potential for remediation contribution orders to allow landlords to recover money already paid by way of service charge to remedy fire safety defects, particularly if they are a “qualifying Leaseholder” (it might also be prudent when acting for a buyer to ask about remediation issues as part of your standard enquiries in all leasehold flat transactions).
• Look to scope your retainer to exclude liability for issues relating to remediation costs and remember to revise your charges for any additional work that you may subsequently be required to do outside the original retainer.
• If you do decide to act, carefully scope your retainer highlighting the complexities of complying with the BSA and use an appropriate disclaimer to explain clearly to your client exactly what you are going to do and what you are not going to do.
• Ensure the seller or buyer client is aware from the start that you are not providing advice in respect of the Building & Fire Safety Regulations. There may be certain aspects that a buyer, in particular, is not aware of which will make it very difficult for a solicitor to give their client the right advice, so it should be made clear to the client that they should seek independent expert advice before proceeding e.g. a Surveyor/Architect or relevant skilled person to undertake this work/advice.
• Monitor for guidance issued by the Law Society and/or SRA and ensure it is communicated and followed within your firm.