Relevant Defects
The concept of a “relevant defect” is key to the obligations imposed by the BSA and essentially means anything arising from the construction or conversion of the building, or works to it in the 30 years up to 28 June 2022 (including works to fix previous defects), which causes a risk of spread of fire or structural collapse.
Accountable persons for relevant buildings (over 11 metres or 5 storeys high with at least 2 residential units) are required to set out any relevant defects in landlord’s certificates, and cannot recover the cost for those works from tenants in certain circumstances. They can also be compelled to remedy relevant defects under remediation orders or remediation contribution orders.
The definition of “relevant defects” at section 120 of the BSA has now been changed through LAFRA and now includes a definition for “relevant steps”, meaning works aimed at preventing or reducing the likelihood of fire or structural collapse as a result of relevant defects, or reducing the severity of any such incident.
This wording was largely already included elsewhere in the Act (in Schedule 8, which sets out the limits on recovering certain costs from leaseholders), but there is some new wording which now brings works “preventing or reducing harm to people in or about the building that could result from [fire or structural collapse]” within the definition of relevant defects. This could include mitigation measures such as installing sprinklers, or waking watch.
Bringing these steps within the definition of “relevant defects”, rather than including them elsewhere in the Act, makes it clear that the costs of implementing these steps will fall within the remit of remediation contribution orders, as well as being subject to limitations on recovery of service charge from leaseholders, bringing the wording of the BSA in line with judgment in the Triathlon Homes case and doing away with any future room for doubt on this point.
Remediation orders
This change is also reflected in changes to section 123 of the BSA brought in through LAFRA, relating to remediation orders. The Court can now make an order requiring the landlord to “take specified relevant steps” to reflect the expanded definition of “relevant defects” outlined above, so that it now includes preventative and mitigation works, as well as remedial works.
Section 123 has also been expanded to allow the Tribunal to order the landlord to produce an expert report
Remediation contribution orders
The provisions on remediation contribution orders have also been broadened so that the costs to which a landlord can be required to contribute now include “relevant steps” (preventative/mitigation works, as outlined above), expert report costs, and temporary accommodation costs.
They also now give the Tribunal more leeway not to order payments of a specified amount, but require payment of the “reasonable costs” of taking certain steps.
Other changes already in force
The changes to the BSA below were introduced through LAFRA, but came into force back in July:
Service charge
LAFRA introduces new provisions to Schedule 8 (which deals with recovery of service charge), and creates a limited exemption to the that rule that the legal and other costs of enforcing liability for relevant defects cannot be recovered through service charge.
The changes allow right to manage or resident management companies, who run their own buildings, to apply for remediation contribution orders and split the costs of doing so between a larger group of leaseholders through the service charge where the lease allows.
Changes for insolvency practitioners
LAFRA repeals section 125 of the BSA, which had allowed insolvency practitioners acting on the winding up of an insolvent landlord company, which was under an obligation to remedy relevant defects under the BSA, to apply to court for an order requiring “associated” companies or partnerships to contribute or pay towards those remediation costs.
This section created a conflict between the requirements on insolvency practitioners under the BSA to apply those funds to remedying fire safety defects, and their obligations under the Insolvency Act to prioritise paying off creditors in the first instance, which is why it has now been repealed.
New notification duty for insolvency practitioners
LAFRA introduces a new Section 125A into the BSA, which applies where an insolvency practitioner is appointed to the insolvency of the owner or leaseholder of a “relevant building” (over 11 metres or 5 storeys high) with repair obligations under the BSA.
Insolvency practitioners are required to provide various information to the local authority and fire and rescue service within 14 days of their appointment, including:
- the name and address of the company in respect of which the insolvency practitioner is appointed;
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the address of each higher-risk building or relevant building, and Land Registry office copy entries showing their interest;
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the insolvency practitioner’s name and contact details, and the nature of their appointment;
Where the building is a higher-risk building (over 18 metres or 7 storeys high) they must also provide this information to the Building Safety Regulator.
Insolvency Practitioner is widely defined, and includes an administrator, an administrative receiver, a receiver appointed by the courts or by a mortgagee, a liquidator; and a trustee in bankruptcy.
What does this mean for the BSA?
Building safety legislation continues to evolve, and the latest changes add to the raft of building safety legislation already in place. However, these changes bring some welcome clarity on the scope of remediation orders and remediation contribution orders, and the status of preventative or mitigatory works.
