A Conveyancer's Guide to Cladding Compliance and Leaseholder Protection - Navigating the Building Safety Act 2022

An issue that the haunts the dreams of Conveyancers and Leaseholders alike.

Highrise cladding was brought to the attention of the UK public in light of the tragic circumstances of the Grenfell Tower disaster in 2017.

The outpour of emotion following the disaster looked to hold landlords and building developers to account for the materials used in the construction of such buildings, with their focus allegedly having been to favour profit over safety.

What is the Building Safety Act 2022?

The Building Safety Act 2022 (“BSA2022”) was established to:

- Improve building safety standards by regulating materials and construction.

- Hold developers and landlords accountable for remediation costs, even if they no longer own the building.

- Protect leaseholders from unfair financial burdens.

It was previously unclear as to where the bill to rectify the cladding would sit. You may remember articles on the news during this period, where leaseholders felt trapped in their own homes, many fearing that the value of their property would be less than the mortgage debt secured against it (known as negative equity). Michael Gove wrote a letter to the Property Institute and British Property Foundation highlighting that the law as it previously stood, meant that Leaseholders would have foot the bill[1] and with the introduction of BSA2022, that definitive responsibility would shift.

The BSA2022 placed the responsibility on the shoulders of a landlord group (being the Landlord referred to in the Lease) to rectify non-complicit cladding, so long as they have met certain criteria. This being:

a. The defect is a relevant defect.

b. The building is a relevant building.

c. You are a qualifying leaseholder, and

d. They (or the associated landlord group) have a net worth of at least £2 million per relevant building.[2]

What is a relevant building?

A. Height: It is at least 11 metres in height or has at least five storeys (whichever is reached first).

B. Usage: It contains at least two dwellings.

C. Ownership: It is not a leaseholder-owned building[3]

The relevant building’s height is defined by the building as a whole. The building’s highest habitable point is the building’s height. It may be necessary to instruct a Measured Survey to further determine this.

A Higher-risk building (“HRB”) is one that is slightly different, in that it is at least 18 metres in height or has at least 7 storeys[4]. The key difference in a HRB is that The Building (Higher-Risk Buildings Procedures) (England) Regulations 2023 are affected.

These regulations mean that for those buildings, they are required to report to the Building Safety Regulator and obtain approvals, an example being a Building Assessment Certificate.

The regulations mostly affect the erection of new builds, but there are requirements for pre-existing HRBs, in that any on-going works must be referred to the regulator.

Cladding remediation in and around Bristol City

Scaffolding businesses across the city are seeing a boom in recent years, as they are experiencing unprecedented demand. You need only walk into the centre of Bristol to see the large number of buildings undergoing works or intrusive inspection surveys.

Largely because of this however, I have found the buildings in Bristol and Greater-Bristol to be considerably ahead of the game when compared with the rest of the country.

Having the paperwork to evidence the remediation, together with the building sign-offs is still absolutely paramount for anyone looking to sell or purchase their property, and one should make sure that they have this to hand to allow for a smoother transaction.

Does the Building Safety Act 2022 affect me?

If your residential property is over 11 meters in height, or 5 storeys, yes.

There are relatively few exceptions. A relevant building must have the appropriate certification to show that if there is cladding, it is compliant, or that there is no cladding present.

An intrusive survey may be necessary to determine the state of the building’s cladding, to which thereafter the findings can be made and authenticated via a Fire Risk Assessment.

If a sufficient survey has not been undertaken to demonstrate that the building has: a) no cladding; or b) compliant cladding, then the property will be un-mortgageable, and the value of the building, not to mention the properties within it, will be considerably affected.

EWS1 compliance

As a stop-gap measure between the 2018 and 2022, the EWS1 survey was considered necessary for almost all leasehold high-rise property transactions.

The EWS1 is not legal document[5]. It is however, still being referred to today, and can be accepted by some lenders as demonstrating that the building’s cladding is compliant/non-existent.

The EWS1 certificate only provides limited information regarding present cladding however, which is why it is not mandatory.

Ultimately, an up-to-date Fire Risk Assessment with an appropriate intrusive survey and result should be enough to satisfy most mainstream lender requirements.

Leaseholder and Landlord Certificates

Following the introduction of the BSA2022, Leaseholder and Landlord Certificates were introduced, and a section added to the LPE1 (this being the information form used in all residential leasehold property sales and purchases and provided by Landlords, Management Companies or their Agents) to pass comment on.

Effectively, these Certificates are utilised for relevant buildings where remediation works are still to be carried out on the buildings where unsafe cladding still is present.

Remediation works can cost hundreds of thousands of pounds. The Landlord group will have to foot the bill for these works, so long as the criteria is met as described earlier in this article.

The Leaseholder Deed of Certificate is therefore utilised to effectively exempt the Leaseholder from contributing to these proposed works so long as they also meet qualifying lease criteria. This is noted in Regulation 7 of the BSA 2022[6]

The Leaseholder Deed of Certificate asks more questions in respect of the property, and the answers apply differently to that of shared ownership properties but rely on the same principles.

An example of a Landlord Certificate is listed at Schedule 1 of the BSA[7] effectively to “means-assess” the Landlord-group, as to whether they will be able to apply for Cladding Safety Scheme funding (CSS), or whether they will need to fund the project themselves.

Conclusion

Cladding remediation has been an ever-changing process over the last six years affecting government, conveyancers, leaseholders, developers, management companies and lenders alike.

As things stand, cladding requirements have seemed to have become standardised, with more and more developments (in Bristol at least!) seemingly satisfying what used to be a convoluted mess of conflicting requirements.

If you are a leaseholder in a relevant building, you should definitely make use of Check if you'll have to pay to fix safety problems with your building - GOV.UK provided by gov.uk, which can help better assess your situation and allow yourself to determine if anything could and should be done.

Next Steps: Get in touch

To discuss any of the above or if you have any specific queries please don’t hesitate to reach out to our team of legal experts at John Hodge Solicitors based at our Bridgwater, Bristol, Clevedon, Wedmore, Weston-super-Mare, and Yatton offices.

You can reach us via our website or by calling 0800 097 8611.