The Building Safety Act 2022 - What This Means for Conveyancers

Since the introduction of The Building Safety Act 2022 as the legislative response to the Grenfell Tower tragedy, leasehold transactions have certainly slowed. What is more, some lenders are requiring solicitors to take responsibility for compliance and liability assurance in situations that are clear. For some it is a risk too far.

Grenfell – the unintended consequences

The Building Safety Act 2022 (BSA), which came into force last April, remains cause of acute concern for Conveyancers. It was a response to the Grenfell Tower fire in 2017 and is designed to improve safety of buildings, as well as giving residents and homeowners greater protections, including from the costs associated with correcting safety defects.

To protect residents and homeowners from such costs, the legislation creates varying degrees of responsibility for making tall buildings safe, especially through the replacement of dangerous cladding. The act allocates the cost of those works between developers and contractors, insurers, government, and leaseholders. Overall, the burden falls heavily, but not exclusively, on developers and contractors.

Some requirements complicate the position of conveyancing solicitors, from whom some lenders want assurances on responsibility for future works in situations where the legislation lacks clarity. So, while the BSA came in response to a tragedy, it had unintended consequences for leaseholders and their lawyers.

This uncertainty has reduced the pool of solicitors willing to act on the sale or purchase of properties which are likely to fall within the remit of the act.

Relevant Buildings

Solicitors are required to identify whether the property falls within the BSA’s remit, as well as any further information needed by clients and lenders.

‘Relevant buildings’, which are located within the remit of the BSA, are defined as those that are over 11 meters or five storeys or more high.

A solicitor’s involvement starts with an appraisal of whether the property in question falls within this definition. This is generally outside the scope of Conveyancers and solicitors’ normal consideration when acting in the sale or purchase of leasehold properties.

For purchases of flats, the biggest concern is that such buildings may have fire safety defects and buyers may be liable for repair costs. While the act seeks to address this, if the processes set out in it are not followed, problems can arise. Hence the importance of the new guidance, and the need for secondary and primary legislation that adds to or amends the BSA.

Timing is key in order not to fall foul of the legislation. Conveyancers acting for sellers need to ensure a leaseholder’s deed of certificate is served on the landlord; while buyer’s solicitors must pay close attention to the landlord’s certificate sent by return, as it states the remediation works needed.

Gathering the information needed to fulfil the requirements of the BSA is slowing down the transactions considerably. And any additional time spent on the matter as a consequence is having to be written off.

To act or not to act

Law Society guidance sets out the steps that solicitors can take to limit the scope of their retainer in leasehold conveyancing transactions.

New general advice to clients

Clients should be advised that Solicitors/Conveyancers:

• are not able to advise in relation to the physical structure of buildings or fire safety issues (on which specialist building survey advice should be obtained);
• can pass on information they have been given by the seller’s solicitors and the landlord/managing agents of the building but cannot warrant or guarantee this information;
• will carry out all necessary searches and check any relevant registers, but that the information obtained may not the definitive;
• cannot measure the height of buildings and therefore cannot advise definitively on the specific provisions in the BSA 2022 that apply to a property;
• cannot necessarily establish for the landlord’s certificate or leaseholder deed of certificate who owned a particular building or how many they owned at a particular date; and
• cannot verify information about landlord’s finances and some of the other information in landlord certificates.