Following the recent legislation Building Safety Act 2022, what do conveyancers need to know that has or is going to impact the conveyancing process?
Buying or selling a house can be one of the most stressful times in a person’s life, and external factors, whether economic, legal or otherwise, have the ability to make matters worse. Right now, it’s easy to see that the current status of the housing market and high interest rates could be causing clients to be more hesitant in the conveyancing process. But what about the role of recent legislation such as the Building Safety Act 2022 (BSA)?
Lawyers say that the BSA is potentially adding to already-existing anxieties. As explained by Helen Young, Commercial Litigation & Dispute Resolution Associate at SA Law:
“Since the introduction of the Building Safety Act, prospective buyers have been reluctant to purchase “Relevant Buildings” (at least 11 metres high or 5 storeys). This is because of the possibility that those residential buildings might have safety related defects and the cost of putting these right might fall on the purchaser (at least initially) even though they were not responsible for the defects.
The BSA includes various protections for leaseholders against the costs to put right the defects but do not always apply. Similarly, freehold purchasers of high rise residential buildings will potentially be liable to pay for certain safety related defects and whilst the BSA makes provision for recovery from the developer/contractor responsible this will involve expensive and time consuming litigation to recover their outlay with no guarantee of success. For higher risk buildings (at least 18 meters high or 7 storeys) there is a new onerous regulatory safety regime which is making freehold purchases unlikely. This has all in turn impacted the property market and the desirability of such properties; purchasers are thinking twice about proceeding.”
So, how is this impacting conveyancers? Fiona McIntosh, Head of Residential Conveyancing at Cripps explains:
“Many conveyancers will not now take on leasehold sales and purchases. Some agents are even refusing to take on these properties because they say they just can’t shift them, either because there are not enough lawyers taking on this type of work or those that do are having to explain the implications of the Act to their clients who then have to decide whether or not to proceed.
Lender requirements are still a challenge. Legislative change is required to clarify certain aspects of the Act but that could take some time.”
And what practical considerations do conveyancers need to consider? Helen says:
“Conveyancers need to consider the application of the BSA to a property and, for example, any further information lenders and clients will require if the transaction engages the BSA. If acting for a seller of a flat within a residential building caught by the BSA then a Leaseholders Deed of Certificate will need to be served on the landlord and if acting for a buyer you are going to want to carefully consider the Landlord’s Certificate sent by return because it will set out whether any remediation works are required.
The timing of these steps should also be carefully considered in order to minimise delays in transactions and falling foul of the BSA time limits. The information required to complete these certificates is detailed and not always readily available but without the information practitioners cannot advise clients of the impact the BSA might have on them. The cost of dealing with transactions involving the BSA has risen quite considerably along with the risks to conveyancers of not fully considering the BSA. As a result some practitioners are no longer dealing with properties that are caught by the BSA.”
