New fire and building safety regulations flowing out of the Grenfell Inquiry mean that conveyancers need to look again at template residential leases to ensure that building-managers reserve the powers they need to comply with their new responsibilities. Owning a reversionary freehold interest in a block of flats may no longer be the secure investment it once was. It is in the interest of all leaseholders that such issues are addressed.
Conveyancers representing residential ground landlords should look again at template leases to make sure that they reserve the rights which building-managers need to comply with new statutory fire-safety responsibilities.
The Fire Safety Act 2021, which took effect 16th May, 2022, extends the Fire Safety Order 2005 to the structure and external walls of a multi-occupied residential building as well as external attachments, such as balconies. Formerly the 2005 Order only applied to the internal common parts of multi-occupied residential buildings. Going forward, the structure and exterior of a residential block of flats must be taken into account when carrying out a statutory risk assessment.
The Building Safety Act 2022, which received Royal Assent on 28th April, 2022, contains, amongst other things, measures to shield leaseholders from the costs of replacing defective cladding in situations where the whole or part of that cost can be passed back either to a third party or to the ground landlord itself.
Of more immediate importance to building managers are the Fire Safety (England) Regulations 2022, which take effect 23rd January, 2023, and which, amongst other things, place direct responsibility on building-managers to carry out an annual inspection of fire doors, at the front of flats which lead onto communal areas. Other fire doors within communal areas must be inspected quarterly. Evacuation lifts, including those to be used by firefighters, must be inspected monthly.
For as long as conveyancers can remember, modern residential leases have followed a basic format as regards the sharing of responsibilities between ground-landlords and each individual leaseholder. Generally, it is only the interior of a flat which is actually owned by the individual leaseholder. It is always the landlord who will insure the building and take care of the main structure, exterior, and communal parts of the building. Detailed service charge provisions will then enable ground-landlords to claw back 100% of their costs in complying with these landlord-obligations.
Self-closing fire doors
The annual inspection and repair of self-closing fire doors at the front of each flat, are particularly problematic for building-managers, as in most cases those doors will form part of the flat itself and belong to the leaseholder and not to the ground-landlord. It is why the 2022 Fire Safety Regulations can only require landlords to use “best endeavours” to carry out fire-door inspections.
Practical points
Going forwards, it is important that leases reserve the rights that building-managers need to comply with their new fire-safety responsibilities and that they have the ability to claw back that financial outlay so far as it is legally possible to do so. Suggested lease-changes, when acting for a landlord on a new lease might include:
- Ensuring that building-managers reserve the contractual powers they need to carry out annual inspections of fire-doors at the entrance of individual flats and to carry out any operational repairs to those door.
- To look again at service-charge schedules to ensure landlords can recover expenditure arising out of the need to comply with new fire safety regulations, “to the extent that the law allows such recovery”. The inclusion of the last qualifier is important as there are some remediation costs which, under the Schedule 8 of Building Safety Act 2022, may not be recoverable.
- To give ground-landlords the contractual power to impose new fire-safety requirements on leaseholders from time-to-time to meet changing circumstances.
- To ensure that landlords retain ownership of sprinklers and other fire safety equipment situated within individual flats, together with the right to install and upgrade equipment as necessary.
- Even where older leases are no longer fit for purpose in terms of fire safety, negotiation on the terms of a statutory extension lease may give ground-landlords a second opportunity to bring their leases up-to-date in terms of fire safety. No First Tier Tribunal could argue with that.
- Anyone acting for a prospective buyer of a new residential lease should also make sure that the terms of the template-lease being offered are sufficiently up to date with modern fire regulations.
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One Response
Would this make 99% of residential leases defective then? Hardly seen any with room for manoeuvre for the Landlord to make improvements/claim back expenses from leaseholders to bring building up to regulatory standards.