The Building Safety Act: What are Relevant Buildings and Relevant Defects and why does this matter for Landlords?

The term “relevant building” introduced by the Building Safety Act (BSA) post Grenfell has perhaps not attracted the same attention in the real estate and construction sector as “higher risk buildings”. However, landlords should be careful not to overlook this term and fall into a misconception that if their building is not a “higher risk building” the BSA does not apply.

Establishing if a building is a relevant building is an important step for landlords because there are provisions in the BSA limiting the ability of landlords of relevant buildings from recovering from leaseholders the costs of remedying “relevant defects” through service charge.

Landlords need to understand what costs they can and cannot recover from leaseholders and on the flip side leaseholders need to know what costs they are obliged to pay.

A relevant building is one that contains at least two dwellings and is at least 11 metres in height or has at least 5 storeys.

Then looking at what a relevant defect is, this means a defect arising from works completed in the 30-year period ending June 2022 which cause a risk to the safety of people resulting from the spread of fire or the collapse of the building.

To assess who is to bear the cost of remedying a relevant defect and whether it is the landlord or the leaseholders, the BSA looks at two criteria in relation to the landlord.

The first is whether the landlord is responsible for those defects. The BSA does not allow a landlord who is responsible for the defects to recover the remedial costs from the leaseholders. The second is whether the landlord is of a certain net worth. The BSA balances whether it would still be reasonable to prevent the landlord from recovering costs from the leaseholders when the landlord is in a certain financial position but was not ultimately responsible for the relevant defects. There are also criteria for the leaseholders which affects what costs can be recovered from them; this is whether or not they hold a “qualifying lease”.

Whilst the thinking behind the provisions in the BSA is logical, i.e. balancing matters between who is responsible and who is in a better position to pay, the legislation itself is far from straightforward and must be applied by the facts relevant to each building as well as landlord and leaseholder.

We would always recommend that legal advice is sought as early as possible for landlords to determine how they will fund the cost of remedying relevant building defects .

If you are a landlord and have any issues or questions in understanding your position as regards recovery of costs for relevant defects through service charge, please contact a member of our Property Team or Building Safety & Cladding Team for assistance.

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