Building Safety Act 2022 and residential conveyancing
What you need to know
The Building Safety Act 2022 was introduced in the wake of safety concerns for occupants of high-rise buildings after the 2017 Grenfell Tower tragedy.
The legislation is intended to improve the design, construction and management of higher-risk buildings. It came into force from 1 April 2023.
The Building Safety (Leaseholder Protections) (England) Regulations 2022 and Schedule 8 of the Building Safety Act address how remediation costs are to be borne by some long leaseholders.
The legislation sits alongside other measures introduced in response to the Grenfell Tower inquiry, including:
- the Fire Safety Act 2021, which requires all responsible persons to assess, manage and reduce fire risks in residential buildings (including in relation to external walls and cladding)
- valuation guidance for higher-risk buildings from the Royal Institute of Chartered Surveyors (RICS)
- changes and potential changes to the UK Finance Mortgage Lenders’ Handbook and the Building Societies Association Mortgage Instructions
One of the government’s key aims is to enable long leaseholders, whose flats are affected by these types of safety issues, to be able to sell their flats.
We understand why this new legislation and these changes have been causing some confusion and difficulties in the home buying and selling market.
Raising your concerns
The complex implications of the legislation and the potential requirements it places on solicitors are significant.
We have been listening to the concerns members have raised with us and our working with our Conveyancing and Land Law Committee, which is made up of solicitors specialising in residential and commercial conveyancing practice.
We share many of the concerns that have been raised, including:
- obligations in Part 1 and Part 2 of the UK Finance Handbook and the expectation for conveyancers to take on additional risks
- expectations for solicitors to explain complex requirements from the legislation to lender and lay clients, which may fall outside their current expertise
- possible implications for professional indemnity insurance (PII) availability and cost
- referring clients to suitably qualified persons (if they can be found) will add expense and delays to the process
- buyers' solicitors cannot verify sellers’ claims that leases qualify for leasehold protection – for example, they cannot check whether a leaseholder qualifies because they cannot check how many properties the seller or the previous seller held as at 14 February 2022
We are in regular contact with the Department of Levelling Up, Housing and Communities (DLUHC), PII brokers and insurers, regulators and UK Finance to make sure your concerns are understood.
We want to ensure that Law Society members are not exposed to unnecessary risk and to see that the legislation is amended to clarify the provisions which concern members.
What we’re asking for
You told us it is not possible to satisfy the handbook's requirements without:
- taking on an unacceptable level of risk, and
- confirming information that conveyancers are not capable of checking
Since December 2022, we have met and been in communication with UK Finance to discuss members’ concerns about the handbook.
UK Finance has listened and amended the handbook's building safety provision on 21 July.
The new wording makes it clear that the provision only applies where the flat is in a 'relevant building' (more than five storeys or 11 metres).
While we are pleased some progress has been made, we appreciate there is much more that needs to be done.
We are continuing to engage with UK Finance to ask for further changes to the handbook:
- building safety provisions to apply only where the lender advises in the ‘instructions to solicitors’ that the flat is in a ‘relevant building’ (more than five storeys or more than 11 metres)
- the lender to satisfy itself that the flat is in a ‘relevant building’ without requiring the conveyancer to verify this
- the lender’s valuer to see and take account of the leaseholder deed of certificate and the landlord’s certificate when valuing the flat
- the lender to confirm it is not looking to the conveyancer to warrant or verify the validity or status of the leaseholder deed of certificate or the landlord’s certificate
You also told us you have concerns about the instructions from some individual lenders in Part 2 of the handbook. We have begun to raise this with the lenders.
We have recommended technical amendments to the government to help address members’ concerns, including:
- correction of the definitions used in the amendment regulations
- clarification on the status and protection for long leaseholders who have enfranchised since February 2022
- introduction of a fixed time limit during which landlords can challenge the validity of leaseholder deeds of certificate
Some changes are being implemented in draft regulations, some require primary legislation, while others are still under discussion.
You told us:
- the burden of explaining building safety issues to consumers sits with the conveyancer
- you are concerned about the risks involved in explaining likely service charges and financial liability
We are in discussions with DLUHC and the Home Buying and Selling Group about creating consistent guidance for consumers on building safety issues.
We have also published information on building safety for flat buyers for you to share with your clients.
This guidance was issued before the act became law, but it sets out some of the practical issues that clients will need to consider.
Government guidance and resources
Get in touch
To inform our discussions with stakeholders, we’re asking conveyancers to share their experiences with the Building Safety Act.