Now that the date for registering "higher-risk buildings", new and old, has passed, focus is shifting to the practical reality of fulfilling the "accountable person" role and managing those buildings in a way that is compliant with the Building Safety Act 2022 (the "Building Safety Act").
This insight considers the extent to which property managers could have direct responsibilities under the Building Safety Act and how building safety is changing the face of residential and mixed property management in England.
Who is the "accountable person"?
Under the Building Safety Act, the responsibility for keeping the building safe during the occupation phase falls to the "Accountable Person" or, if there is more than one accountable person, to the "Principal Accountable Person". Working out who falls into these roles can be complicated and may require a detailed analysis of how the relevant building is owned.
Section 72 (1) , which is now in force, defines an accountable person as a "person who holds a legal estate in possession in any part of the common parts" or "a person who does not hold a legal estate in any part of the building but who is under a relevant repairing obligation in relation to any part of the common parts".
Broadly, this means that the principal accountable person will be the entity who retains the responsibility for repairing the structure and exterior of the building (usually the freeholder or the superior leaseholder if there is an investment long lease). Where there is a chain of leases, the tenants who have taken a long lease will probably also be accountable persons if they have any repairing obligations for the common parts.
For some buildings, it will be easy to identify who falls within the statutory definition, but where it is not or where certain exceptions specified in the Building Safety Act apply, you need to consider responsibility for repairs.
Where the owner has delegated the legal responsibility to repair the common parts (by which we mean the structure and exterior of the building or parts of the building used by residents such as lobby areas, corridors, staircases, lifts and car parks), with that delegation comes the duties and obligations of the accountable person role. For example, where:
- the common parts are leased to a residential management company that is responsible for common parts repair; or
- where an operator has responsibility for repairing the building (and not merely managing repairs), or at least the interior (for example, this does arise in some student accommodation); or
- where there are flats which are let to residents and the operator has responsibilities to repair (and not merely manage repairs) the common parts (for example, this can arise with build to rent, and rented affordable housing).
In each of these situations, the entity with the repair obligations could be the accountable person and/or the principal accountable person.
What does that mean for the property manager?
In a typical property management agreement, where the property manager is appointed as agent for the freehold owner or the head tenant, the property manager will not usually have sufficient responsibility for repairs and as such will not usually be an accountable person. The property manager is typically managing the repairs on behalf of the landlord, and therefore, the landlord retains the ultimate responsibility for the repair.
A property manager can be an accountable person, but normally only if the property manager has taken on a responsibility to repair (see above).
Whilst many property managers will be letting out a sigh of relief at this point, this does not, however mean that property managers can switch off from building safety.
The main driver for clients when appointing a property manager is to outsource the day-to-day responsibilities of running the building. Property managers already support with identifying risks such as health and safety, overseeing and managing repairs and maintenance, operating the service charge, carrying out (or appointing third-party specialists to carry out) various surveys, keeping records and generally supporting the owner in fulfilling its leasehold and legislative commitments. As such, many owners will expect the property manager to at least assist with the new responsibilities.
Property managers that start thinking about how to offer some support will find themselves increasingly in demand.
What can property managers expect to see?
- increased requests from clients to support with building safety requirements;
- growing pressure to support with identifying and managing building safety risks;
- increased concern about the reputational risk of failing to prevent, mitigate and remedy building safety risks;
- specific requests to prepare and feed into safety case reports and to retrospectively support with the collation of key building documentation;
- a range of requirements and expectations when it comes to building safety. Housebuilders, for example, who tend to set up resident-led management companies for their development sites, will likely look to flow down as much of the accountable person role as possible, whereas larger investors may be more willing to take on some or all building safety actions in-house;
- granular focus on record keeping and storage requirements because of the need to preserve the "golden thread";
- more demands about how documentation is handed over at exit again with the "golden thread" in mind;
- requirements to co-operate with other parties where the ownership structure has several levels and there are multiple accountable persons all motivated to ensure building safety compliance;
- greater resident awareness of building safety rights and a more interactive relationship with those residents (noting that there is a legal obligation on the accountable person to engage with residents in relation to building safety).
Now is the time for property managers to check, if they have not already done so, whether they manage any higher-risk buildings (as reported in our previous article "What are higher-risk buildings?").
Where they do, property managers should start to:
- work out who the accountable person is;
- consider the extent to which they can and/or want to offer to perform all or part of the accountable person role;
- decide how they are going to respond to requests for building safety support; and
- reach out for support with updating their legal documents.
There is no firm market position yet on what a property manager's building safety offering should look like. The Building Safety Act is very much in its infancy, with more secondary regulations to come and several areas which need clarification. We are, therefore, seeing, and expect to continue to see, different property managers forming different views on the services they offer.
It is, however, clear that over time, a market position will emerge, and that market position will be influenced by owner assertion that this is a property management issue (or, at the very least, an issue to be tackled by the owner and property manager together).
Some key points to keep in mind:
- The Building Safety Act can apply to mixed-use and wholly-residential properties (including student accommodation, care homes and hospitals but not hotels).
- Different rules apply to different categories of buildings. In particular, some provisions of the Building Safety Act apply to buildings over 18m in height, or at least seven storeys, whereas others apply to buildings over 11m in height or at least five storeys.
- It is impossible for the accountable person to fully step out of that role even if they decide to delegate all or parts of it. Where they do delegate, they will still be liable for non-compliance and therefore exposed to penalties, including criminal penalties.
- Building safety and fire safety are not the same things!
- Building safety is different in Wales - see our insight on this here.
If you have any questions about this article, please contact Danielle Klepping, Sue Ryan, Gemma Whittaker or David Lowe.