In July, the government published its draft Building Safety Bill, heralding the biggest changes to building safety for nearly 40 years. The reforms will cover any building that is at least 18m or more than six storeys above ground level, containing two or more dwellings.
All new-build and existing high-rise residential buildings will be subject to new obligations. The most significant of these is a new requirement for each building to have an accountable person who will need to register a safety case report, explaining their assessment of the building safety risks and steps that will be taken to prevent major incidents such as fires.
The impact assessment accompanying the draft bill includes eye-wateringly large estimates of the cost of bringing buildings up to the required standard. For the most expensive 10% of buildings, the one-off costs of initial remedial works are estimated at £30,000 to £60,000 per flat. The average cost across all dwellings is estimated at £9,000 per flat. In addition, the ongoing annual cost of compliance is estimated at an average of £200 per flat.
In an attempt to provide additional legal protections to leaseholders, the draft bill introduces a new category of service charges, called ‘building safety charges’. Annual budgets will need to be set for these charges and sums paid by leaseholders will need to be held in a designated trust account. A reconciliation account will need to be served within 28 days of the end of each accounting period, certifying the costs incurred and recording actual receipts as well as the sums demanded. New consultation requirements are being introduced, similar to existing section 20 consultation, and the charges will only be payable if reasonable.
To reduce the financial burden on leaseholders, the government has appointed Michael Wade to come up with funding solutions to protect leaseholders, while ensuring that the burden does not fall on taxpayers.
However, unless and until further proposals come forward, the costs of fire safety works to residential blocks of flats are likely to fall on leaseholders unless works can be funded from government funds set up to deal with cladding removal.
Douglas Rhodes is a partner at Trowers & Hamlins