Can a Remediation Order be made against a Landlord with no repairing and maintenance obligations under Section 123 of the Building Safety Act 2022?
It is now well-known under the Building Safety Act 2022 a person with a legal or equitable interest in a relevant building has a right to pursue remediation orders and remediation contribution orders against relevant landlords and developers for remedial work to be carried out, or for contributions to be made towards the costs of doing so. This applies to those relevant buildings defined as buildings containing at least two dwellings and at least 11 metres or five storeys in height (whichever is reached first) or any part of it. Section 123 enables remediation orders to be made against a relevant landlord and Section 124 enables remediation contribution orders to be made against landlords, developers and those associated with either.
The meaning of a relevant landlord under Section 123 (2) is a landlord under a lease of the building or any part of it who is required, under the lease or by virtue of an enactment, to repair or maintain anything relating to a relevant defect. So, a question becomes what happens where leaseholders have exercised their Right To Manage under The Commonhold and Leasehold Reform Act 2002, eliminating the landlord’s repairing and maintenance obligations by transferring them to an RTM Company. Can leaseholders still obtain a remediation order against the landlord in those circumstances?
The First-Tier Tribunal has recently decided the answer is ‘no’. Concerning the property Thanet Lodge in London, three leaseholders applied to the FTT for a remediation order against the landlord, with the RTM Company joining as an interested party. Despite repairing and maintenance obligations transferring to the RTM, Sections 123 (3) and (4) already provide that an RTM cannot be held to be the relevant landlord itself where it is not a party to the lease. It does not matter that the repairing and maintenance obligations belong to the RTM.
But doesn’t this lead to a lacuna in the rules where a remediation order can therefore not be made against both the landlord nor the RTM obliged to carry out repair? Again, there is no such crack in the legislation according to the FTT. Leaseholders are still protected because they (and now the RTM itself) are able to apply for a remediation contribution order under Section 124 instead. In Thanet Lodge, the landlord had actually developed the four penthouses in 2006 (it is a 1950’s building) which allegedly led to the problems which need to be remediated, meaning any remediation contribution order can be made by the fact the landlord was the developer too.
With respect to being the landlord, while the meaning of a ‘relevant landlord’ under Section 123 requires a repairing and maintenance obligation, the meaning of ‘landlord’ under Section 124 is a landlord under a lease of the relevant building or any part of it, or a person who was such a landlord at the qualifying time. Therefore, where a remediation order may not be available there remains the opportunity to seek a remediation contribution order to be made, where just and equitable to do so.
Whether or not this is what Parliament intended is unclear (the FTT indicates the position with respect to RTMs went amiss, noting the Explanatory Notes do not refer to an RTM Company). Nevertheless, paragraph 60 of the decision is telling about the importance of the redress a remediation contribution order can provide including to interpreting these points under the Act:
‘Although that does not undermine the fact that clearly Parliament intended that the Tribunal should be given power to compel those who have obligations in respect of repair or improvement of relevant buildings to comply with their covenants, without clear indication that should also apply to a landlord without a present obligation, the fact that such costs could potentially be recovered by the Applicants in this case through other means – i.e. by section 124 of the Act, is therefore material to the interpretation to be put on section 123(3).’
In the present case, the leaseholders’ attempt to switch their application into one for a remediation contribution order was rejected by the FTT, as was their attempt to seek to convince the FTT the RTM had technically ceased. For now, in these situations we will expect to see remediation contribution orders opted for over remediation orders so at least the costs of remedial works are recovered. Whether those costs will include any increased time management by virtue of leaseholders and RTMs arranging those works themselves remains to be seen. The decision may also have implications for the preparation of Landlord’s Certificates.
The decision can be considered here.
