Latent defects exposed by remediation surveys in ‘relevant buildings’

Ever since the Building Safety Act 2022 (BSA) came into force on 1 April 2023, there’s been extra work for flat owners and their advisers, with the requirement for surveys for “relevant buildings” to remediate “relevant defects” which cause “building safety risks”.

One unexpected result that we’re seeing is a deluge of latent defect cases brought to light by these surveys. Whilst these defects may not relate to the spread of fire or the risk of collapse of buildings, they can still lead to remediation through the backdoor under the BSA.

A latent defect is a concealed flaw in workmanship, design or material, that may not manifest itself for many years. Examples of latent defects that have been uncovered by remediation surveys include:

foundations constructed to an insufficient depth; under croft parking with inadequate steel support within concrete pillars;
poor damp proofing; and inadequate membranes on the flat roof of an apartment building leading to water ingress.

Latent defects often arise from breaches of the original construction contract between a developer and a contractor, or from the negligence of a professional adviser (architect/structural engineer) in the advice provided to a developer.

BSA shifts responsibility away from landlords

Prior to the BSA, in the absence of a collateral warranty or a clause within a purchase contract, if a latent defect was found, causes of action were against the landlord of an apartment block and arose from landlords’ obligations of repair for retained parts within a lease. Lessees had no cause of action against a contractor or professional adviser, as they were not party to the contract.

The good news for managing agents and flat owners is that the BSA has effectively reassigned responsibility for latent defects away from landlords.

Section 1 of the Defective Premises Act 1972 (DPA) applies to work for or in connection with the provision of a dwelling. Section 2A, which was inserted by the BSA, applies to work by someone in the course of a business, to any part of an existing “relevant building” (i.e. one containing at least one dwelling). The DPA requires work to be done in a workmanlike or (as the case may be) professional manner, with proper material so that the dwelling is fit for habitation when the work is completed. This means that the BSA has significantly shifted responsibility to developers, contractors and professional advisers – and away from landlords.

The DPA prescribes a 15-year limitation period for claims accruing under Section 1 or Section 2A after 28 June 2022. Work completed before 28 June 2022 has a 30-year limitation period for Section 1 claims (for the provision of a dwelling). Claims accrue on the date that the work was completed.

It is also possible for lessees to bring claims against the manufacturers and sellers of construction products for single dwellings and any building containing two or more dwellings (under sections 147-149 BSA).

The dwelling must be unfit for habitation and that must have been caused by a person failing to comply with a construction product requirement; or from making a misleading statement in relation to the marketing or supply of the product; or manufacturing a construction product that is inherently defective.

There is a 15-year prospective limitation period for claims in connection with construction products causing issues with building safety.

Legal options for building occupiers

The DPA does not prescribe a definition for “fit for habitation”, however defective foundations, inadequate structural support, poor damp proofing and a defectively constructed roof have all led to successful claims. Under the DPA it is possible to recover economic loss, not just for damage to property, and successors in title to the original leaseholder can claim.

Section 38 of the Building Act 1984 remained dormant until the BSA came into force, however it provides a vital legal tool for individuals pursuing compensation for damages caused by breaches of building regulations. Section 38 defines “damage” broadly to encompass physical injury, death, disease, impairment of mental or physical condition, and even damage to property, and applies retrospectively,

Sharp Minds Communications Ltd, 134 London Road, Southborough TN4 0PL 3 provided that the relevant building regulations were in force at the time of the breach. This effectively creates a new avenue for lessees and tenants who have suffered harm from latent defects.

Outstanding responsibilities of landlords

Under Section 4 of the DPA, a landlord still owes a duty to anyone who might be affected by defects in the state of the premises let by them to take reasonable care to see that they are reasonably safe from personal injury and from damage to their property, but only if the lease obliges or gives the landlord the right (express or implied) to maintain or repair the premises and the defect amounts to a breach of those obligations.

The duty arises when the landlord knew, or ought to have known, of the “relevant defect”. A landlord is not liable to the tenant where the landlord only has a right (not an obligation) to repair and the defect is caused or continues because of a breach by the tenant.

Achieving best outcomes for flat owners

In this new landscape, it is important that landlords and their advisers secure good legal advice so that any potential claims by leaseholders are directed to appropriate parties – hopefully restricting claims against the landlord/freeholder.

However, legal cases against third parties are also not in landlords’ interests, as building occupiers drawn into protracted wranglings are seldom happy, and their stress – and even anger – is likely to have repercussions for both landlords and agents.

Managing agents can therefore support flat owners by helping to effect negotiated solutions that enable all parties to avoid costly – and stressful – litigation. Key here is to brief that the expert surveyor’s report should establish clear causes of action against prospective defendants and prescribe liability for each head of damage in a Scott Schedule quantifying each head of loss to provide independent, substantiated evidence of liability and loss as a starting point for negotiations.

Where flat owners do have culpability, the best approach both they and their advisers can adopt is to be pragmatic, looking to enter into constructive negotiations to avoid a lengthy legal battle – and to encourage other parties to do the same.

Mustafa Sidki is a partner at Thackray Williams