Kate McCall and Kirsty Black outline where liability lies for the costs of remediation works for cases involving reinforced autoclaved aerated concrete.
With the shock closure of schools in early September, reinforced autoclaved aerated concrete hit the headlines.
However, this was not a new story. The issues of RAAC had been known for decades, but they had not been comprehensively addressed. Now that the government has taken action and the Health and Safety Executive has announced: “RAAC is now life-expired. It is liable to collapse with little or no notice,” the issues of risk and remediation are of concern across the property industry.
The problem with RAAC
RAAC was used in construction between the 1950s and 1990s in flat roofing, floors and wall panels. It is estimated that there are more than 100,000 RAAC planks in buildings in the UK. Its porosity means it is susceptible to water ingress, causing rust on its steel reinforcing bars, cracking, and ultimately collapse. Most buildings affected are in the public sector, but owners and occupiers of other property need to be aware of the risks.
RAAC in situ and in good repair does not pose any risk to health but, when it degrades, action needs to be taken.
It is key that owners and occupiers carry out building inspections without delay and follow up with regular monitoring to keep a record of RAAC within their premises and assess risks. Where issues are identified, structural engineers or surveyors should be instructed as a matter of urgency and temporary measures may be needed such as closing premises, netting off or carrying out interim safety works.
Poor record keeping is a major concern and it can be difficult to get relevant information without carrying out invasive testing.
Where does responsibility lie?
It is thought unlikely that responsibility for the failure of RAAC lies with the developers or contractors who used it. Given the passage of time since the use of RAAC, commercial warranties will have expired. The Defective Premises Act 1972 is unlikely to assist and RAAC was an acceptable construction material at the time it was used.
Where a building is owned and occupied, responsibility between landlord and tenant will depend on the lease terms.
Where RAAC falls within the demised premises, it is unlikely a tenant could be required to carry out works to remove or replace RAAC if it is not in disrepair. Where a landlord is responsible for the structure of a building, tenants should bear in mind that they may be under an obligation to report any repair defects to the landlord on becoming aware of them.
Usually, it will be a landlord’s responsibility to maintain and repair the structure of a building and so the landlord may incur the initial costs of any survey and resulting works. It might seek to recover those costs through the service charge and so it will be important for tenants to scrutinise the relevant service charge provisions to ensure those costs are properly recoverable. Where there is a question as to whether RAAC is in repair or not and/or whether the material should have been replaced already, there is likely to be fertile ground for debate.
The service charge provisions in some leases will carve out any contribution for latent defects. But, as RAAC is not a defective material – it just has a limited lifespan – it is unlikely that such a carve-out will assist.
Where RAAC is an immediate threat, occupiers of retail premises may need to close for the safety of employees and customers. It will be important to review any “keep open” covenant, to understand its terms and whether damage to the premises entitles the tenant to close.
There may be a rent cesser provision in the lease permitting the tenant to stop paying rent while it cannot operate from the premises, particularly where serious structural renovation or demolition is required. These provisions will also need to be reviewed in detail.
Insurance policies are not typically set-up to cover wear and tear or construction defects, although may cover damage caused by sudden and unforeseen events, such as RAAC failure. Policyholders are advised to check their policies now to establish how their insurers may respond to claims for the cost of rectifying or mitigating RAAC and/or for losses associated with it.
Under statute, those in control of a building have a duty of care to keep others safe from harm, and to ensure that the premises are safe. Therefore, both landlords and tenants will be at risk of enforcement by the HSE if they fail to take steps where they are aware that RAAC is within the buildings they let and occupy.
What now?
Building owners should take steps now to establish whether RAAC is present within their buildings and, where it is, urgently undertake an audit to establish its condition. Where immediate remedial action is required, these works should be commissioned and completed with all due speed, with appropriate safety measures being put in place in the meantime. An ongoing regime of auditing, monitoring and maintenance should also be adopted wherever RAAC is identified.
Tenants should take immediate steps to identify what action landlords are taking to assess the risks of RAAC where it is outside their demise, and to carry out their own investigations in case action is required by them.
Purchasers should raise appropriate enquiries before committing to any acquisition, and health and safety information should be properly reviewed and acted on post-acquisition. A more detailed survey may be advisable than would have previously been the case.
The RAAC crisis is an example of the serious and urgent concerns that may arise through failure of action to address a known issue, and remediation costs may be compounded because of issues with asbestos, which was commonly used in construction in the same time frame as RAAC. While it is possible that the government will support public bodies needing to pay for remediation, or even residential tenants who are at risk of funding essential remedial work, the commercial sector is likely to need to pay for its own remediation.
Kate McCall and Kirsty Black are partners in the property litigation team at Shoosmiths LLP
Photo by VVVproduct/Shutterstock
