Closed consultation

Building safety directors: consultation

Updated 10 January 2023

Applies to England

Scope of the consultation

Topic of this consultation:

This consultation seeks views regarding the appointment of a person to directly support resident-led organisations in complying with their duties under Part 4 of the Building Safety Act 2022 to the board of directors of:

• Resident Management Companies through the proposed Resident Management Companies (Building Safety Directors) Regulations

• Right to Manage Companies through proposed amendments to the (Model Articles) (England) Regulations 2009

It covers the following areas:

• the eligibility requirements for becoming a building safety director
• what leaseholder engagement should take place prior to any such appointment taking place
• the method of appointing and removing building safety directors
• the method of agreeing the remuneration of a building safety director

Scope of this consultation:

All higher-risk buildings which contain at least 2 residential units and are at least 18 metres in height or at least 7 storeys (whichever is reached first) where a resident-led organisation is the accountable person under Part 4 of the Building Safety Act 2022.

Geographical scope:

These proposals relate to England only.

Impact assessment:

An economic annex for the proposals covered is included in this consultation.

Basic information

Body/bodies responsible for the consultation:

Department for Levelling Up, Housing and Communities

Duration:

This consultation will run from 1 December 2022 to 7 February 2023.

Enquiries:

For any enquiries about the consultation please contact: occupiedbuildingsconsultation@levellingup.gov.uk.

How to respond:

You may respond by completing an online survey

or

You can email your response to: occupiedbuildingsconsultation@levellingup.gov.uk.

If you are responding via email, please make it clear which questions you are responding to.

When you reply it would be very useful if you confirm whether you are replying as an individual or submitting an official response on behalf of an organisation and include:

• your name,
• your position (if applicable),
• the name of organisation (if applicable),
• an address (including post-code),
• an email address, and
• a contact telephone number

or

You can send written responses to:

Consultation on Building Safety Directors
c/o Reform, Legislation and Regulators Division
Building Safety Programme
Department for Levelling Up, Housing and Communities
3rd Floor, Fry Building
2 Marsham Street
London
SW1P 4DF

About you

We will only use your personal information to contact you should we require further clarification on a point or comment made during this engagement. We will not share your contact details or responses with third parties.

Question 1. What is your name?

Question 2. What is your email address?

Question 3. Are you responding as an individual or on behalf of an organisation?

Introduction

Following the Grenfell Tower tragedy, the government appointed Dame Judith Hackitt to lead an Independent Review of Building regulations and Fire Safety. In her final report, Dame Judith Hackitt outlined a new approach to managing fire and structural safety risks in high-rise multi-occupied residential buildings. Overall, 53 recommendations were made for government and industry to drive the cultural change and behaviours necessary to improve building safety. 

The government has committed to implementing Dame Judith Hackitt’s recommendations and in July 2021 the Department for Levelling Up, Housing and Communities (then the Ministry of Housing, Communities and Local Government) introduced the Building Safety Bill into Parliament. The Bill received Royal Assent and became an Act of Parliament on 28 April 2022.

A key part of these reforms includes introducing a new, more stringent regulatory regime for high-rise residential and other in scope buildings. These are known as higher-risk buildings.

In Part 4 of the Building Safety Act 2022, higher-risk buildings for the new occupation regime are defined as being buildings which contain at least 2 residential units and are at least 18 metres in height or at least 7 storeys (whichever is reached first).

The new, more stringent regulatory regime will place legal responsibilities on principal accountable persons and accountable persons to manage structural and fire safety in higher-risk buildings when they are occupied.

These requirements include a requirement to register the building with the Building Safety Regulator, the introduction of a safety case approach to managing fire and structural safety during occupation, duties to engage residents, the ongoing management of a digital golden thread of information throughout the building lifecycle and the creation of a mandatory occurrence reporting framework.

The Building Safety Regulator (part of the Health and Safety Executive) will enforce the new, more stringent regulatory regime for higher-risk buildings; overseeing compliance with the new regulations once they come into force.

Impact on resident-led organisations

This new regulatory regime will place building safety responsibilities on resident-led organisations which will be accountable persons for in-scope higher risk buildings.

These are usually leaseholders who have taken over the responsibility for the management and repairing obligations for the building that they are living in, through exercising their statutory right to manage or by purchasing the freehold of the building. These entities may also include leaseholders who have become part of a resident management company under a tripartite lease.

Within these organisations, the board of directors include leaseholders who carry out the role on an unremunerated basis. Some will have the requisite skills and knowledge to meet their new responsibilities as accountable persons. Some organisations will employ managing agents to support them with meeting legislative and procedural requirements.

However, we are aware that there may not be the competence within the organisation to ensure that those designated as accountable persons are able to fulfil their new building safety duties. Therefore, the government included provisions in the Building Safety Act to enable resident-led organisations who are accountable persons to appoint a professional director to support them in meeting their duties under Part 4 of the Act.

In this consultation we are seeking views on our proposed regulations under section 111 of the Building Safety Act 2022 that imply terms into the articles of association for Resident Management Companies (where the RMC is an accountable person) to enable the appointment of a professional building safety director. The proposals will cover:

• the eligibility requirements for becoming a building safety director of the company
• the appointment of a building safety director
• the entitlement to remuneration of an appointed building safety director
• and the removal of an appointed building safety director

We are also seeking views on our proposed amendments to the Right to Manage Companies (Model Articles) (England) Regulations 2009 to align these with our proposed implied terms into the articles of association for RTM companies.

This consultation be open for 6 weeks and the government will aim to publish its response to the consultation within 12 weeks of the consultation closing.

Building safety director provisions in the Building Safety Act 2022

Section 72 of the Building Safety Act 2022 provides that the accountable person for a higher-risk building (a building which is at least 18 metres in height or has at least 7 storeys) is the person with repairing obligations in respect of its common parts under a lease or by virtue of an enactment. This includes resident-led organisations such as resident management companies (RMCs) and right to manage companies (RTM companies).

They will assume the statutory duties under Part 4 of the Building Safety Act 2022 including criminal liability in circumstances of non-compliance.

When considering our approach to resident-led organisations that are accountable persons, we took account the view of stakeholders which, in summary, outlined there may be issues with:

RMCs dissolving if lay directors fail to come forward or resign due to concerns around taking on responsibility for the duties and liabilities under the new regime; and

The potentially limited competence of some resident directors in charge of RTMs/RMCs to effectively manage and discharge their building safety duties. To ensure that resident-led organisations continue to be empowered to manage their buildings and mitigate against the new regime acting as a deterrent to such organisations, we have included an option for them to appoint a person with relevant expertise to their board to support them with their Part 4 building safety duties. As such, provisions in the Building Safety Act 2022 and any subsequent regulations made will have retrospective effect.

Section 112 (30E) of the Building Safety Act 2022 amends the Landlord Tenant Act 1985 by implying terms in leases so that the costs of the appointment of a building safety director can be recoverable as a service charge under the lease. This enables RMCs and RTM companies to recover monies to cover the cost of the appointment of a director appointed for a building safety purpose whatever the terms of the lease.

Section 161(4) of the Building Safety Act 2022 provides that where a RMC or RTM company appoints a paid building safety director, all unpaid officers of the company will be relieved of their personal criminal liability for any offences committed under Part 4.

The Building Safety Act 2022 provided the framework that ensures all resident-led organisations have the option to appoint one or more building safety directors. This consultation will set out the detail of proposals to be included in regulations.

Resident-led organisations

Resident Management Companies (RMCs)

A RMC is a company that has been formed to undertake the management of a residential building. It can be set up by the original developer of the building and consists of equal shareholders or members, who are typically the leaseholders.

The RMC is responsible for the management and maintenance of the building, as well as compliance with the obligations of the lease and a range of statutory requirements (subject to the lease structure). The directors of the RMC, who are unpaid and appointed by the leaseholders, decide how best to achieve this, either by self-managing or by appointing a professional managing agent.

Unlike Right to Manage companies, there are no statutory requirements applicable to the constitution of a RMC therefore provisions made in the articles of association of RMCs can vary widely and some may have articles that specifically exclude the ability of the company to appoint a non-resident director (i.e., a director who is not also a tenant).

A RMC is defined in the Building Safety (Leaseholder Protections) (Information etc) (England) Regulations 2022 and for the purposes of our proposals we intend to align the definition, as follows:

RMC means a body corporate which is party to a lease of a building where—

• (a) the body corporate is limited by guarantee and the members of that body are tenants under leases of dwellings in the building (“leaseholders”), or
• (b) the majority of the shares of the body corporate are held by leaseholders.

Right to Manage companies (RTMs)

The Right to Manage is a statutory right for leaseholders to take over the management of their building. Right to Manage is governed by Chapter 1 of Part 2 of the Leasehold Reform and Commonhold Act 2002, which makes provision for the acquisition and exercise of rights in relation to the management of premises by a RTM company.

Section 73 of the Commonhold and Leasehold Reform Act 2002 (CLRA) defines what a RTM company is. The RTM Companies (Model Articles) (England) Regulations 2009 are given effect by provisions under section 74 of CLRA.

The Schedule to the RTM Companies (Model Articles) (England) Regulations 2009 sets out model articles and regulation 2(2) provides that the provisions in the Schedule shall have effect for a RTM company regardless of whether or not they are adopted by the company.

Where the right is successfully exercised, a RTM company takes over most of the management functions of the landlord under the lease together with those of any other person who has management functions. However, the lease remains unaltered. “Management functions” are functions with respect to services, repairs, maintenance, improvements, insurance, and management.

The model articles of association include:

• A provision enabling any person who is willing to act as a director (and not barred from doing so by law) to be appointed as a director by ordinary resolution of the RTM company or by a majority decision of the directors (para. 22)

• The process for termination of a director’s appointment (para. 23)

• The process for enabling the remuneration of directors with the consent of the company given in general meeting (para. 24)

The proposals set out in this consultation and to be included in secondary legislation will enable both types of resident-led organisations, where they are accountable persons, to appoint a building safety director.

Section A: Eligibility of a building safety director

For the purpose of this consultation, a building safety director is a person appointed specifically for the purpose of supporting the Resident Management Company (RMC) or Right to Manage (RTM) company in complying with its duties under Part 4 of the Building Safety Act 2022 or under regulations made under that Part. The extent of remuneration^{[footnote 1]} recoverable for such an appointment from leaseholders is limited to this extent only.

We intend to protect leaseholders as much as possible from circumstances where a building safety director’s judgment, decisions, or actions when carrying out their roles may be compromised due to a conflict of interest.

If a conflict were present, this may lead to the building safety director choosing to take action that benefits them (or their associates) to the detriment of the resident-led organisation. This may result in both sub-standard building safety management and unreasonable financial burdens being passed onto to leaseholders.

A1. Resident Management Companies (RMCs)

It is proposed that regulations will amend articles of association for an RMC by setting out the eligibility of a building safety director to be appointed for a building safety purpose to a RMC to be any person who:

a. is willing to act as a director; and
b. is permitted by law to do so; and
c. has declared all conflicts of interest.

The RMC must consider the following when considering the eligibility of a professional building safety director to determine if there is a likely conflict of interest. This includes whether the proposed building safety director:

a. is likely to make a financial gain (other than any agreed remuneration for holding the position) at the expense of the RMC

b. has an interest in the outcome of the service or advice provided to the RMC or of a transaction carried out on behalf of the RMC, which is distinct from the interests of RMC

c. has a financial or other incentive to favour the interest of another client or group of clients over the interests of the RMC

d. receives or will receive from a person other than the RMC an inducement in relation to a service or advice provided to the RMC, in the form of monies, goods or services

A2. Right to Manage companies (RTMs)

The model articles of association for RTM companies include provisions enabling any person who is willing to act as a director (and not barred from doing so by law) to be eligible for appointment as a director.

We propose to amend the model articles to also include provisions which will align with our eligibility criteria set out above for RMCs, namely by:

a. ensuring that the proposed building safety director to be appointed by an RTM company has declared all conflicts of interest; and

b. placing an obligation on RTM companies to also consider any conflicts as set out above for RMCs as a minimum

Question 4. Do you agree that for a building safety director to be eligible for appointment by a RMC that they must meet the criteria set out at Section A1. above?

• Yes
• No
• Indifferent
• Not sure

If you did not answer ‘Yes’ please explain why.

---

Question 5. Do you agree that for a building safety director to be eligible for appointment by a RTM company, they must also meet the criteria set out in Section A1. above?

• Yes
• No
• Indifferent
• Not sure

If you did not answer ‘Yes’ please explain why.

Section B: Notification prior to the appointment of a building safety director

As already set out, we have enabled the reasonable costs of appointment of a building safety director to be recoverable, as if they were a service charge under the lease. Importantly, our intention is to balance enabling resident-led organisations to appoint building safety directors (to manage building safety duties) by ensuring that genuine and transparent appointments are made, with adequate engagement with affected leaseholders about why the decision is being made and the financial implications.

We intend to ensure that prior to a building safety director being appointed by a Resident Management Company (RMC) or Right to Manage (RTM) company, all other qualifying leaseholders^{[footnote 2]} for the building are notified and have the opportunity make observations about the proposed appointment.

It is proposed that regulations will amend articles of association for a RMC and RTM company by setting out a 28-day notification process which means that prior to any appointment of a building safety director being made, the RMC or RTM must provide leaseholders with the following information:

• the name of the proposed building safety director
• the description of the role of the building safety director will be carrying out and their relevant experience that enables them to effectively carry out the role
• the reasons for considering such an appointment to be necessary
• the proposed remuneration of the building safety director
• the intended duration of the agreement
• the intended method of appointing the building safety director (e.g. by decision of directors or ordinary resolution)
• setting out that each leaseholder has 14-days from the date of the notice in which to make written observations, specifying where they should be sent, and by what date;
• any connection (apart from the proposed agreement) between the building safety director and the RMC/RTM company or any other party to the lease
• any of the building safety director’s declared conflicts of interest and a statement from the company about the outcome of the internal conflict check
• the leaseholder’s estimated contribution towards the remuneration of the building safety director
• how the building safety director can be removed

Within 14-days after the written observation period closes, the RTM or RMC will provide a summary of any observations received and a response to those observations.

Question 6. Do you agree that prior to the appointment of a building safety director that all qualifying leaseholders should be notified?

• Yes
• No
• Indifferent
• Not sure

If you did not answer ‘Yes’ please explain why.

---

Question 7. Do you think the information (as set out in the list above) that is to be provided as part of the notification process with qualifying leaseholders is sufficient?

• Yes
• No
• Indifferent
• Not sure

If you did not answer ‘Yes’ please explain why and/or tell us what information we should consider including or removing.

---

Question 8. Do you think that 28-days is sufficient to notify qualifying leaseholders and provide a summary/response to any observations made?

• Yes
• No
• Indifferent
• Not sure

If you did not answer ‘Yes’ please explain why.

Section C: RMCs and RTMs decision to appoint a building safety director

The model articles of association for Right to Manage (RTM) companies include a provision enabling the appointment of a director by ordinary resolution or by a decision of the directors. Subject to additional eligibility checks and engagement with leaseholders as set out in this consultation, we think the mechanisms available for appointments of building safety directors are sufficient, we are therefore not proposing any further amendments to the RTM Companies (Model Articles) (England) Regulations 2009 in relation to making decisions to appoint a building safety director to a RTM company.

As already mentioned, Resident Management Company (RMC) articles of association can vary widely and may not allow the company to appoint a director who is not a leaseholder.

It is proposed that regulations will amend articles of association for an RMC to align with the position of RTM companies namely by setting out that a building safety director may be appointed to support the company in complying with its duties as an accountable person under Part 4 as defined by section 111 of the Building Safety Act by:

a. ordinary resolution; or
b. a decision of the directors

Question 9. Do you agree that no amendments are required to RTM companies model articles regarding the decision to appoint a building safety director to the company?

• Yes
• No
• Indifferent
• Not sure

If you did not answer ‘Yes’ please explain why.

---

Question 10. Do you agree that we should align RMCs articles of association with RTM companies’ articles as set out above?

• Yes
• No
• Indifferent
• Not sure

If you did not answer ‘Yes’ please explain why.

Section D: Remuneration of a building safety director

D1. Resident Management Companies (RMCs)

Through section 112 of the Building Safety Act 2022 we have amended the Landlord and Tenant Act 1985 by implying terms in leases so that the costs of the appointment of building safety director can be recoverable as a service charge under the lease. This enables RMCs and RTM companies to recover monies to cover the cost of the appointment of a director appointed for a building safety purpose whatever the terms of the lease.

However, as previously mentioned, articles of association for an RMC can vary widely and may not allow the RMC to remunerate the building safety director.

It is therefore proposed that regulations will amend the articles of association for an RMC to include provisions that will enable the remuneration of a building safety director to be determined by either:

• a decision of the directors; or
• with the consent of the company in general meeting by way of ordinary resolution.

D2. Right to Manage companies (RTMs)

The model articles of association for RTM companies already include a provision enabling the remuneration of directors with the consent of the company given by ordinary resolution in a general meeting.

We propose to amend the model article to fully align RTM companies with our proposals for RMCs by also enabling the remuneration of a building safety director to be determined by a decision of the directors.

Question 11. Do you agree with our proposal, as set out above, on how remuneration for a building safety director should work for RMCs?

• Yes
• No
• Indifferent
• Not sure

If you did not answer ‘Yes’ please explain why.

---

Question 12. Do you agree with our proposal to align the determination of remuneration for building safety directors of RTMs fully with our proposals for RMCs?

• Yes
• No
• Indifferent
• Not sure

If you did not answer ‘Yes’ please explain why.

Section E: RMCs and RTMs removal of an appointed building safety director

Section 168 of the Companies Act 2006 already enables the removal of directors through ordinary resolution. This resolution may be passed by a ‘simple majority’ of members, meaning that the votes ‘for’ must equate to more than 50% of the total votes cast by each member’s voting rights.

Through engagement with stakeholders, we understand that passing resolutions for some Resident Management Companies (RMCs) and Right to Manage (RTM) companies can be challenging for a number of reasons including members disengagement with taking building management decisions. This may make it, in some cases, excessively burdensome to remove directors before the end of their planned term.

We would like to ensure that building safety directors appointed are not in post indefinitely or unnecessarily, and that where they are no longer required to support the RMC or RTM company (to meet duties under Part 4), they can be removed, notwithstanding anything in any other agreement between the organisation and the building safety director.

We propose to amend articles of association to enable the removal of a building safety director by majority decision at a meeting of the directors or when all eligible directors^{[footnote 3]} indicate to each other by any means that they share a common view on a matter. This will be in addition to the already available provision for removal of a director by ordinary resolution that is available under section 168 of the Companies Act 2006.

Question 13. Do you agree with our proposals on the removal of building safety director by RMCs and RTMs?

• Yes
• No
• Indifferent
• Not sure

If you did not answer ‘Yes’ please explain why.

About this consultation

This consultation document and consultation process have been planned to adhere to the Consultation Principles issued by the Cabinet Office.

Representative groups are asked to give a summary of the people and organisations they represent, and where relevant who else they have consulted in reaching their conclusions when they respond.

Information provided in response to this consultation may be published or disclosed in accordance with the access to information regimes (these are primarily the Freedom of Information Act 2000 (FOIA), the Environmental Information Regulations 2004 and UK data protection legislation. In certain circumstances this may therefore include personal data when required by law.

If you want the information that you provide to be treated as confidential, please be aware that, as a public authority, the Department is bound by the information access regimes and may therefore be obliged to disclose all or some of the information you provide. In view of this it would be helpful if you could explain to us why you regard the information you have provided as confidential. If we receive a request for disclosure of the information we will take full account of your explanation, but we cannot give an assurance that confidentiality can be maintained in all circumstances. An automatic confidentiality disclaimer generated by your IT system will not, of itself, be regarded as binding on the Department.

The Department for Levelling Up, Housing and Communities will at all times process your personal data in accordance with UK data protection legislation and in the majority of circumstances this will mean that your personal data will not be disclosed to third parties. A full privacy notice is included below.

Individual responses will not be acknowledged unless specifically requested.

Your opinions are valuable to us. Thank you for taking the time to read this document and respond.

Are you satisfied that this consultation has followed the Consultation Principles? If not or you have any other observations about how we can improve the process please contact us via the complaints procedure.

Personal data

The following is to explain your rights and give you the information you are entitled to under UK data protection legislation.

Note that this section only refers to personal data (your name, contact details and any other information that relates to you or another identified or identifiable individual personally) not the content otherwise of your response to the consultation.

1. The identity of the data controller and contact details of our Data Protection Officer

The Department for Levelling Up, Housing and Communities (DLUHC) is the data controller. The Data Protection Officer can be contacted at dataprotection@levellingup.gov.uk or by writing to the following address:

Data Protection Officer
Department for Levelling Up, Housing and Communities
Fry Building
2 Marsham Street
London
SW1P 4DF

2. Why we are collecting your personal data

Your personal data is being collected as an essential part of the consultation process, so that we can contact you regarding your response and for statistical purposes. We may also use it to contact you about related matters.

We will collect your IP address if you complete a consultation online. We may use this to ensure that each person only completes a survey once. We will not use this data for any other purpose.

Sensitive types of personal data

Please do not share special category personal data or criminal offence data  if we have not asked for this unless absolutely necessary for the purposes of your consultation response. By ‘special category personal data’, we mean information about a living individual’s:

• race
• ethnic origin
• political opinions
• religious or philosophical beliefs
• trade union membership
• genetics
• biometrics
• health (including disability-related information)
• sex life; or
• sexual orientation.

By ‘criminal offence data’, we mean information relating to a living individual’s criminal convictions or offences or related security measures.

3. Our legal basis for processing your personal data

The department has a statutory duty to consult on these regulations.

The collection of your personal data is lawful under article 6(1)(e) of the UK General Data Protection Regulation as it is necessary for the performance by DLUHC of a task in the public interest/in the exercise of official authority vested in the data controller. Section 8(d) of the Data Protection Act 2018 states that this will include processing of personal data that is necessary for the exercise of a function of the Crown, a Minister of the Crown or a government department i.e. in this case a consultation.

Where necessary for the purposes of this consultation, our lawful basis for the processing of any special category personal data or ‘criminal offence’ data (terms explained under ‘Sensitive Types of Data’) which you submit in response to this consultation is as follows. The relevant lawful basis for the processing of special category personal data is Article 9(2)(g) UK GDPR (‘substantial public interest’), and Schedule 1 paragraph 6 of the Data Protection Act 2018 (‘statutory etc and government purposes’). The relevant lawful basis in relation to personal data relating to criminal convictions and offences data is likewise provided by Schedule 1 paragraph 6 of the Data Protection Act 2018.]

4. With whom we will be sharing your personal data

DLUHC will appoint the Health and Safety Executive (HSE) and the Home Office as ‘data processors’. The Health and Safety Executive (HSE) and the Home Office will act on behalf of the Department and under our instruction, to help analyse the responses to this consultation. Where we do we will ensure that the processing of your personal data remains in strict accordance with the requirements of the data protection legislation.

5. For how long we will keep your personal data, or criteria used to determine the retention period

Your personal data will be held for 2 years from the closure of the consultation, unless we identify that its continued retention is unnecessary before that point

6. Your rights, e.g. access, rectification, restriction, objection

The data we are collecting is your personal data, and you have considerable say over what happens to it. You have the right:

a. to see what data we have about you

b. to ask us to stop using your data, but keep it on record

c. to ask to have your data corrected if it is incorrect or incomplete

d. to object to our use of your personal data in certain circumstances

e. to lodge a complaint with the independent Information Commissioner (ICO) if you think we are not handling your data fairly or in accordance with the law. You can contact the ICO at https://ico.org.uk/, or telephone 0303 123 1113.

Please contact us at the following address if you wish to exercise the rights listed above, except the right to lodge a complaint with the ICO:

dataprotection@levellingup.gov.uk

or

Knowledge and Information Access Team
Department for Levelling Up, Housing and Communities
Fry Building
2 Marsham Street
London
SW1P 4DF

7. Your personal data will not be sent overseas

8. Your personal data will not be used for any automated decision making

9. Your personal data will be stored in a secure government IT system

We use a third-party system, Citizen Space, to collect consultation responses. In the first instance your personal data will be stored on their secure UK-based server. Your personal data will be transferred to our secure government IT system as soon as possible, and it will be stored there for 2 years before it is deleted.

1. By remuneration we mean the salary for carrying out the role as a building safety director. ↩

2. A leaseholder whose lease was granted for an original term of more than 21 years. ↩

3. All directors of the RMC and RTM excluding any building safety director. ↩