Top claims risks facing surveyors in 2024

1.

Reinforced Autoclaved Aerated Concrete (RAAC)

Whilst there has been much said in recent months on the use of RAAC within buildings, this appears yet to translate to claims in a meaningful way. This could be attributed to the likelihood that many claims (or what would have been potential claims) are now time barred (even with the additional limitation periods under the Defective Premises Act 1972, which potentially allows up to 30 years for retrospective work). 

With this in mind, it may be prudent for firms to identify how this could create future liability and how this can be mitigated, we have observed that:  

It is now apparent that many firms are seeking to offer services in relation to RAAC, primarily around the identification within buildings, but potentially also extending to commenting on the current state and immediacy of the need for intervention.

A further risk potentially sits on the property management side, i.e. was the property kept in a sufficient state of repair and in particular, one that does not present a hazard for the ongoing integrity of inherent RAAC. 

Finally, firms may face risks arising from a ‘failure to identify’, where they have not commented on the potential presence of RAAC. 

Overall however, much of the risk here can be mitigated through appropriate terms and conditions and ensuring that where possible, any statements (or lack thereof) are caveated to the extent possible and any obligations subject to the exercise of reasonable skill and care.  

2.

Environmental Social and Governance (ESG) and Sustainability

Valuers are increasingly required to make commentary or observations about the sustainability and/or ESG, when valuing properties. This pressure comes from two points, the real estate companies who wish for their ESG credentials to be adequately incorporated into the value of a property and on the flip side, the potential purchaser of a property, who will want to understand the risks as they may significantly impact future saleability.

The difficulty within this area is the extent to which valuers have sufficient data to adequately quantify the sustainability or ESG risk within a particular property and/or portfolio. In turn, failing to do so may have significant adverse consequences from an investor’s point of view. 

Valuers here are somewhat caught between a rock and a hard place, to the extent that they fail to adequately comment on these risks they may face claims further down the line from investors but also, to the extent that they go beyond their competency in commenting on it, they may similarly face claims. 

3.

Increased Ombudsman activity

The Ombudsman schemes (the Property Ombudsman and The Property Redress Scheme) present a free and independent resolution to consumers to settle perceived disputes. They do present however an increased risk to insurers in terms of frequent attritional losses. Due to the barrier free access (when compared to traditional litigation) to these schemes, the number of referrals is on the rise. 

Whilst this is not necessarily a bad thing, as they can provide a swift and often cheaper resolution to disputes, it can be open to abuse and in particular during the ongoing cost of living crisis where budgets may be tightened, there is a heightened risk of spurious matters being passed through the Ombudsman services. Whilst these matters pose a risk to insurers, firms need to consider that they can take up a significant amount of otherwise fee earning staff’s time. 

4.

Building Safety Act 2022

Part 4 of the Building Safety Act 2022 introduces the Accountable Person regime, relating to occupied higher risk buildings. This ‘dutyholder’ will have responsibility for the fire and structural safety of a building during occupation. Whilst this person is likely to be the owner or the building, or have some leasehold obligation for upkeep and/or maintenance rather than a management company, it is likely that in the event of a breach, the accountable person may seek to pass these liabilities down to managing agents. 

Similar to the above points, firms need to ensure that they are adequately protected within their terms of engagement and ensure that where possible, the services and obligations that they are agreeing are appropriate for the services being performed.