Jon Coane, partner and social housing expert at Shakespeare Martineau, looks at how the Reinforced Autoclaved Aerated Concrete (RAAC) scandal is affecting the social housing sector.
Reinforced Autoclaved Aerated Concrete (RAAC) is a building material that was widely used in the public building sector from the 1950s to the 1980s before the potential for damage was noted and the material fell out of use. However, government guidance highlighted that lingering RAAC may be an urgent concern in 2021, and again in May 2023 when it identified the material might be in use in over 500 school buildings.
Since then, safety concerns have escalated, with RAAC found to have the potential to collapse with little to no notice. While it is predominantly public sector buildings affected, the housing industry, particularly Housing Associations (HA), must take these warnings seriously.
HAs may not typically include a search for RAAC in their usual stock condition surveys, but with the crisis only set to grow it is imperative that they begin to test for it, before it’s too late. When it comes to checking stock, particularly if it came from a large scale voluntary transfer (LSVT) from a local authority, paperwork alone may not be detailed enough. In these cases, local authorities and HAs often relied on stock condition surveys carried out on a percentage of the stock transferring, underpinned by a range of collateral warranties for the totality of the stock, rather than obtaining certificates of title, deeds and other due diligence checks on each individual building. These warranties mean that if there is an issue with a transferred property that is covered by a warranty, the local authority may be required to indemnify the HA for the cost of resolving the problem.
Therefore, HAs that are also LSVTs should not only conduct a swift stock condition check, but also seek to understand whether RAAC is covered by any of the collateral warranties under the LSVT agreement, and if they can recoup the cost of any remedial action. However, should it be found that any buildings do contain RAAC, it is not only the local authority that will need to be informed.
The HA’s funders will also need to be informed of any material RAAC issue discovered, as there may be an obligation in their loan and security documentation to inform them of such material issues which may have a knock-on effect on matters such as valuations of the affected housing stock. Consideration should also be given as to whether any other regulatory notifications need to be made.
With so much on the line it is vital that HAs seek professional guidance where appropriate to understand the risks and provisions of any collateral warranties, building contracts and their finance documentation, and receive assistance in coming up with a plan of action to take to key stakeholders. For example, this could include an investigation into whether the builder could be liable for the cost of repair, depending on what was agreed at the point of the build as well as the legislation that was around at the time.
With so much at stake and so many complexities to consider, HAs could become frozen in place – unsure of what to do. However, the first and most important step is to undertake a swift stock condition survey to check for RAAC; prioritising older buildings that may have been constructed in the applicable timeframe. This stock check is vital, as it is probable that this story will only gain traction in the media. To prevent uncertainty, HAs need to be ahead of the game, to keep their tenants safe and comply with their regulatory obligations.
Should RAAC be discovered, it is vital that HAs follow their internal processes to seek temporary accommodation for affected tenants if required. It is likely that any discovered RAAC will form a structural issue to the building, requiring time and expense to resolve. Running a stock condition survey will additionally empower HAs to reshape asset management plans where necessary and could influence decisions such as whether certain stock should be sold off or refurbished.
While there is the hope that this crisis will not have as much of an effect on housing as it is on public sector infrastructure such as schools or health care buildings, the risk remains. Should RAAC be left undiscovered, there is a real risk of injury and even death to tenants, something that must be taken seriously, with prevention measures put in place.
With the recent media interest surrounding mould, damp and other unsuitable housing arrangements, the social housing sector is no stranger to intense scrutiny. Without conducting a stock condition survey, the amount of RAAC in existing HA stock simply isn’t known, and the risk to tenant safety will only grow with time. By conducting a proper audit of stock, seeking professional advice and keeping all key stakeholders informed, HAs will be able to achieve the best outcome for their tenants and their business as a whole – regardless of the result of the stock check.
