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Real Estate tip of the month: RAAC and implications for landlords and tenants

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By Stephanie Bagshaw, Rachael Reynolds & Victoria Armstrong


Published 29 September 2023


The news about the presence of reinforced autoclaved aerated concrete (RAAC) cannot have escaped anyone's attention in the last few weeks, particularly the many thousands of anxious parents awaiting confirmation as to whether their children's schools fell within the 150 plus school buildings deemed to be at risk of collapse due to the presence of RAAC. 

The headlines were, of course, initially dominated by reports around the presence of RAAC in schools but it quickly became clear that the issue is not limited to schools. Indeed, there is now widespread concern around the use of RAAC in all kinds of public buildings, including court buildings and hospitals.   Whilst the news has, until now, largely focussed on the presence of RAAC in public buildings, a recent FT article quotes Noble Francis, economics director at the Construction Products Association, whose opinion is that the issue is not limited to buildings in the public sector and that RAAC "… was also utilised in commercial office buildings, shops, factories and warehouses."

The implications could therefore be significant for both the public and private sectors and, owners of all older commercial properties, are being urged to "conduct a survey of the building to identify or eliminate the possibility" of the presence of RAAC  by the Institution of Structural Engineers.  

In this article, we will consider some of the practical issues which may arise for landlords and tenants in surveying and identifying whether RAAC has been used in the construction of the buildings they own and occupy and some initial thoughts about the type of lease provisions which will need to be considered if their properties fall within the "at risk" category. 

What is RAAC?

RAAC is a lightweight, aerated concrete which was frequently used as a cheaper alternative to conventional concrete in buildings constructed between the 1950s and 1990s.  RAAC is however less durable than standard concrete and its lifespan is only around 30 years.  Its aerated structure also means that if it is exposed to moisture, it is prone to collapse as the bubbles can allow water in more easily.  

In May 2019 the Standing Committee on Structural Safety raised an alert to emphasise the risks of structural failure in properties constructed using RAAC, where an RAAC panel roof within an operational school had collapsed suddenly with no apparent warning.  There have been further sudden collapses and concerns raised relating to the structural deficiencies in RAAC by both the Building Research Establishment and SCOSS[1], culminating in the closure of a number of schools this summer.  

There are also concerns that the covering of RAAC panels contains asbestos which poses a further risk.

What should landlords and tenants be doing now?

Given the recommendations of the Institution of Structural Engineers (as referred to above), responsible landlords (and tenants) across the country will no doubt also now be keen to investigate the presence of RAAC in their buildings. 

To this end, the parties will need to review what their leases provide for in terms of rights for the landlord to access the premises to carry out such investigations. 

What if RAAC is located?

If the results of the landlord's investigations reveal that RAAC is present, then landlords should seek  professional advice (from a building surveyor and/or structural engineer) as to how the issue should be dealt with and resolved.   

There are a raft of interrelated lease provisions which will need to be considered and discussed with legal advisers.

The first point to establish is who is responsible for the repair and maintenance of the structure and fabric of the building – and therefore for any works required as a result of the presence of RAAC. While landlords will usually hold this responsibility for multi let buildings, tenants may be responsible if the building is let on a stand alone basis.

If RAAC is causing actual disrepair then this will trigger an obligation to remedy the disrepair in accordance with the terms of the lease.  However, the lease may not impose any obligation to remove or otherwise deal with RAAC if it is not in disrepair or causing disrepair.  Each case will be different, but parties should not assume that there is a breach of lease or contractual liability simply because RAAC is present in the building.

There will be a question as to whether the use of RAAC is an inherent defect.  We are aware that RAAC was widely used in its time as a cheap alternative to traditional concrete and that, provided it is properly maintained  was deemed to be safe.  

We also know, however, that RAAC has a limited shelf life so there will also be questions as to what the parties' position may be where there has been a failure  to maintain and repair the RAAC or replace it when it has exceeded its lifespan, particularly where this has resulted in an increase in the cost of the works. There may also be a case to answer as to whether, given the known life span of RAAC, it was appropriate to use it as a building material in a building with an intended lifespan of say, 60 years without an appropriate maintenance plan in place.   Given current limitation periods, there may not be any claim against the original developer for the construction of the building . 

There are a host of other lease provisions which will likely be brought into focus as the RAAC issues unfold, including the effect the presence of RAAC may have on the tenant's ability to assign or underlet its premises and the likelihood of landlords becoming unable to let buildings which are (or may be affected) by RAAC.  Parties may have problems at rent review around market valuations which presumably will be affected by the presence of RAAC and both will be keen to understand whether the rent review provisions offer them appropriate protections in the assumptions and disregards.    

Liability for repair and costs associated with the presence of RAAC will very much depend on the lease drafting and we would expect that, where there are concerns around RAAC, both parties will be closely scrutinising their leases to establish what their liability may be.

The future

It appears that the risks around the failure of RAAC have been known for some considerable time and may affect a significant number of buildings within the public sector and potentially those within the private sector.

We have very recently seen the government stepping in to prevent landlords from passing the cost of remedying fire safety defects on to certain tenants by way of the Building Safety Act 2022 (BSA 2022) and extend the limitation period for claims in respect of defective works under the Defective Premises Act 1972. It may be that they will, as a consequence of the RAAC crisis, extend the scope of the BSA 2022 to apply to RAAC type defects or introduce similar legislation to deal with defects around RAAC but this will depend on the extent of the risks and as, with the BSA 2022, would likely only protect residential tenants. 

Whatever the scale of the problem and whether in the public or private sector, it appears highly likely that we will see a number of legal claims and disputes around the issue in the years to come. 

[1] DfE Reinforced Autoclaved Aerated Concrete (RAAC): Identification Guidance August 2023