Transforming the way we address building safety

Alexander Edwards is a partner at Rosling King LLP

We all saw the Grenfell Tower tragedy unfold before our eyes in June 2017. In the aftermath, its disastrous consequences, and cladding in high-rise buildings in particular, triggered fierce debate across the country.

Almost five years later, the Building Safety Act has finally received Royal Assent. According to the government, the new act will “deliver the biggest improvements to building safety in nearly 40 years”.  While its full effect is still to be understood, it should revolutionise the real estate and construction industries.

The act itself has been fiercely debated, and the outcome of it is somewhat different to the version that was first introduced to Parliament in July 2021. Originally, its focus was on improving safety in the design and construction of new high-rise residential developments, but the resulting legislation extends far beyond that, addressing the entire building lifecycle from the pre-construction procurement stage through to the post-construction management phase.

Its implications are likely to be far-reaching and it is expected to be fully implemented, along with a myriad secondary legislation and guidance in a series of stages over the next 18 months.

For developers, there are going to be several changes to how buildings are designed, constructed and managed, and from now on it’s going to be their responsibility to ensure they are keeping up with the act’s requirements.

What are the requirements?

The act clarifies that no costs for the replacement of defective cladding will be recoverable from tenants. Instead, building owners or developers will be responsible.

Some of the largest housebuilders signed up to a building safety pledge, requiring them to remediate life-critical building safety defects on all buildings of more than 11 metres high that they constructed in the last 30 years. These developers will need to pay the remediation costs in full and without application to the Aluminium Composite Material Fund/Building Safety Fund.

In respect of the buildings not covered by the pledge, where the building owner has the funds to cover remediation, they will be required to undertake the works. For other buildings that do not fall within the above categories, money from the Building Safety Fund will be available to cover cladding costs.

“Surprisingly, the act introduces a 30-year limitation period for claims pertaining to dwellings completed before 28 April”

Landlords may pass on some of the cost of remedying other building safety defects to tenants through the service charge payable under certain leases, but the act contains controls on what the service charge can include and a statutory cap on the amount that can be charged. Namely, up to £15,000 within London and up to £10,000 outside London.

The act also extends the statutory limitation period during which homeowners may bring a claim against developers, contractors and professional contractors if their home is not fit for habitation (under Section 1 of the Defective Premises Act 1972) or there is a breach of Building Regulations (under section 38 of the Building Act 1984) from six years to 15 years in relation to any works carried out on or after 28 April this year.

Surprisingly, the act allows for retrospective claims. It introduces a 30-year limitation period for claims pertaining to dwellings completed before 28 April. The new limitation periods came into force on 28 June.

Changes to fire-safety regulations

The act also introduces crucial changes to fire-safety regulations by establishing a Building Safety Regulator (BSR) to oversee the management of higher-risk buildings. These are defined as buildings of at least 18 metres high or of at least seven storeys, and as otherwise set out in draft secondary legislation; that is a building containing at least two residential units, and hospitals or care homes during the construction phase.

By October 2023, all occupied higher-risk buildings will have to be registered with the BSR. It is a criminal offence if a building is occupied after this date, but remains unregistered. The BSR’s duties will include overseeing the new duty-holder mechanism during the construction phase and the accountable persons mechanism at the occupation stage.

Furthermore, in respect of higher-risk buildings, the current draft of the secondary legislation requires submission to the BSR of written declarations concerning the competency of duty-holders. Namely, that they have the necessary skills, knowledge and experience. While developers have 12 to 18 months before these requirements come into force, they should already be reviewing their records and practices, as well as their professional teams’ competence to ensure they can comply.

Three new gateways

Additionally, three new Gateways, forming part of the planning and construction process, have been developed, which must be passed before a building can be occupied.

Gateway 1, relating to planning, came into force on 1 August 2021. It requires those seeking a planning permission for a higher-risk building to submit a fire statement for approval as part of the planning process.

Gateway 2 concerns the pre-construction stage. At this point, applicants will have to demonstrate to the BSR that their designs and construction proposals satisfy the requirements of Building Regulations and the act, including the provision of information as to how the new duty-holders, competence and golden thread requirements will be met. If these are not satisfied, a developer will not be able to commence building works.

Gateway 3 will apply post-construction but before the building is occupied. This is the final stage at which relevant documents will be handed over to the BSR and the building owner. Once passed, the BSR will issue a completion certificate and the higher-rise residential building will be registered on the regulatory system. It is a criminal offence for a building to be occupied before the certificate is issued.

Building safety levy

There is also a new building safety levy, which the secretary of state has the power to introduce. Its purpose is to contribute towards the cost of remediating historical building safety defects. As mentioned above, the levy will be payable by developers at the Gateway 2 stage in addition to the Residential Property Developer Tax, which came into force on 1 April. The details of the levy, including who is liable and its rates, will be outlined in secondary legislation.

Under the act, the courts have been granted a new power to make Building Liability Orders. Namely, the High Court will be able to extend the specific liabilities of one body corporate to any of its associates (for instance, a parent or sister company), and make them jointly and severally liable. This is intended to address the fact that many developers use special-purpose vehicles (SPVs) to deliver projects.

“Developers of new-build homes will have to provide buyers with a 15-year warranty”

The act also makes a provision for the establishment of a New Homes Ombudsman scheme, which will provide redress for buyers of new-build properties against developers. Once the scheme is fully established, developers will be required to become and remain members.

Another feature is the new homes warranty, which means developers of new-build homes will have to provide buyers with a 15-year warranty. This requirement will come into force under secondary legislation, expected in the next 12 to 18 months.

It is clear that the impact of the new act is going to be far reaching. We know a number of changes will not formally come into play until secondary legislation is finalised and issued. There are also a number of questions that need to be answered and timescales that need to be provided, but at least the act offers a robust framework to improve standards.

Passing this act is a big step towards building safety reform and will, no doubt, transform the UK’s built environment in many ways. Elements of it are ambitious, but the act brings an element of assurance. Developers, as well as the rest of the construction industry, should start making the necessary preparations now.

Rosling King LLP is a London-based law firm, specialising in serving the needs of financial institutions, corporates and individuals. For more information, please click here. 

Leave a comment