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Building Safety Bill – changes ahead

Unfinished office development with crane Print publication

13/09/2021

What has happened and why is it important?

On 5 July 2021, the government finally introduced the Building Safety Bill to Parliament, heralding the next step in its proposals for fundamental reform of building safety. A draft Bill was first published in July 2020. According to the explanatory notes, the Bill’s objectives are to learn the lessons from the Grenfell Tower fire and to remedy the systemic issues identified by the Hackitt Independent Review of Building Regulations and Fire Safety, by strengthening the whole regulatory system for building safety.

The Bill affects all those involved in the built environment industry, in addition to building owners, residents and homeowners. Walker Morris’ Regulatory & Compliance and Construction & Engineering specialists summarise the key elements of the Bill and offer their practical advice.

Key elements of the Bill

  • A new building safety regulator is established within the Health and Safety Executive to: implement a new, more stringent regulatory regime for higher-risk buildings; oversee the safety and performance of all buildings; and assist and encourage competence among the built environment industry and registered building inspectors. See our previous briefing.
  • In a much-publicised addition to the earlier draft, the Bill extends from six to 15 years the time period for bringing compensation claims under section 1 of the Defective Premises Act 1972 (DPA) in respect of construction defects that render a dwelling unfit for habitation [1]. These claims concern initial construction or conversion of a building, and the extended limitation period applies both prospectively and retrospectively. Note that where a section 1 DPA claim is brought that would otherwise have been out of time, the court must dismiss it if it is necessary to avoid a breach of the defendant’s human rights (for example, the right to a fair trial).
  • This extended limitation period also applies (prospectively only) to: claims under a new section 2A of the DPA in relation to any work undertaken to any part of a building which contains one or more dwellings, i.e. including refurbishment work; and claims under a (yet to be commenced) section of the Building Act 1984 in respect of damage suffered as a result of a breach of building regulations.
  • For specified remediation works (yet to be defined in regulations), the landlord must take ‘reasonable steps’ to seek other cost recovery avenues before passing on costs to leaseholders through service charges. This includes obtaining available grants and pursuing third parties.
  • In another development since the earlier draft, there are powers to impose a higher-risk building levy on developers making applications for building control approval [2].
  • ‘Higher-risk buildings’ are defined as at least 18 metres in height or having at least seven storeys and containing at least two residential units. The Secretary of State can make regulations amending or supplementing this definition or excluding classifications of building from its scope.
  • A new ‘dutyholder’ regime applies across the lifecycle of higher-risk buildings. Dutyholders (either individuals or legal entities) are responsible for complying with building regulations when buildings are commissioned, designed, constructed or refurbished. They include appointments under the Construction (Design and Management) Regulations 2015, such as client, principal designer and principal contractor. The regulator can prosecute if work proceeds without building control approval.
  • A new ‘gateway’ regime from planning to occupation is designed to ensure that building safety risks are considered at each stage of a new higher-risk building’s design and construction. The regulator will also oversee building work on existing higher-risk buildings. Occupation cannot begin until the regulator has issued a completion certificate and the building has been registered.
  • A ‘golden thread’ of documents and information must be provided to the building owner once construction is complete. Dutyholders will need to start collating it during design and construction [3].
  • The ‘accountable person’ is the dutyholder during occupation. They may be an individual, partnership or corporate body, and are likely to be the building owner or management company. The Bill provides for the scenario where there is more than one accountable person. It will be an offence not to cooperate (this includes the ‘responsible person’ under separate fire safety legislation).
  • The accountable person must register higher-risk buildings with the regulator prior to occupation, register existing occupied buildings and apply to the regulator for a building safety certificate. There are numerous obligations regarding resident engagement, including complaints handling processes. They have an ongoing duty to assess and manage building safety risks and are required to appoint a building safety manager [4]. Compliance is demonstrated by a safety case report, part of the ‘golden thread’, which must be kept up to date. Among other things, the report must explain what policies, procedures and processes are in place. Continued failure to comply with a regulator’s compliance notice could lead to criminal or ‘special measures’ proceedings.
  • Mandatory occurrence reporting will be required for higher-risk buildings. A reporting framework and process must be put in place by dutyholders during design and construction (including reporting by on-site workers) and occupation.
  • For higher-risk buildings, a new building safety charge (separate to service charges) will be payable by the tenant to the landlord for the ongoing costs of the new regime, excluding remedial works.
  • There are toughened existing powers and new powers for the regulator, including individual liabilities for officers of corporate bodies that commit criminal offences.
  • A new regulator of all construction products placed on the UK market is set to be established within the Office for Product Safety and Standards.
  • There is a power to require developers to be members of a New Homes Ombudsman scheme.
  • Building control will be reformed and the regulator will maintain a register of building inspectors and building control approvers.
  • The Regulatory Reform (Fire Safety) Order 2005 (Fire Safety Order) will be strengthened to support greater compliance and effective enforcement, with increased financial penalties of unlimited fines for certain criminal offences. There will be new requirements for the building’s ‘responsible person’, typically the building owner.
  • Social housing residents will be able to escalate complaints directly to the Housing Ombudsman once their landlord’s complaints process is complete.

What happens next?

Related to the Building Safety Bill, changes to the planning system (‘planning gateway one’) came into effect on 1 August 2021. For certain high-rise buildings, developers will need to submit a fire statement with their planning permission applications setting out fire safety considerations specific to the development.

The Bill itself is a substantial and complex piece of draft legislation. According to the government’s indicative timetable, it will take at least nine months to become law. Changes intended to come into force in the first 12 months of operation include the extended time period for bringing DPA claims, changes to the Fire Safety Order and additional powers for construction products regulation. The remaining provisions are expected to come into force within a further six months, by around the autumn of 2023.

There is ongoing controversy surrounding protection for leaseholders facing crippling bills for remedial work as a result of the cladding scandal, with continuing uncertainty as to how and when issues of legal liability for those costs will ultimately be resolved. Fifty-five MPs spoke during the second reading of the Bill on 21 July 2021, many in moving terms about their constituents who are, as leaseholders, facing these crippling bills.

Campaigners fear that the Bill’s redress provisions will do little to address the current crisis, with leaseholders unable to afford the costs of bringing DPA claims against large and well-funded defendants, developers becoming insolvent, and the defective work itself falling outside the 15 year period in some cases. We can expect this to be the subject of fierce debate in both Houses of Parliament. The Bill is now at the committee stage, when detailed line-by-line examination takes place. Walker Morris will continue to monitor and report on developments as more details become known.

Practical advice

The message is clear that building safety can no longer be seen as a tick-box exercise, and at least to some extent the importance of increased regulation is acknowledged in the Bill. As a matter of general good practice, the spirit of the reforms can flow through in the actions dutyholders take now in the day-to-day conduct of their business.

While the content of the Bill may change as it passes through Parliament and implementation is probably a couple of years away, the fundamentals behind the new regime are here to stay. Dutyholders can start to put the groundwork in by familiarising themselves with the Bill and proposed obligations at each stage of a building’s lifecycle, and considering what resources will be required and the procedures, policies and processes that will need to be put in place. Safety related proposals can be considered and potentially incorporated in existing safety arrangements in anticipation of the Bill becoming law with appropriate training and upskilling being adopted where necessary.

Developers in particular, in light of the proposed 15 year time period for bringing DPA claims, should prepare in advance by reviewing both their potential exposure to such claims (including retaining potentially relevant documents) and their ability to claim against third parties.

They should review and plan ahead to update third party contractual arrangements/protections and professional indemnity cover accordingly, and ensure that document retention and other relevant policies/processes are amended to reflect the longer time period. Finally, they should ensure that they have the necessary systems in place to comply with the new planning gateway one requirements.

As the Bill proceeds through Parliament, affected parties can also raise any concerns directly with MPs and/or industry and other bodies.

How we can help

Whatever your role in a building’s lifecycle, we have experts who can help. If you have any queries or concerns on any aspect of the Bill, or need any advice or assistance, please contact one of the team below. Leaseholders should get in touch with Paul Hargreaves directly.

 

[1] In Rendlesham Estates Plc and others v Barr Limited [2014] EWHC 3968 (TCC), one of Walker Morris’ cases, the court gave guidance on the interpretation of certain DPA provisions, including the meaning of ‘dwelling’ and ‘fit for habitation’. For a dwelling to be fit for habitation it must, on completion, be capable of occupation for a reasonable time without risk to the health or safety of the occupants and without undue inconvenience or discomfort to the occupants. A dwelling may be unfit for habitation even though the defect which makes it so is not evident at the time of completion. What is a reasonable time will depend on the nature of the defect.

[2] The government is consulting until 15 October 2021 on the design and calculation of the proposed ‘Building Safety Levy’.

[3] The Building Regulations Advisory Committee recently published a report providing an overview of the development of golden thread policy.

[4] The Construction Industry Council recently launched the Building Safety Alliance, an independent and industry-led not-for-profit organisation, with the purpose of implementing the certification of competent individuals wishing to deliver the role of building safety manager and a publicly accessible register of those certified by the scheme.

 

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