After its debut in Parliament in July 2021, the Building Safety Act 202 (“BSA”) finally received royal ascent on 28 April 2022.
The BSA marks a shift in building safety and rights of recourse available to those who are affected by building safety defects alongside an array of other changes. It goes without saying that the introduction of the BSA pinpoints a landmark moment following the Grenfell Tower fire in West London on 14th June 2017; thought of as the worst disaster in modern UK history.
Grenfell was Britain's deadliest fire in more than a century; in which 72 people tragically lost their lives, scores were injured and hundreds were left homeless after the 23-story tower was ablaze.
The newly introduced regulatory regimes for construction and building safety will undoubtedly have a significant impact on individuals and businesses in the construction and development industry. The BSA also introduces new claims allowing forms of redress for, in particular, leasehold owners and tenants. The first part of the BSA is coming into force on 28 June 2022 but a number of the provisions of the Act require secondary legislation to provide necessary detail. The BSA provides for a period of up to 18 months following royal ascent for the changes to be brought into force.
Below we summarise some of the key provisions.
1. Extended limitation periods
The first significant change is to limitation periods. For a claim under the Defective Premises Act 1972 (“DPA”) the BSA increases the scope of duties owed to now include any work undertaken to an existing dwelling including refurbishment or rectification works under a new Section 2A. The DPA imposes a duty on persons taking on work in connection with the “provision of a dwelling” (Section 1) for “any part of a relevant building” (under Section 2A) to see that the work is done in a workmanlike manner so that the dwelling is fit for habitation. The limitation period for bringing a claim prior to the BSA was six years from the date of practical completion. However, the BSA extends this to 15 years for claims under Section 1 and Section 2A which occur after the BSA takes effect and most significantly to 30 years for claims under Section 1 which arise before the BSA takes effect.
The BSA finally brings Section 38 of the Building Act 1984 into force. This section allows private individuals to claim damages when they suffer harm because the work undertaken on a building did not meet building regulation standards. Claims under Section 38 apply to all buildings, not just dwellings or residential properties. The DSA has extended the limitation for claims under Section 38 to 15 years, but this will only apply prospectively.
The BSA has introduced new powers to sue and fine the manufacturers of construction products where the product does not comply with a relevant construction product requirement or the person selling a construction product makes a misleading statement about it or the product is inherently defective. If any of these breaches cause a building or a dwelling to be unfit for habitation a claim exists and the limitation period for bringing such a claim is 15 years. If the claim relates to defective cladding products, then the limitation period applies retrospectively for 30 years.
2. New Builds
Developers will also be subject to additional duties in respect of new build homes, with the introduction of the mandatory requirement to provide new build home warranties. Developers are obliged to provide a warranty of 15 years at least, for all new build homes. The warranty will require developers (in specified circumstances and periods) to correct any defects. Penalties for not procuring a new home penalty will also apply.
3. Higher Risk Buildings
The BSA imposes greater responsibilities for higher risk buildings. Generally speaking, a higher risk building will be at least 18 metres high or have at least 7 storeys and contain at least 2 residential units. The new rules applying to high-risk buildings apply throughout their lifecycle, from design and construction all the way through to continued occupation. It is worth noting that the wider definitions of higher risk buildings encompass an array of buildings and will likely continue to expand. Accordingly, close eye should be kept on whether a development falls within the current definition.
The biggest change for high-risk buildings is the procedural requirements, such as the new building control body known as the Building Safety Regulator which overseas and deals with the approval process, certification, changes during constriction and appeals. The BSA also requires a “golden thread” of information in electronic form to ensure the building at all stages is compliant with building regulations as well as to identify and mitigate any safety risks.
You should note that as part of these responsibilities, a “duty holder regime” is expected to come into force. This will be a requirement for all those who hold the position of duty holder (such as principal contractor, principal designer, contractor and designer) to be competent, meaning they have the essential skills, knowledge and experience to undertake their role. Details of what is expected of this duty holder and their level of required competence are set out in guidance such as the “Duty Holder’s Fact Sheet” and the “Industry Competence Fact Sheet”.
The same duty holder regime not only applies through the design and construction phase but throughout the building’s occupation. During this period, the duty holder is referred to as the “Accountable Person”. The effect is that the Accountable Person can be an array of entities including corporate bodies. The Accountable Person is responsible for undertaking risk assessments at least once a year, taking all reasonable steps to prevent building safety risks materialising, preparing safety case reports, taking steps to reduce and mitigate incidents, and retaining and updating prescribed information. Most significantly, this removes the role and need for a Building Safety Manager, replacing it with professional consultants who can advise.
The effects of the above are that the contractors and developers must ensure that duty holders are competent in order for them to effectively undertake their role as the Accountable Person and that information throughout the building and development’s lifecycle is correctly and sufficiently retained. These changes are expected to be implemented within the next 12 months.
It is worth noting that the obligations imposed by the BSA do not only extend to contractors and developers but also to residents. High risk building residents or owners of such units must not act in a way that creates significant risk, not interfere with safety equipment in common parts of the building and comply with an Accountable Person’s request relating to its duty to assess safety risk and prevent harm.
4. Remediation Costs
The BSA also deals with the liability for the cost of putting right certain defects in certain buildings that are at least 11 metres high or have at least 5 storeys and contain at least 2 dwellings which have been built or converted in the last 30 years. This also extends to any new works completed after the relevant sections of the BSA come into force if any of the defects cause a building safety risk. A building safety risk is defined as the risk to the safety of people in or about the building which arise from the spread of fire or the collapse of the building or part of it. The BSA sets out who is responsible for these defects. The expectation of the BSA is that developers, contractors, manufacturers of defective construction products and freeholders/owners of buildings will be expected to meet the remediation costs.
The BSA introduces protections for leaseholders as it relates to remediation costs under certain leases. It provides that leaseholders in a relevant building (generally those at least 11 metres high or at least 5 storeys containing at least 2 dwellings) are not liable through a service charge if a relevant landlord is responsible, in the sense of being the person who undertook or commissioned the construction or commission of the building with a view to granting leases or the landlord is associated with the person responsible for that work. If the defects are not particularised from the original construction, the landlord must have undertaken or commissioned works relating to that defect.
Even where a landlord is not responsible or connected to the person responsible for the defect, the BSA provides that if the landlord has sufficient net worth at the relevant time, certain leaseholders will not be required to pay a service charge contribution for rectifying the defects.
There are further exemptions, for those with qualifying leases, from paying service charges depending on the value of the qualifying lease at the relevant time. In other cases, lessees will only be responsible if the service charge does not exceed the permitted maximum amount laid out in the BSA. The Act also introduces annual limits of one tenth of that permitted maximum sum. Presently the permitted maximum sum for properties in Greater London is £15,000 and £10,000 elsewhere in the country. However, if the value of the qualifying lease is between £1,000,000 and £2,000,000 then the permitted maximum increases to £50,000. If the flat is valued at over £2,000,000 the permitted maximum amount increases £100,000.
There is complete bar from the landlord being able to claim for cladding remediation costs via a service charge where the tenant has a qualifying lease.
Landlords cannot claim through a service charge, legal costs, and other professional fees in relation to liabilities incurred as a result of the defect. Further, landlords are prevented to seeking to recover any shortfall from other tenants who are not protected by the exclusions and limitations contained with the BSA.
The BSA has introduced a variety of significant changes, the true extent of such changes will be seen once implementation begins and secondary legislation is passed. Although seemingly daunting, the gradual and staged approach for the implementation of the significant changes introduced by the BSA means that all levels of the construction and development industry, with the right guidance, can be prepared.
If you or your organisation would like further information on any of these changes and how it will affect you, please contact Robert Ryall.