The Building Safety Bill – what’s new?

Section 38 Building Act allows civil claims for breaches of the building regulations which cause physical damage. It has never been brought into force. However, the government has confirmed that this is about to change. In addition, the bill extends the limitation period from six to 15 years. This will expose developers, consultants and contractors to liability which does not currently exist and for longer than normal. 

Section 1 Defective Premises Act 1972 (DPA) applies to the carrying out of work in connection with the provision of a dwelling and imposes a duty to carry out the work in a workmanlike/professional manner and to use proper materials. When the work is complete the dwelling must be fit for habitation.

The limitation period for bringing a claim for breach of section 1 is currently six years from the time the dwelling is completed or from the completion of any further work in respect of the defects. This will be extended retrospectively to 15 years from the date the right of action accrued. If the bill receives royal assent in 2022 potential claims dating back to 2007 which were out of time may become viable again. However, if a fair trial is not possible because of the lapse of time there may be grounds for arguing that the claim be dismissed under the Human Rights Act 1998.

Those involved with the provision of any dwelling (not just those within higher risk buildings) should take steps now to review document retention policies to ensure that any further information which might be useful if faced with such a claim is not destroyed. Developers should also consider limitation periods in new appointments and building contracts.

The DPA will also be extended to include refurbishment work and there will be a new duty on those who do any work on a building which contains a dwelling to ensure that the work does not render the dwelling unfit for habitation. There will be a 15-year limitation period for bringing a claim for breach of this new section.

In this article we flagged that further changes were likely following the government’s consultation on ways to improve fire safety during summer 2020. In its consultation response the government committed to a number of changes including a requirement for the responsible person (RP) to assess the competency of, and only appoint someone who is competent, to carry out or review a fire risk assessment; to take reasonable steps to identify themselves to all other RPs (and any accountable person in respect of a higher risk building) where they have duties in respect of the same building and to take reasonable steps to share all relevant fire safety information with incoming RPs. These changes, amongst others, are set out in the bill.

The bill extends the concept of dutyholders which many are familiar with in the context of the Construction (Design and Management) Regulations 2015 (CDM) to building safety and the building regulation regime.

Details are set out in the Building (Appointment of Persons, Industry Competence and Dutyholders) (England) Regulations (published alongside the bill).  

The provisions are strongly influenced by CDM drafting and impose new obligations on clients, designers and contractors alike. For example, clients will be expected to plan, manage and monitor projects to ensure compliance with specified parts of the building regulations. They will also have to appoint a designer and contractor with control over the design and construction phases respectively to take the lead with meeting building regulation requirements (they can be the same as the CDM principal contractor and principal designer). Clients must also take ‘reasonable steps’ to satisfy themselves that any appointee is competent.

Competence includes having the skills, knowledge, experience and behaviours necessary to fulfil the relevant role on the project in question. Organisations will be expected to have the organisational capability to carry out a role. The British Standards Institute (BSI) has developed a new code of practice setting out the core safety criteria for built environment competence frameworks (published earlier this year) and is developing accompanying Publicly Available Standards for the proposed new roles of principal designer and principal contractor. These should help clients check the competence of proposed new appointees.

There is now greater clarity as to which buildings which will be subject to the enhanced safety regime. Buildings 18m or more in height or 7 or more storeys which include 2 or more residential units will be considered to be higher risk under the bill. However, basements and certain plant space are still excluded from height calculations.

Care homes and hospitals, which were previously excluded, will now be classified as higher risk buildings for the purposes of work and refurbishment (but not during occupation).

New buildings which fall within this definition will eventually be subject to the new enhanced regime during the construction and occupation phases. Existing buildings will be brought within the new regime on staged basis after the new regime is in force (according to projected government timelines this is likely to be after October 2023) and building owners will be expected to ensure that the new occupational requirements are complied with.

The proposal for new gateways remains. 

Changes to planning requirements to implement gateway 1 have been in force since 1 August 2021. Unless an exemption applies, developers have to submit a fire statement setting out fire safety considerations specific to their development. This statement must accompany a relevant application for planning permission if the project involves the provision of a relevant high rise building, the development of an existing relevant high rise building or development within the curtilage of a relevant high rise building. The statement needs to be in the form published by the Secretary of State or one with “substantially the same effect”. The Health and Safety Executive (HSE) is the statutory consultee for these planning applications until the Building Safety Regulator is up and running.

Information about gateways 2 and 3 is still limited although the Impact Assessment expands on some of the documents previously mentioned (in the draft Impact Assessment) as being required at both stages. For example, at gateway 2 a developer will be expected to submit a ‘statement of approach’ “setting out the guidance and standards utilised for each of the applicable building regulations with rationale to demonstrate building regulations compliance … [and where] these are not met in full, setting out the alternative approaches adopted.” (paragraph 57, Impact Assessment).

Previously, gateway 3 (before occupation) had anticipated that the client, principal designer and principal contractor would co-sign a declaration that, to the best of their knowledge, the relevant building complies with building regulations. Interestingly, this now appears to have changed with a shift towards the client alone signing the declaration. It seems that the principal designer and principal contractor will be expected to confirm they have met their dutyholder requirements.

More information about proposals for a statutory change control process during the construction phase has been provided. This includes clarification that there will be two levels of regulatory oversight by the Building Safety Regulator – major and notifiable changes. Major changes will require regulator approval before they can be implemented whereas notifiable changes will need to be notified to the regulator and should not be implemented until a prescribed period has passed. If the regulator decides further information or action is required this will need to be complied with before the notifiable change can be implemented.

In February this year the government announced it intended to recover a contribution towards the funding it has provided/is continuing to provide to fund the remediation of defective cladding on high rise residential buildings. The proposals included the introduction of a new residential developer tax and what was described as the ‘gateway 2 levy’. You can read our initial thoughts on those proposals here.

The government consultation on the new residential developer property tax is now closed and its response is awaited. You can read our thoughts on the government’s proposals here.

The consultation on the proposed gateway 2 levy is currently underway (open until 15 October 2021). Plans include a requirement for ‘clients’ working on developments of new higher-risk buildings to pay a levy as part of obtaining gateway 2 approval (i.e. the right to start works on site). Options for calculating the levy include by reference to square footage (a familiar method for calculating overage and rent for example) or on a per unit residential basis. Whilst the consultation gives clients a right to challenge the amount of the levy chargeable on a particular project this element in particular needs careful further thought. There does not appear to be any timeframe for a response to a challenge at the moment – something which is crucial if works cannot start on site until the levy has been agreed and paid (or at least part of it if a payment schedule is in place).

The government is aware of the potential for clients to be liable for both the new residential developer property tax and the gateway 2 levy and is seeking views on this overlap.

The bill introduces the concept of the "principal accountable person" to address circumstances in which there is more than one accountable person for a higher risk building. Where this is the case, the principal accountable person will be the accountable person who holds a legal estate in possession in the structure and exterior of the building except so far as included in a demise of a single dwelling or premises to be occupied for the purposes of a business. 

The bill now includes general cooperation and coordination clauses designed to address the relationship between accountable persons. The intention is to provide clarity over where responsibility lies in buildings where the ownership structure results in there being multiple accountable persons.

Certain duties of the principal accountable person have also been amended since the draft bill was published. For example, an offence will be committed if a higher-risk building is not registered prior to occupation – the previous requirement was simply that an application for registration had to be submitted before the building was occupied.

The bill, and the accompanying explanatory notes, make it clear that responsibility for meeting the statutory obligations for occupied higher-risk buildings lies with the principal accountable person. The principal accountable person must be satisfied that the building safety manager has the relevant skills, knowledge and experience to assist them in meeting their obligations as dutyholder under Part 4 of the Bill (i.e. overseeing systems and processes for building safety). The principal accountable person can themselves be the building safety manager but must notify the regulator of this and consult with any other accountable persons.

The building safety manager's obligations will be governed by the terms of their appointment by the principle accountable person. The building safety manager will be appointed to carry out such duties relating to the planning and monitoring of the functions set out in Part 4 of the bill (e.g. to manage the building in accordance with the safety case report and to work with the principal accountable person to manage building safety risks appropriately).

The draft bill previously required an accountable person of a higher risk building to prevent a ‘major incident.’ This language has been replaced by obligations to prevent a ‘building safety risk’ from materialising.

The bill no longer provides for regulations to be made requiring the accountable person to ensure that there is adequate buildings insurance against loss caused by a building safety risk. However, it provides that regulations may be made requiring ‘prescribed information’ to be submitted to the regulator, residents and others – this may include evidence of insurance.

Obligations on residents to keep ‘residents items’ (i.e. electrical / gas installations) in repair and proper order have been removed from the bill and replaced with a general obligation on residents not to act in a way that creates a significant risk of a building safety risk materialising. This includes refraining from interfering with relevant safety items (i.e. fire doors). There is a compliance regime in place to prevent contravention through which, if appropriate, a resident can be asked to make payment to the principal accountable person.

Terms relating to the payment of the new building safety charge will be implied into leases granted for a term of 7 years or more under which a tenant is liable to pay a service charge (certain social housing tenancies are excepted).

In an attempt to offer protection to leaseholders the bill requires landlords to take ‘reasonable steps’ to obtain money from available grants or from pursuing third parties (i.e. contractors, consultants, guarantors, latent defect insurers) before passing remediation costs through the service charge. What might constitute ‘reasonable steps’ has, unhelpfully, not been defined. Landlords should however expect to have to dust down collateral warranties, third party rights and latent defects insurance policies once the provision comes into force and investigate if claims are still within time and/or parties are worth suing in the first instance.

It has been reported in the press (4 September 2021) that the government may be considering a ‘polluter pays’ approach which would force companies that construct dangerous housing to pay for making them safe. It is possible that this proposal might be tabled as an amendment to the bill.

In February this year the government announced that it would introduce long term loans for leaseholders facing bills to replace cladding on buildings less than 18m tall. The intention was that no leaseholder would have to pay more than £50 a month towards the removal of unsafe cladding. The announcement was criticised at the time for being limited to cladding costs and for leaving leaseholders exposed to potentially far greater costs if, for example, defects with fire stopping and/or insulation required rectification. There is no mention of this in the bill.

The government has also decided not to take into account all of the recommendations of the Ministry of Homes Communities and Local Government Select Committee which was tasked with scrutinising the draft version of the bill. For example, the Committee recommended:

• that the bill include a statutory requirement that all those involved with the design and construction of higher risk buildings be subject to a system of third-party accreditation and registration. The government is currently proposing third party accreditation for the principal contractor, principal designer and building safety manager roles, which the BSI is developing. Competence requirements for others involved with the design and construction of new higher risk buildings will be industry led with support from a new Industry Competence committee to be set up by the Building Safety Regulator;
• that information about the gateways be published alongside the bill to provide much needed clarity. As mentioned earlier, that information is still lacking and may not be available until committee stage, hampering efforts to plan ahead;
• that dutyholder choice be removed from the building control system and replaced with a system of independent appointment. The government intends to retain the element of choice pointing to the fact that proposed new measures to improve the competence and oversight of the building control profession as a whole should render this un-necessary; and
• that the government include a legislative requirement for residents’ groups in higher risk buildings with representatives from every type of resident. The government has resisted this on the grounds that it should be entirely voluntary and left to individual choice.

The government hopes the bill will receive Royal Assent within 9 to 12 months of it being laid before Parliament (so by July 2022 at the latest). As some elements are contentious (the building service charge and recovery of remediation costs in particular) that timescale seems ambitious and may slip.

After Royal Assent a raft of secondary legislation, providing the detail, will follow. The government’s timescale for this is 12 – 18 months. If all goes according to plan the new regime could be in force sometime between April and October 2023.

Clearly this is some way off, however, the sector is still being encouraged to continue to get to grips with many proposed changes. Certain efforts are already underway, for instance, in respect of competence requirements and establishing the ‘golden thread’ of information.