Nearly five years on from the Grenfell Tower tragedy, and after nearly a year of debate and amendments, the Building Safety Bill yesterday received Royal Assent and has become an Act of Parliament. At 264 pages long it is not, on any analysis, a light read, and that is before the secondary legislation that will enable a number of the provisions to be put in place over the next 12-18 months is considered. Fear not however, as we have set out below the key provisions implemented by the Building Safety Act.
1. Costs of fire safety remediation
Perhaps the biggest headline grabbing element of the post-Grenfell "cladding crisis" has been the high costs of remediating existing buildings falling to leaseholders. The initial Government proposal that leaseholders would pay for remediation through a loan scheme was reversed. Earlier this year, the new minister for the Department for Levelling Up, Housing and Communities, Michael Gove, announced that house builders would have to pay for such remediation, under threat that any house builder that failed to do so would not be able to obtain planning permission or building control approval.
That threat has been made good in the Building Safety Act, which would enable the Government to prevent any house builder from building homes "for any purpose" connected with "securing the safety of people or improving the standard of buildings". However, whether this power is actually used will remain to be seen. The Government has invited 53 of the largest house builders to sign up to a "Building Safety Pledge" which will require them to remediate "life critical" building safety defects on all buildings over 11m constructed by those developers over the last 30 years.
In the meantime, leaseholders in properties covered by the pledge will not be expected to pay for such remediation works, and the developer will need to pay for the costs in full and without an application to the previously developed ACM Fund / Building Safety Fund. Any sums previously received from the funds will have to be reimbursed.
For those leaseholders in properties not covered by the pledge, but where the current building owner has the funds to undertake remediation, the owner will be required to undertake those works without charge to the leaseholder. For any other property not falling under the pledge or with a building owner not able to pay for remediation costs (so-called "orphan buildings"), the Government will use money from the building safety fund to remediate cladding costs. The leaseholder will be expected to bear other building safety costs up to a cap set initially at £10,000 outside of London and £15,000 within London.
2. Establishment of Building Safety Regulator, dutyholders and accountable persons
Under the Building Safety Act, a new Building Safety Regulator will be established to oversee the management of "higher risk" buildings (i.e. those over 18m high). The regulator will be established through secondary legislation in due course.
Part of the remit of the Building Safety Regulator will be to oversee the new "dutyholder" (construction phase) and "accountable persons" (occupation stage) mechanisms put in place to ensure the ongoing maintenance and safety of such higher risk buildings. Part of the obligations on those persons will be the maintenance and management of the "golden thread" of building information.
During the planning and construction process for all higher risk buildings, three new "Gateways" have been developed that must be passed before a building can be occupied:
- Gateway 1 - Planning. This came into effect on 1 August 2021 and required those seeking planning permission for a higher risk building to submit a fire statement for approval as part of the planning process.
- Gateway 2 – Pre-construction. At this stage applicants will have to demonstrate how the proposals comply with building regulations requirements - including information about how the new dutyholders, competence, golden thread and reporting requirements will be met. This is a "stop/go" point and, if a developer is unable to demonstrate compliance with the above, it will not be able to proceed with construction.
Further, payment of the new building safety levy (see below) must be made at Gateway 2.
- Gateway 3 – Post-construction, pre-occupation. The completion/final certificate phase at which handover of the relevant documents to both the regulator and the building owner will take place. If approved, the regulator will issue a completion certificate and the high rise residential building will be registered on the regulatory system. A building cannot be occupied until the Gateway 3 process has been completed satisfactorily.
4. Defective Premises Act 1972 - Extension of Limitation
At present, the Defective Premises Act enables the occupier of a dwelling to pursue a claim against anyone involved with the construction of the dwelling in the event that the dwelling is "not fit for habitation", up to a period of six years following construction. Under the Building Safety Act, that period will be extended to 30 years retrospectively and 15 years prospectively and will now also bring the manufacturers of construction products within the scope of the act, should its products fail to comply with new regulations covering construction products.
5. New Home Warranties
Developers of new build homes will be required to provide buyers with a new home warranty lasting for 15 years. Secondary legislation may be brought forward setting out the requirements for the cover that must be provided.
6. New Homes Ombudsman Scheme
Provisions in the Act will require the Secretary of State to make arrangements for there to be a New Homes Ombudsman scheme, to which developers must belong, to resolve complaints from homebuyers about developers.
The New Homes Quality Board is set to put in place a New Homes Ombudsman Service, which will be run by The Dispute Service Ltd and is expected to launch in Q2 of 2022. This may be adopted by the Secretary of State as the scheme pursuant to the Act. If adopted in its current form, we anticipate that the Ombudsman will be able to order compensation for a consumer of up to £75,000 - albeit full details of the scheme are yet to be released. We are in regular contact with the New Homes Quality Board (NHQB) and organise regular joint events for affected clients. For more information on these, or on the New Homes Ombudsman, contact Rob Bridgman.
7. Building Safety Levy
The Building Safety Act gives powers to the Secretary of State to bring in a new building safety levy, designed to contribute to the cost of remediating historical building safety defects. The levy must be paid by developers at the Gateway 2 stage and will be payable in addition to the Residential Property Developer Tax, which came into force from 1 April 2022. The details of the levy, including who is liable to pay and the levy rates, will be confirmed in secondary legislation.
Whilst the Building Safety Act became law yesterday, a number of the provisions (for example the Building Safety Regulator Regulations, the New Homes Ombudsman Scheme and the New Home Warranty Regulations) will not come into force until secondary legislation has been implemented. There is a plan for this legislation to be introduced over the next 12-18 months, and we will keep you updated as and when that legislation is passed.
If you have any questions about this, please get in touch.