The Building Safety Act 2022 (BSA) gained Royal Assent on 28 April 2022. It is a mammoth piece of legislation which has been (and still is being) brought into force incrementally. To mark its one year anniversary, and following the bringing into force of another raft of its provisions on 6 April 2023, we summarise where we are now and what to expect over the coming months.
- The BSA can apply to mixed use, as well as wholly-residential properties (including student accommodation, care homes and hospitals).
- While some parts of the BSA apply to buildings in the course of design and construction, other parts apply to existing, occupied buildings.
- Different rules apply to different categories of building. In particular, some provisions of the BSA apply to buildings over 18m in height, or at least seven storeys, whereas others apply to buildings over 11m in height, or at least five storeys.
- However, the BSA is not only relevant to higher rise buildings: there are numerous elements of the BSA that have wider relevance and cover all work to which building regulations apply.
- Agreements for lease being negotiated now may be affected by the requirement to gain sign-off from the Building Safety Regulator.
- The ban on carrying out development that can be imposed pursuant to the Government's Responsible Actor Scheme will prohibit commercial, as well as residential, developments.
- Many of the BSA provisions include criminal penalties for non-compliance.
Higher risk buildings vs. all buildings?
A pervasive term in the BSA is a "higher risk building" (HRB). As we reported in this insight, the definition of a HRB in England has recently been confirmed as a building that:
- is at least 18m in height, or has at least seven storeys; and
- contains at least two residential units.
During the design and construction phase only, care homes and hospitals are also included within the definition of HRBs.
As we observed in our insight in March, a different definition of higher-risk buildings will apply in Wales.
The BSA will establish a new, more stringent building control regime that will apply to the design and construction of HRBs. The secondary legislation which will implement this regime and the proposed 'Gateway' process (described below) is still awaited and is expected to be published imminently. The regime is currently expected to come into force from October 2023.
The BSA also establishes a new safety regime for occupied HRBs, which is now partially in force (see below for further details on the registration requirement).
However, the BSA is not only relevant to HRBs: there are numerous elements of the BSA that have wider relevance and cover all work to which building regulations apply.
In particular, the BSA will establish a new dutyholder regime, which is intended to ensure that all those involved in the commissioning, design, construction or refurbishment process - of all buildings to which the building regulations apply - will have formal responsibility for compliance with building regulations. This regime will be taken forward through secondary legislation - also expected imminently - and is anticipated to come into force in October 2023.
The dutyholders will mirror those appointed under the Construction (Design and Management) Regulations 2015 (CDM 2015), i.e. the Client, Designer, Contractor, Principal Designer and Principal Contractor. The BSA also provides powers to impose competency requirements on these dutyholders.
For HRBs, documents are expected to be required to support building control applications attesting to the competence of the Principal Designer and Principal Contractor.
The regime is intended to support the "golden thread" of information, with dutyholders being required to share information with the next dutyholder as the building's life cycle progresses, and with the Building Safety Regulator where applicable.
Who is the Accountable Person / Principal Accountable Person?
During the occupation phase in respect of HRBs, the dutyholder will be the Accountable Person (AP). There may be more than one AP. Each building must also have one clearly identifiable AP, known as the Principal Accountable Person (PAP). The provisions of the BSA governing APs / PAPs are now in force.
There are detailed rules governing who the AP / PAP should be. Identifying the AP / PAP is not always straightforward, particularly in ownership structures with multiple layers of leasehold tenures (perhaps with varying demises and/or repairing obligations), and/or split ownership between residential and commercial parts of a building, and/or where a management company is involved. Please get in touch if you would like us to advise who has responsibility for the AP / PAP role.
The Government released guidance on 5 April 2023 entitled Safety in High-Rise Residential Buildings: Accountable Persons.
Which buildings need to be registered with the Building Safety Regulator?
A key tenet of the BSA is that HRBs - both new and existing - must be registered with the Building Safety Regulator (BSR). The role of the BSR is being taken on by the Health & Safety Executive (HSE).
The trigger for registration of existing buildings is when the HRB is "occupied" - this is a low threshold and applies as soon as more than one residential unit is occupied.
As we reported in March following an announcement by the HSE, registration for existing occupied HRBs - of which there are believed to be around 14,000 in England - opened on 6 April 2023. We understand that the deadline for registration of occupied HRBs in England is 1 October 2023.
Regulations, which came into force on 6 April 2023, prescribe both:
The PAP must therefore ensure that it is in a position to provide the information required, and should start collating it as soon as possible. In cases where such information is not readily available, e.g. older buildings, surveys may need to be commissioned and carried out in order to obtain the information required.
The BSR must also be updated whenever the key building information changes.
From 1 October 2023, a PAP will be guilty of an offence if it allows a HRB that is not registered to be occupied. If convicted, the PAP could be subject to a fine or imprisonment or both. As we explain in more detail in our earlier alert on potential personal liability under the BSA, liability for breaches of the registration requirement will, in certain circumstances, be extended to individual directors of a body corporate.
Development - what about the Gateways and the Building Safety Levy?
During design and construction, there are three "Gateways" that HRBs must pass through:
Planning (in force from 1 August 2021).
Gateway Two – Before construction begins
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.
Gateway Three – Post construction, pre-occupation
The completion/final certificate phase at which handover of the relevant documents to both the BSR and the building owner will take place. A building cannot be registered or occupied until the Gateway Three process has been completed satisfactorily. The timing implications of Gateway Three will need to be built into Agreements for Lease.
In addition, as we reported in a previous insight, it is understood that there will be a new building safety levy at Gateway Two. The new levy is a further means of Government recouping cladding remediation costs from the construction industry and will operate alongside the Residential Property Developer Tax. Importantly, the scope of the building safety levy is now proposed to be broader than just HRBs and will cover all residential buildings requiring building control approval.
Liability for historic remediation costs
Part 5 of the BSA imposes obligations in respect of the remediation of "relevant defects" within "relevant buildings". Relevant buildings are broadly, self-contained buildings, or a self-contained part of a building in England that contains at least two dwellings and is at least 11 metres high or has at least five storeys. It is important to note that this height requirement is lower than the definition of HRBs. Relevant defects are those which would cause a risk to the safety of people in or about the building arising from the spread of fire, or the collapse of the building or any part of it.
The BSA also introduces strict limitations on the recovery of remediation costs from tenants. Tenants of qualifying leases covered by the Building Safety Pledge (which applies to eligible buildings over 11 metres) will not be expected to pay for remediation works, and the developer will need to pay for the costs in full (and without using Government funds such as the ACM Fund or the Building Safety Fund).
To be a qualifying lease, it must have been granted before 14 February 2022, be for a term of 21 years or more and oblige the tenant to pay a service charge. The dwelling must also be the tenant's only or principal home; the tenant must not own any other dwelling in the UK; or the tenant must own no more than two dwellings in the UK, apart from the qualifying lease.
Different rules apply to properties not covered by the Building Safety Pledge, depending on whether the current building owner has the funds to undertake remediation. In some circumstances where there is defective cladding, Government will use money from the Building Safety Fund to remediate. As far as other building safety remediation costs are concerned, tenants can be asked in certain circumstances to contribute, but subject to financial caps.
Importantly, the BSA further enables a landlord who is obliged to pay certain remediation costs to recover a proportion of those costs, in certain circumstances, from other landlords or the original developer who was responsible for the defects by way of Remediation Contribution Orders.
Information on the sale of certain buildings
Part 5 of the BSA aims to prevent landlords from recovering the costs of remediating existing building defects through service charge contributions from their tenants. To find out if they are protected, tenants are entitled to obtain certain information from their landlords. The format of the landlord's certificate is specified in the regulations. It covers details of any relevant defects, as well as the net worth of the landlord (and its group) as at 14 February 2022. Information may also be required from previous landlords of the building. For this reason, outgoing landlords are likely to find themselves asked by their buyer to provide these certificates on a sale of the building. If the certificate is not provided to tenants, then there are limits on the landlord's ability to recover remediation costs through the service charge.
Responsible Actors Scheme
Sections 126 to 129 BSA allow Government to set up one or more "building industry schemes" for England and bar eligible developers who are not members of that scheme from carrying out certain development.
On 24 March 2023 Government published more information about what it is describing as its Responsible Actors Scheme, which our earlier article summarised. Hot off the press are the draft Building Safety (Responsible Actors Scheme and Prohibitions) Regulations 2023, which were published on 25 April 2023 and will implement the first phase of the Responsible Actors Scheme.
The scheme is aimed at major housebuilders and other large developers who have developed or refurbished multiple residential buildings known to have "life-critical fire safety defects". Developers with an average annual operating profit in the three years from 2017 to 2019 of £10 million or higher will be eligible for the Scheme, if they meet one or more of the following criteria:
- their principal business is residential property development and they have developed or refurbished residential buildings of 11 metres and above in England in the last 30 years (other than solely as a contractor);
- they have developed or refurbished (other than solely as a contractor) multiple buildings that have been assessed as eligible for a relevant government cladding remediation scheme; and/or
- they have developed or refurbished (other than solely as a contractor) at least one residential building 11 metres and above that qualifies for remediation under the terms set out in the developer remediation contract; and they volunteer to sign the contract and join the scheme.
The Scheme may, in time, be expanded to cover other developers who have developed or refurbished defective residential buildings of over 11 metres.
Developers who are eligible to be members of the Scheme, but do not become members, will be known as "prohibited persons". Prohibited persons will be prohibited from carrying out major development in England (the "planning prohibition") and from gaining building control approval, where such approval is required (the "building control prohibition"). The definition of major development includes residential schemes that provide 10 or more residential units. It also includes commercial development creating at least 1,000 sq. m of floor space.
How does the BSA affect lease terms?
The BSA implies provisions into certain leases of premises that consist of, or include, a dwelling in a HRB.
Leases in existence as at 6 April 2023
Terms implied into the lease with effect from 6 April 2023, regardless of any provision in the lease to the contrary.
New leases granted on or after 6 April 2023
Terms implied into the lease. Parties cannot agree to vary or "contract-out" of the implied terms.
The precise terms which will be implied depend on a number of criteria, including the length of the lease. For leases of seven years or more (excluding social housing tenancies, as defined in the Act), a term will be implied which will permit the landlord to recover the cost of certain building safety measures through the service charge mechanism in that lease. This will permit recovery of things like the costs of applying for registration of the building as a HRB and preparing the building's safety case report, identifying the building's major fire and structural hazards and how they are managed. There is no implied ability to recover remediation costs / works, so the service charge provisions in the lease will determine whether these are recoverable (subject to the important restrictions outlined in the section above entitled "Liability for historic remediation costs").
If you have any questions about this article, please get in touch with Sue Ryan, Gemma Whittaker, Sean Garbutt or Megan D'Souza-Mathew.