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Legal changes

Set up to make provision about the safety of people in or about buildings and the standard of buildings, the Act will tackle a number of key issues.

As the Building Safety Bill receives Royal Assent and becomes the Building Safety Act 2022 (“the Act”), we take a look at some of the latest changes together with some of the key provisions of the Act as a whole.

Remediation works and removal of cladding

Michael Gove’s letter sent to the residential property developer industry in January this year set out a clear agenda, with commitments that developers are expected to make to “ensure the industry that caused the cladding problem pays to fix it”. Specifically, property developers will be expected to agree a clear and fully funded commitment to:

  • make financial contributions this year, and in subsequent years, to a dedicated fund to cover the full outstanding cost of remediating unsafe cladding on 11m to 18m residential buildings (currently estimated to be £4 billion);
  • fund and undertake all necessary remedial work to buildings over 11m that they have played a role in developing (both 11m to 18m and those over 18m); 
  • provide comprehensive information on all buildings over 11m which have historic safety defects and which they have played a part in constructing over the last 30 years. 

The consequences for those developers failing to comply with the above include the restriction on developers' access to Government funding and future procurements to undertake the remedial works. The Government has also threatened the use of planning powers, the pursuit of companies through the courts, or if necessary, imposition of a legal solution, should the industry fail to take responsibility.

Prohibition of prescribed developers

The latest amendments to the legislation provide the Secretary of State with the power to prohibit developers meeting a “prescribed description” from carrying out development works. It is currently unclear how this would work in practice and in what circumstances this might be applied. There are currently no draft regulations dealing with this provision. However, the Act does expressly reference the failure to sign up to Building Industry Schemes as a potential criterion for such a prohibition.

Since most of the offending residential developers are likely to be on the smaller end of the spectrum rather than household names, they are likely to conduct business under corporate special purpose vehicles who transact on one development project only. For prohibitions to be successful, more sophistication will be needed to track those involved in the operation and management of these businesses and bar them from being involved in successive development schemes.

New Provisions: Remediation Orders and Remediation Contribution Orders

The First-Tier Tribunal will be given the power to make Remediation Orders requiring a relevant landlord to remedy specified relevant defects (anything arising from construction or conservation works in the last 30 years that causes a building safety risk) in a specified relevant building by a specified time.

Remediation Contribution Orders are similar orders from the First-Tier Tribunal requiring an organisation to meet all or part of the costs of works undertaken to remedy relevant defects. The key feature of such orders is that they can be made, not just against current landlords, but also against previous landlords, developers and other companies and directors linked with landlords or developers.

New Regulator and Regulatory Regime

The Act creates a new Building Safety Regulator (“the Regulator”) which will have a central role in the new stringent regulatory framework for higher-risk buildings. Higher risk buildings are buildings of at least 18m or 7 storeys in height containing at least two residential units (the current draft regulations under the Act would also bring some hospitals and care homes within the scope of higher-risk buildings).

This new regulatory regime represents a fundamental change in the approach towards responsibility for high-risk buildings, removing them from the scope of approved inspectors and local authority building control teams, and centralising control under the new Regulator. The Regulator will be part of the Health and Safety Executive (“HSE”) and will cover both fire and structural building safety risks.

The Act creates criminal offences for failures to meet the requirements of the new regulatory regime – with criminal liability potentially attaching to both companies and individuals (such as company directors). These offences carry an unlimited fine and, in some cases, the potential for up to two years’ imprisonment.

Golden Thread and Gateways

A key element of the Act is the concept of the “Golden Thread” of information that runs throughout the construction process and ensures safety and compliance at all stages. This concept is embodied by a new system of three “Gateway” points. Those responsible for construction of such buildings will have to demonstrate that the buildings safety requirements are met at each gateway before the construction project can move onto the next phase.

  • Gateway One: Has already been in force since August 2021 (having been implemented through secondary legislation). This requires information to be submitted to the Local Planning Authority which demonstrates that fire safety requirements have been considered and incorporated into the proposals. Once established, the Regulator will act as a statutory consultee for all planning applications relating to a higher-risk building.
  • Gateway Two: Replaces the building control deposit of plans stage. It provides a “hard stop” and construction cannot begin until the Regulator is satisfied that the design meets the functional requirements of the building regulations. The aim is that Gateway Two will be less of a “tick box exercise” than the building control process and will be about holistically and realistically addressing and managing the safety of the building.
  • Gateway Three: Takes place at completion of the construction works and only once it is satisfied can the building be registered with the Regulator for occupation and completion certificates issued. At this point, all “golden thread” documentation must be provided to the Accountable Person by dutyholders to help them manage building risks going forward.

Whilst extremely important and necessary, these requirements pose significant additional burdens to residential property developers at a time when they are experiencing unprecedented issues arising from Brexit, Covid and large-scale fluctuations in the cost and availability of materials and labour.

Accountable Person and Principal Accountable Person

In addition to the existing “Responsible Person” under the Regulatory Reform (Fire Safety) Order 2005, the Act introduces an additional “Accountable Person” dutyholder for higher-risk buildings. This is an individual or corporate entity that holds a legal estate in possession in any part of the common parts of the building (with some exceptions).

The Accountable Person will be responsible for assessing and managing building safety risks on an ongoing basis and for demonstrating to the Regulator, via a “Safety Case Report”, how this will be achieved.

If there is more than one person meeting the “Accountable Person” definition for a given building, then one of them will be the “Principal Accountable Person” with the primary responsibility. In the event of a dispute, the First-Tier Tribunal can make determinations as to who the relevant Principal Accountable Person is for any given building.

Amendments to the legislation introduced by the House of Lords removed the provisions originally requiring the Accountable Person to appoint a competent “Building Safety Manager” to carry out many of the day-to-day functions of managing building safety risks. The relevant duties which were to be assigned to the Building Safety Manager will remain with the Accountable person. This is understood to derive from concerns that the Building Safety Manager requirements were too rigid and could result in significant additional expense being passed on to leaseholders.

Unanswered questions and outstanding issues

Questions about exactly how the Regulator and the Gateways system will function in practice remain. Although the key principles have been settled now that the Act has received Royal Assent, many of the practical and technical issues that will affect practitioners and clients will be contained within the various Regulations that will be made under the Act. Whilst the Government has published draft Regulations, it seems likely that these could still undergo further changes and redrafts even now the Act itself has become law. Additionally, much will rest upon the attitude and approach of the Building Safety Regulator – something which all practitioners will have to wait and see for themselves.

For further information on the Building Safety Act or to discuss any issues you may have with regards to construction, property or social housing then contact our construction solicitors who will be more than happy to speak with you.