Following the tragic Grenfell Tower fire in June 2017 a number of government inquiries were established to consider, amongst other things, the circumstances leading up to and surrounding the fire and the wider building and fire safety regimes in place at the date of the fire. The Hackitt Report, which reviewed the adequacy of the building regulations and fire safety regime, was published in May 2018.
The Building Safety Bill (the 'Bill') is intended to implement the recommendations of the Hackitt Report and introduces a comprehensive new building safety regime governing the design, construction and occupation of higher-risk buildings (i.e. a building over 18 metres, or seven storeys, in height and which contains at least two residential units).
The Bill will, according to the secretary of state, 'deliver the biggest changes to building safety for nearly 40 years and make residents safer in their homes' and our analysis of the key provisions of the Bill can be found here. However, it is debateable whether the Bill in its current form achieves its stated objectives and in this article we consider some of the main areas of concern with the Bill and some of the potential implications of the Bill passing into law.
Addressing previous criticism
An initial draft of the Bill was published for scrutiny in July 2020 and was subject to significant comment and criticism from diverse sources, including the House of Commons Housing, Communities and Local Government Committee. However, despite significant amendment to the draft Bill, the main criticisms of the Bill do not appear to have been addressed, in that:
- the Bill is still reliant on unpublished secondary legislation and regulation to set out details of the new building safety regime and there remains significant gaps in how the new regime will operate in practice, meaning that the impact of the Bill on the construction industry and the wider market is difficult to predict; and
- while the Bill does place an obligation on landlords to take 'reasonable steps' to obtain funding from alternative sources before passing building safety costs on to leaseholders, it is not clear what 'reasonable steps' will mean in practice. These provisions also provide no protection to leaseholders where their landlord is unable to secure an alternative source of funding. Rather, the new implied terms to leases will effectively impose a statutory obligation on leaseholders to pay for building safety works to their properties. Accordingly, we consider that it is doubtful that these provisions, even when looked at in conjunction with the proposed amendments to the Defective Premises Act 1972 and the Limitation Act 1980 to extend the limitation period for bring a claim under the Defective Premises Act 1972 from six years to 15 years, will satisfy the criticism that the Bill fails to provide sufficient protection to shield leaseholders against the cost of repairing fire safety defects identified within their properties.
It is therefore anticipated that the Bill is unlikely to have a smooth passage through parliament and will be subject to numerous challenges and/or amendment as campaigners seek to ensure, amongst other things, that leaseholders in higher-risk buildings are protected against the cost of repairing fire safety defects in their properties.
Scope of higher-risk building
The Bill empowers the Secretary of State to amend the definition of higher-risk buildings. On the basis that the building regulations have already been amended to reduce the height at which sprinklers are required in high-rise residential buildings from 30 metres to 11 metres, it may be envisaged that the definition of higher-risk buildings may be amended to align with the requirements of the building regulations.
It should also be noted that the definition of relevant buildings within the amended TCPO extends to both higher-risk buildings and educational accommodation that is over 18 metres in height. As such Gateway One (Planning) already has wider application than the wider provisions of the Bill. As such it is possible that the definition of higher-risk buildings may be extended to include other building types which have a ‘sleeping over’ aspect.
Prudent developers and/or asset owners may wish to take steps to plan for the potential extension of the definition of higher-risk buildings to guard against the consequences of a building falling within the scope of the new building safety regime at a later date.
Increase in cost and duration of projects
A number of factors within the Bill are likely to result in delays and additional costs being incurred in the development of higher-risk buildings. These factors include:
- the ‘hard stops’ on the start of work and occupation of a building inherent within Gateways Two and Three
- increased monitoring of completed work to ensure compliance with requirements of the building regulations and the requirements of the Gateway Regime
- a potential shortage of appropriately qualified and competent, personnel within the Building Safety Regulator and/or registered building inspectors to facilitate compliance with the requirements of the Gateway Regime
- incorporation of higher specification and/or non-combustible materials to minimise building safety risks
- compilation of the golden thread information
- additional fees payable to offset the cost of the Building Safety Regulator and proposed new levies / taxes on the development of higher-risk buildings.
While it is possible that some of these additional costs may be offset by a reduction in the cost of rectifying building safety defects in completed buildings, it is anticipated that any such savings will be absorbed by contractors and that the majority of the above costs will be passed on to the developers, and ultimately the purchasers and/or occupants, of higher-risk buildings.
Although the likely timeline for the implementation of the new building safety regime is extended, with the Bill not anticipated to received royal assent before Summer 2022, and with detail of all the reforms unlikely to be available until 2024, prudent developers, designers, contractors and asset owners of higher-risk buildings are likely to start to take steps to ensure that future projects are delivered in accordance with the new building safety regime.
It is therefore anticipated that significant improvements in the management of building safety risks will be delivered before the Bill comes in to force. Such improvements are likely to be reinforced by a range of other influencing factors that may drive behaviours within the construction industry in the same direction as the Bill, such as:
- organisations with a strong environmental, social and corporate governance outlook addressing the potentially discriminatory impact of building safety risks as responsible businesses requiring action
- providers of building warranties in the 'beds' market focusing on quality issues around fire safety
- the insurance market perception of risk associated with building safety risks leading to exclusions of certain risks from professional indemnity cover.
It is anticipated that the new building safety regime will drive significant improvement in the management of building safety risks, not only in higher-risk buildings, but across the whole of the construction industry. It is also anticipated that such improvements are likely to start to manifest before the Bill comes in to force. However, the implementation of the new building safety regime is likely to result in additional costs and delays being incurred in the development of higher-risk buildings and there is a risk that such additional costs will, ultimately, be passed on to the purchasers and/or occupants of higher-risk buildings.
Further to the above, the main criticisms of the initial draft Bill, regarding the lack of clarity around how new building safety regime will operate in practice and the protection of leaseholders against the cost of repairing fire safety defects in their properties, do not appear to have been addressed in the Bill put before parliament. It is therefore anticipated that the Bill is unlikely to have a smooth passage through parliament and will be subject to numerous challenges and/or amendment as campaigners seek to ensure that these criticisms are addressed.