Building Safety Act 2022 becomes law

On the 28th of April 2022, nearly five years on from the tragic events of Grenfell as well as countless amendments made to the bill following debates in parliament, the Building Safety Act 2022 has finally received the Royal Assent and become an Act of Parliament.

So, what does this mean for the construction industry? We explore some of the fundamental changes to the approach of building safety and how the implementation of the new Act will impact stakeholders involved.

Remediation costs

From the outset, The Secretary of State of levelling up, Michael Gove made a clear commitment to “protecting leaseholders and tenants from the costs of remediation as far as possible”, placing the onus firmly on developers, manufacturers and suppliers and it is evident that this threat has partially been made good by the Act.

In April this year, the Government invited 53 of the largest house builders to sign up to a Building Safety Pledge. This Pledge will require them to remediate life critical building safety defects on all buildings over 11m constructed by those developers over the last 30 years and clauses within the Building Safety Act include legal powers to block those developers that refuse to engage with the Pledge from further development by potentially refusing planning permission.

Leaseholders in properties covered by the Pledge will not be expected to pay for such remediation works as these developers will need to pay for costs in full. Any sums previously received from the leaseholders will have to be reimbursed. Orphan buildings, being properties that do not fall under the Pledge or buildings where the owner cannot be traced or cannot pay for remediation costs, may well have to be remediated through an extended building safety levy, set up by the government which will be charged on all new residential buildings that require building control.

Extension to limitation period

Currently, occupiers of a dwelling looking to take legal action against all involved with the construction of the dwelling, including use of defective products on a home that has since been found unfit for habitation, can bring a claim for a period of six years following completion of construction under the Defective Premises Act 1972. Under the Building Safety Act, that period will be extended to 30 years retrospectively and 15 years prospectively.  This is much longer even than if the occupier has a deed of contract with the relevant parties which typically allows 12 years from practical completion of the dwelling.

Whilst it may seem that building owners and landlords are better placed as the amendments allow them to take retrospective legal action, the practical element of bringing claims forward may not be so straightforward. Records will not be easily accessible over such a long period of time and proving manufacturers used faulty cladding will be a costly and arduous procedure.

Contractors, designers, and developers, however, will be open to a wave of historic claims that were previously time barred. Companies in the building sector will need to notify their insurers of circumstances from which future claims may arise. With Professional Indemnity Insurance rates increasing significantly in price already, smaller businesses will no doubt continue to suffer. Insurers going forward, will also be assessing very carefully, whether they are willing to provide the level of cover required in a bid to mitigate their own risk and any future decision to stop providing cover in respect of cladding issues will essentially pull the safety net from under the industry, leaving businesses precariously placed and open to even more challenges.

Accountable Person and the removal of the role of Building Safety Manager

The role of the Building Safety manager was created to work alongside the Accountable Person to manage higher-risk buildings. This has now been scrapped by the government as the expectation was that costs of having such manager would be paid by leaseholders through a building safety charge and would burden leaseholders further unnecessarily.

This will place a further burden on Accountable Persons who will be expected to be pro-active in approach to fire and safety risks, register the higher-risk building with the Building Safety Regulator prior to occupation and to apply for the new Building Assurance Certificate as well as keep on top of day-to-day tasks. One really does question, who would be brave enough to step up into the role with so much to lose and very little to gain. Nonetheless, it’s a headache for the industry as a whole and will need to be adhered to.

What’s next?

Despite the Bill becoming law on 28th April 2022 and being partially in force, many of the provisions will not come into force until twelve to eighteen months as there is still a requirement to construct secondary legislation such as Regulatory Reform (Fire Safety) Order 2005. As we move forward into a new age of Building Safety, the industry should step with precaution and review their own position to see if they are placed suitably to tackle the challenges that may come their way.

Things to consider:

– Reviewing Insurance levels – Ensuring adequate cover is in place to protect against those claims which were previously time barred.
– Retaining documentation – Documents should be retained for a longer period in line with the extension to the limitation period to protect against any unwanted claims.
– Review of policies and Terms and Conditions. – Parties should consider whether their current T&Cs and policies are adequately drafted to protect against the increased risk.

Finally, it is imperative for the industry to stay up to date and informed on changes to the Act. The government have drawn up a transition plan which can be found here. This is a good starting point to keep up to date with how the Act develops through time but if you have any specific queries, please get in touch with our construction team for expert advice.