What is the impact of the Building Safety Act 2022?

The Building Safety Act 2022 (BSA) was introduced in response to the Grenfell tragedy and Dame Judith Hackitt’s subsequent review of Building Regulations and Fire Safety. But contrary to common thought, it isn’t just about cladding and its impact is far more reaching than to just tall buildings.  As a result, we have seen the BSA’s impact across the wide range of practice areas that we offer to both businesses and individuals.

In this article, we break the key parts of the BSA (introduced to date) into three parts and give an indication of just some of the impacts the BSA is having and is likely to have, and why therefore why our clients need to be aware of it.

Part 1 – All Buildings in England

The BSA has introduced a wide set of changes which affect all buildings in England:

• Enforcement powers for building control have been introduced – breach of building regulations is now a criminal offence and building control approval will now also lapse if development is not commenced within three years
• Limitation periods for civil liability (i.e. the period of time in which a claim must be made) for defective premises have been significantly extended
• There are new “dutyholder” requirements imposed on all developments if planning permission is required. Dutyholders will be the client commissioning the development and there must be a principal designer and contractor who will also be dutyholders. The roles are similar to the roles under the CDM Regulations but the dutyholder-role focuses on compliance with building regulations and dutyholders will have their own duties dependent on their role
• The BSA has also introduced Building Lability Orders and Remediation Contribution Orders. The rationale behind these is to address the issue of developer-SPVs (special purpose vehicles) being wound up following completion of a development so that the developer-entity has no long-term liability for the developments which it has undertaken. Under these orders, a party with a claim for what is known as a “relevant liability”, which may be something resulting from a building safety risk or injury or damage caused by a building owner’s failure to fix defects in a property, may now be able to recover financial damages from those responsible and entities associated with those responsible. We have already seen this concept tested in case law and so developers and those associated with them must be aware that they could be on the hook under these types of claims.  Clients engaging in corporate transactions should consider ensuring that there is a robust set of warranties and thorough disclosure of any potential liabilities
• There is a tighter regime for fire safety, especially for buildings with at least two residential units
• Looking forward, new build home warranties will be extended to 15 years, and the New Homes Ombudsman has been created to resolve disputes over new homes. Consultations are ongoing over the creation of a Building Safety Levy payable on new residential developments.

The controls and requirements introduced by the BSA are important to ensure building safety.  However, this will likely come at a financial cost for any building owner who must ensure that they are compliant or else face criminal liabilities.  Those associated with developers e.g. group companies, and company Directors need to be aware of their potential liabilities too.  All of these changes also emphasise the importance of having carefully considered and drafted construction documentation which comprehensively addresses the new regulations and requirements introduced by the BSA.

Part 2 – “Relevant Buildings”

“Relevant buildings’ are in most cases residential or mixed use buildings at least 11m tall or with five or more storeys.

The focus of the BSA in respect of relevant buildings is to limit the landlord’s ability to recover service charges for the cost of remedying “relevant defects”’ and shifting the costs burden from tenants to those considered capable of paying.

Relevant defects are generally defects that already existed in a building on 14 February 2022 which cause a risk of the spread of fire or collapse of the building.

If the landlord as at 14 February 2022, or someone associated with them (like a group company), was responsible for a relevant defect, the landlord may not be able to recover service charges for remedying the defect. Even if the landlord was not responsible as they acquired the building after a defect was carried out, their ability to recover service charge can be removed or capped.

The changes are likely to most impact landlords who own buildings constructed before 14 February 2022.  If landlords are unable to recover remediation costs and must foot the bill themselves, this could impact the landlord’s solvency.  Anyone associated with a landlord of a relevant building must also be aware of their potential liability for remedying defects.

The BSA introduced a fiendishly complex certification process to determine the level of service charge protection that a tenant qualifies for – unsurprisingly, this has added a layer of red tape to residential conveyancing transactions, which anyone involved in the sale of a lease should bear in mind.  This certification process is likely to complicate matters even further for sellers who are acting as executors administering estates and therefore possibly with limited knowledge of the lease that they are selling.  For landlords, the certification imposes a further administrative burden on them.

Part 3 – Higher Risk Buildings

Higher-risk buildings, or ‘HRBs’ are residential or mixed use buildings at least 18 tall or with 7 or more storeys.  HRBs are subject to the tightest regulatory regime. The new Building Safety Regulator (BSR) is part of Health and Safety Executive and is now the Building Control Authority for HRBs.

When building a new HRB or carrying out major work to an existing HRB, BSR approval must be obtained when obtaining planning permission, before starting work, and once work is complete before the HRB is occupied.

Any failure or a delay in obtaining approval from the BSR at one of the required points, may significantly impact any works involving a HRB. Development financing arrangements usually include specific “milestones”, and planning permission and prior approval consents usually contain specific timing conditions relating to commencement or completion of works – these timings are at risk if there is any delay in the BSR approval process.  Each application to the BSR will also incur costs.

Once a new HRB can be occupied, and for existing occupied HRBs, there is a much tighter building safety regime – most of the obligations fall on the ‘accountable persons’ (people responsible for repairing the common parts) and the ‘principal accountable person’ (the person responsible for repairing the structure and exterior of the building). Principal accountable persons must register the HRB with the BSR, pull together the ‘golden thread’ of information about the building’s design and construction, and engage with residents and managing safety risks in the building.

Those involved with HRBs (which isn’t limited to the building owner) must be familiar with their new duties and responsibilities and that a failure to comply will be a criminal offence.

Whilst the changes brought about by the BSA appear complex and burdensome, we cannot forget the reason why the BSA was introduced and the recent update on the Grenfell tragedy inquiry emphasises the need to ensure building safety in the UK.  If you would like to talk to one of our lawyers as to how the BSA may impact you, please contact Nicole Priestly or Guy Evans.