Navigating the Building Safety Act

Posted: 28/06/2023

The Building Safety Act 2022 received royal assent on 28 April 2022, and since then has been implemented in stages, with parts yet to come into force. With the aim of improving building safety across the whole built environment sector in the UK, it introduces a regime overseen by a new Building Safety Regulator with particular emphasis on “higher-risk buildings”. This will create obligations throughout a building’s life cycle, requirements on those involved with the buildings, and an enhanced means of enforcement for breach of those requirements.

It affects those in every area of the real estate and construction industries and, consequently, it is a complex piece of legislation which the sector is continually grappling to understand. Note that, while the territorial extent of the Act covers the entire UK, we have concentrated on its application in England as this is where the core of its provisions apply with the largest practical effect.

Part 2 of the Act

The operative provisions of the Act start in Part 2, which establishes the BSR. This will sit in the Health and Safety Executive and report to the secretary of state for levelling up, housing and communities.

The main functions of the BSR include the following:

• overseeing the safety and performance of all buildings in England, including the performance of all other building control bodies and approvers;
• advising ministers on changes to building regulations;
• identifying emerging risks in the built environment;
• establishing and maintaining a register of building control bodies and committees including: the Building Advisory Committee to advise on matters connected with most of its building functions; a committee on industry competence to assist in unifying the building control profession; and a residents’ panel which the BSR must consult before revising guidance related to residents of higher-risk buildings;
• implementing and managing a more stringent regime for “higher-risk buildings”;
• assisting and encouraging competence among the built environment industry; and
• enforcing obligations under the Act.

The BSR will also have powers to authorise remedial works, cease non-compliant projects, impose measures for failing projects and replace key officers, along with responsibilities for the registration of higher-risk buildings.

Part 3 of the Act

Part 3 of the Act sets out a number of amendments to the Building Act 1984, including the definition of “higher-risk buildings”, enhanced building control profession requirements, the dutyholder regime, general competence requirements, the gateway process and enforcement processes.

Some of these elements in more detail include:

Higher-risk buildings 
Part 3 of the Act (specifically section 31), together with the Higher-Risk Buildings (Descriptions and Supplementary Provisions) Regulations 2023 (the HRB Regs) define higher-risk buildings as those which are at least 18m in height, or with at least seven storeys, and which contain two or more dwellings.

The HRB Regs state that care homes and hospitals will be higher-risk buildings but secure residential institutions, temporary leisure establishments (eg hotels) and military premises will be excluded.

However, note section 65 of the Act (contained in Part 4) provides a different definition of higher-risk buildings for the purposes of the “in-occupation” provisions. So, for example, hospitals and care homes will not be required to meet the requirements of the “in-occupation” obligations.

All higher-risk buildings will be subject to Part 3 of the 2022 Act, which imposes new obligations in respect of the design, construction and refurbishment of those buildings.

Dutyholders 
Part 3 creates a regime for “dutyholders” for higher-risk buildings to be in existence across the life cycle of higher-risk buildings. Different roles will be created, which include those similar to those set out in the Construction (Design and Management) Regulations 2015 for the design and construction phase.

Dutyholder roles may be fulfilled by an individual or a legal entity and some dutyholders may hold more than one role in a project. Each dutyholder role will have specific duties in respect of higher-risk buildings, and will be expected to ensure that the people they have appointed are competent; have systems in place to plan and manage the work to ensure compliance with the Building Regulations; comply with specific regulatory requirements of the higher-risk buildings regime (eg gateway requirements and mandatory occurrence reporting); and co-operate and share information with other relevant dutyholders.

The gateway regime
The amendments to the 1984 Act, coupled with existing powers both in the 1984 Act and in other legislation, allow for the inclusion of a three-stage gateway regime for the design and construction of and major refurbishment to all higher-risk buildings. The aim is to ensure that building safety risks are considered at each stage of a new higher-risk building’s design and construction.
Planning Gateway 1 came into force in August 2021 and now forms part of the existing planning application process in the Town and Country Planning Act 1990. Satisfaction of Gateway 1 involves submitting a Fire Statement to the planning authority as part of the application showing fire safety issues have been considered.

Gateway 2 must be satisfied before construction or refurbishment works commence on higher-risk buildings Dutyholders must demonstrate (by submission of critical information) to the BSR how the design and construction will comply with the Building Regulations requirements, including how the dutyholder, competence, golden thread and mandatory occurrence reporting obligations will be met. Where works begin before Gateway 2 has been passed, the BSR will have a range of enforcement options.

Gateway 3 will occur at the current completion/final certificate stage for higher-risk buildings and is similar to the current completion/final certificate phase. Dutyholders must submit to the BSR-prescribed documents and information reflecting the as-built building and demonstrate compliance with Building Regulations and fire safety requirements. The BSR must assess whether the building work complies with the Building Regulations, undertake inspections and issue a completion certificate on approval. Once Gateway 3 has been passed, the accountable person can register the building for occupation.

Part 4 of the Act

Part 4 imposes obligations for the management of building safety risks in relation to occupied higher-risk buildings; creates the role of the accountable person and the principal accountable person; and amends the service charge regime of the Landlord and Tenant Act 1985, imposing obligations on landlords and tenants where long leases are caught by the Act.

What are higher-risk buildings?
In Part 4 of the Act a “higher-risk building” is defined as a building in England that:

• is at least 18m in height or has at least seven storeys; and
• contains at least two residential units. 

Secondary legislation has excluded from the definition of higher-risk buildings: hotels, secure residential institutions, military barracks, living accommodation provided by the MoD, for HM’s forces or any visiting defence forces, care homes and hospitals.

Accountable persons and principal accountable persons
Part 4 of the Act pivots around a key concept of managing building safety risk in occupied higher-risk buildings. In part 4 of the Act, a higher-risk building is occupied if there are residents of more than one residential unit in the building.

To effectively manage this risk, Part 4 establishes the role of the accountable person and the principal accountable person. The accountable person is legally responsible for identifying and managing building safety risks in higher-risk buildings. A “building safety risk” is a risk to the safety of people in or about a building arising from spread of fire or structural failure in a higher-risk building.

The “accountable person” is a person or entity who holds a legal estate in possession of any part of the common parts; or does not hold a legal estate in any part of the building, but who is under a relevant repairing obligation in relation to any part of those common parts.

The accountable person could therefore be the freeholder or landlord, or someone who does not own the building if they have a relevant repairing obligation such as a management company, residents’ management company or right to manage company.

The accountable person has onerous obligations including:

• complying with the requirement to register a higher-risk building and ensuring a completion certificate has been issued prior to occupation;
• assessing and managing building safety risks;
• complying with mandatory reporting requirements;
• holding prescribed information and prescribed information standards (also known as the “golden thread” of information) and keeping it up-to-date; and
• responding to residents’ requests for information.

Where a building has more than one accountable person, a principal accountable person will be identified and have overall responsibility for the safety of the building.

The roles of accountable person and principal accountable person are a serious undertaking as the Act gives the BSR robust enforcement powers. Criminal offences are also a consequence of failing to comply with these duties.

Changes to the 1985 Act
Part 4 of the Act amends the 1985 Act in so far as:

• terms relating to building safety are now implied into occupational long leases of higher-risk buildings;
• landlords can recover costs for a specified list of “building safety measures”; and
• certain building safety costs are “excluded costs” when determining the amount of service charge payable by a tenant under the lease – this is mainly where the landlord is at fault.

The most notable terms implied into applicable leases require landlords who are accountable persons to comply with their building safety duties and co-operate with other relevant persons carrying out building safety duties.

Likewise, tenants must not act in a way that creates a significant building safety risk and they must allow the landlord or accountable person to enter their property to either inspect for or carry out building safety measures. Critically, landlords and tenants cannot contract out of these implied terms.

Other amendments to the 1985 Act mean landlords can only recover costs for a specified list of building safety measures. Excluded costs which cannot be charged to tenants have been defined in the Act.

Part 5 of the Act

Part 5 is substantial and includes:

• remedies requiring landlords (and associated persons) to undertake and pay for remediation works for relevant defects in relevant buildings;
• restrictions on the recovery of service charges for remedying defects in qualifying leases, including financial caps and exclusions on service charge payments for relevant defects in relevant buildings;
• amendments to improve building safety, including provisions related to remediation works and building industry schemes;
• the introduction of building liability orders;
• new home reform with the establishment of a New Homes Ombudsman Scheme and new-build home warranties;
• establishment of the National Construction Products Regulator for UK marketed construction products;
• reforms to the Fire Safety Order 2005; and
• amendments to the Architects Act 1997.

Remediation of defects in “relevant buildings”
Landlords (and associated persons) are required to undertake and pay for remediation works for relevant defects in relevant buildings. 

In an effort to financially protect tenants, Part 5 and Schedule 8 of the Act set out a number of exclusions and financial caps on what a landlord can recover through the service charge.

For the purposes of this part of the Act a “relevant building” is a self-contained building, or self-contained part of a building, in England that contains at least two dwellings and is at least 11m high or has at least five storeys.

Relevant defect is defined in section 120 of the Act and includes defects that cause a building safety risk which have arisen due to anything done or not done (eg the way the work was done or the use of defective or inappropriate products) during the past 30 years.

“Qualifying lease” is also a term used throughout this Part of the Act and means a lease granted for a term exceeding 21 years of a single dwelling in a relevant building granted before 14 February 2022 for which the tenant is liable to pay a service charge, and where, at the beginning of February 2022:

• the dwelling was the tenant’s only or principal home;
• the tenant did not own any other dwelling in the UK; or
• they owned no more than two dwellings in the UK apart from their interest under that lease.
  Part 5 and Schedule 8 of the Act set leaseholder protection provisions, including:
  
  • no service charge is payable under a lease (as opposed to a “qualifying lease”, so could therefore include commercial leases in relevant buildings) in respect of a relevant measure relating to a relevant defect where the landlord is responsible for the defect (or is associated with a person who is responsible for the defect). A person is responsible when they undertook or commissioned works relating to the defect or was in a joint venture with a developer who undertook or commissioned works relating to the defect;
  • no service charge is payable under a qualifying lease in respect of a relevant measure relating to a relevant defect where the landlord meets a defined “contribution condition”, based on a calculation of the landlord group’s net worth. Note, however, this does not apply to local authorities or private registered providers of social housing;
  • no service charge is payable under a qualifying lease in respect of a relevant measure relating to a relevant defect if the value of the qualifying lease on 14 February 2022 was less that £325,000 (if the lease is in Greater London) or £175,000 in any other case.
• Where none of the above applies and service charges are payable, the 2022 Act sets out financial caps on sums that can be recovered from tenants in respect of defects.

Building industry schemes
Sections 126 to 129 of the 2022 Act empower the government to establish building industry schemes for reasons connected with the safety of people in any about buildings.

The first of these schemes to be announced is the “responsible actors scheme” which provides safety and specific standards of building by requiring members to comply with the “developer remediation contract” introduced by the government in January 2023.

The DRC is legally binding and requires developers to comply with a number of requirements including:

• remediating or paying for the remediation of fire safety defects in relevant buildings developed/refurbished in the last 30 years;
• reimbursing the remediation costs and taxpayer-funded work to remediate safety defects in those buildings; and
• keeping residents in relevant buildings informed of the progress of the works.

It is aimed mainly at larger housing developers and the government has made it clear that eligible developers may face significantly adverse consequences if they fail to sign and comply with the DRC.

Building liability orders
In order to prevent developers from escaping liability for safety defects by hiding behind corporate legal structures, section 130 of the Act gives power to the High Court to grant a building liability order if considered “just and equitable to do so”. Such an order will pass on or extend a “relevant liability” (as defined in section 130) to a specified body corporate associated with the original body corporate responsible for the liability, or create a joint and several liability of two or more body corporates associated with the original company.

Extension of limitation periods
The Act amends the Defective Premises Act 1972 to extend limitation periods from:

• six years to 15 years for claims that accrue after the 2022 Act takes effect or for work completed in the future under sections 1 and section 2A of the 1972 Act; and
• six to 30 years retrospectively for claims that accrued before the Act takes effect or for works completed in the past under section 1 of the 1972 Act.

New homes
Provisions of the 2022 Act require developers to provide purchasers of new-build homes with a new-build home warranty under which the developer agrees to remedy specific defects in the new home within a specified period. The warranty will give the purchaser the benefit of an insurance policy with a minimum of 15 years’ coverage.

Part 5 also establishes the New Homes Ombudsman Scheme to allow complaints from the owners or buyers of new build homes to be made to the newly established ombudsman.

Developers will be required to join the scheme with enforcement measures and sanctions taken for breaching these requirements.

Amendments to the Regulatory Reform (Fire Safety) Order 2005
The headline changes are that the responsible person within the meaning of the 2005 Order must ensure that:

• the building has a written record of its fire risk assessment;
• they ensure those carrying out fire risk assessments are competent, which is to be determined by their sufficient training, experience or knowledge;
• they provide residents in higher-risk buildings with comprehensible and relevant information about fire safety matters and keep a register of all such matters; and
• they co-operate with the accountable person.

Further amendments to the 2005 Order have also been introduced through the Fire Safety Act 2021. These amendments clarify that the 2005 Order applies to the structure and external walls of any multi-occupied residential building, including cladding, windows, doors and any balconies.

On the horizon
The government has published draft regulations relating to the responsible actors scheme and further changes to the 1984 Act. These are expected to come into force during the summer of 2023.

The requirement for registration of higher-risk buildings under Part 4 opened on 1 April 2023. The accountable person must make the relevant applications before 1 October 2023.

And, in an attempt to remedy some well-documented issues, particularly those faced by leaseholders and conveyancers regarding the leaseholder protection provisions, the government is planning some changes to the Act which are likely to include the following:

• resolution of the issue of retaining leasehold protections where leases are extended/varied;
• simplification of landlords’ certificates;
• clarification of procedures for storage, digitisation and completion of leaseholder deeds of certificate; and
• engaging with UK finance to review the discrepancies for leaseholder protection requirements in the UK finance handbook.

Concluding remarks

The Act provides an underlying framework for the new building safety regime, but is an extremely complex and technical piece of legislation, with details and guidance being continually updated and added to. 
It will be a challenge for the built environment sector to keep up, but it will hopefully and ultimately lead to a safer and more comfortable life for residents and occupiers of buildings, in the long term.

Building Safety Act timeline

This article was originally published in Estates Gazette in June 2023.

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