Heightened risk

The Building Safety Act 2022 (BSA 2022) came into force last year and has already had a significant impact on the liability of those who construct and own residential property. Regulations coming into force in the coming months will increase the obligations on those planning to construct new ‘higher-risk’ buildings and impose new requirements on parties responsible for managing occupied higher-risk buildings. Practitioners will need to consider the BSA 2022 throughout the lifecycle of a building when advising clients.

Is it a higher-risk building?

The first issue to consider is whether the building is higher-risk as defined by the BSA 2022. Where a property is higher-risk, a more stringent building safety regime applies. There are different definitions of a higher-risk building depending on whether the building is in the design and construction phase, or if it is occupied.

For the design and construction phase, Part 3 of the BSA 2022 provides that a building will be considered higher-risk where it is at least 18 metres or seven storeys tall. This is supplemented by the Higher-Risk Buildings (Descriptions and Supplementary Provisions) Regulations 2023 (the HRB Regulations), due to come into force on 6 April 2023, which at the time of writing provide that the building must also contain at least two residential units or be a hospital or a care home. Hotels, prisons (secure residential institutions) and military accommodation are excluded. 

For a building that is occupied, Part 4 of the BSA 2022 provides that a higher-risk building is one which is at least 18 metres or seven storeys tall and contains at least two residential units. Care homes and hospitals are excluded from the occupation regime under the HRB Regulations, although the Regulatory Reform (Fire Safety) Order 2005 will continue to regulate those buildings as workplaces. Hotels, secure residential institutions and military accommodation are all excluded from the occupation regime under the HRB Regulations. 

The HRB Regulations also contain guidance as to how the building should be measured (including exclusions of roof-top machinery and plant rooms) which should be considered where a building is close to the height threshold.

If a building does not meet the height threshold of 18 metres or seven storeys, but is at least 11 metres or five storeys tall, remediation orders and remediation contribution orders may be relevant in relation to building safety defects, as described below. 

Constructing higher-risk buildings

Where the building is higher risk, the building will be subject to a stricter building control regime which will be overseen by the Building Safety Regulator (BSR). Three gateways will apply during the building control process. Gateway one is already in force and applies at the planning stage, at which point the applicant must submit a fire statement to demonstrate that fire safety matters have been considered. At gateway two, approval of the BSR will need to be obtained to the proposed plans for the building before construction starts. Commencing construction without such approval will be an offence. The approval of the BSR also needs to be obtained upon completion of the works at gateway three. It will be an offence for a higher-risk building to be occupied before the gateway three certification is received.  

The golden thread of information regarding the building must also be created during the design phase and kept up to date throughout construction ready to be handed to the accountable person at completion (see below).

Further regulations are also expected which will provide that a new building safety levy will be payable by developers in relation to new residential buildings, regardless of the height or number of storeys. This levy is intended to fund the remediation of existing ‘orphan buildings’ where no developer exists to fund the remediation of building safety defects.

Owning higher-risk buildings

Once a building is completed, where it is a higher-risk building, an enhanced building safety regime will apply. Building safety obligations fall on the ‘accountable person’, being the person who holds the freehold of the common parts of the building (including the structure and exterior), or the person responsible for repairing the common parts (such as under a lease of the entirety of the building) (see section 72 BSA 2022). If there is more than one accountable person for the building, there will be a ‘principal accountable person’ which is the person who holds a legal estate in possession of the structure and exterior of the building (most likely the owner of the freehold of the building). 

The accountable person has a duty to register a new higher-risk building with the BSR before occupation. Existing higher-risk buildings will also need to be registered before a specified deadline. 

The accountable person must assess building safety risks as soon as reasonably practicable after occupation and repeat the assessment at regular intervals. A safety case report must be prepared identifying the fire and structural hazards, including details of the steps taken to avoid a major incident. Where a major incident could occur because of an identified risk, the accountable person must take all reasonable steps to prevent such an incident occurring; this might involve construction works, subject to feasibility and costs. The accountable person must establish and operate an effective mandatory occurrence reporting system. The golden thread of information created as part of the design and construction process must continue to be maintained and kept up to date so that it can be accessed by those who need it to support building safety. Failure by an accountable person to comply with its duties can result in a fine or imprisonment.

Remediating defects

Remediation orders (ROs) and remediation contribution orders (RCOs) can be made in relation to self-contained buildings or parts of buildings which are at least 11 metres or five storeys tall and contain two or more dwellings (unless otherwise excluded). These orders can be made in relation to building defects which cause a risk to the safety of people in and around a building arising from the spread of fire or the collapse of the building. The works that resulted in the defects must have been completed between 28 June 1992 and 28 June 2022, or be remedial works undertaken after that date that are intended to correct the original defect.

Under section 123 of the BSA 2022, the First-tier tribunal (FTT) can issue ROs to ‘relevant landlords’ requiring them to remedy relevant defects in a building by a specified time. A relevant landlord is a landlord who is required under the lease, or by virtue of an enactment, to repair or maintain anything in relation to a relevant defect. The BSR, local authorities, fire and rescue authorities and persons with a legal or equitable interest in the building can apply for the FTT to make such an order. These parties may therefore seek an order where it is considered that a landlord is not taking action to remedy fire safety defects.

Under section 124 of the BSA 2022, the FTT also has the power to issue RCOs against certain corporate entities on the application of an interested person. The order can require the entity to contribute to the costs of remedying the relevant defects in the building within a specified time. RCOs can be made where the tribunal considers it just and equitable to do so, although there is no guidance in the BSA 2022 itself as to when it will be ‘just and equitable’ to make such an order.

RCOs can be issued against:

• a landlord under the lease of a relevant building,
• a person who was such a landlord on 14 February 2022, 
• the developer of the building, or 
• a person ‘associated’ with any of the above. 

The list of ‘associated’ parties is very wide and includes not only group companies, but also companies that share (or have previously shared) a director (see section 121 BSA 2022).

As any person with a legal or equitable interest in the building can apply for an order under section 124, a landlord that has funded the remediation of a building could seek to claim a contribution from the original developer (or its associated companies) under this section. Section 124 does not, however, extend to contributions from the original contractor or consultants involved in the development.

Landlords should also be aware that Schedule 8 of the BSA 2022 restricts the ability to recover the cost of remediating building safety risks in these buildings from tenants. For example, landlords cannot claim service charges under a qualifying lease in respect of the removal or replacement of unsafe cladding, nor can they claim where the landlord is responsible for the defect or is associated with a person responsible for the defect, nor where the landlord (or its group) has a net worth above a specified threshold. In addition, section 133 of the BSA 2022 amends the Landlord and Tenant Act 1985 to limit the service charge recoverable from tenants where it relates to remediation works.

Acquiring buildings of any height

When carrying out due diligence on a property, practitioners need to consider the BSA 2022 and how the issues described above might impact their clients where the property is higher-risk in the construction or occupation phase. ROs and RCOs may also be relevant when acquiring a property or a company that owns property (or which sits within a group that owns property). Appropriate enquiries should be raised and relevant documents obtained in relation to these issues.

Changes introduced by the BSA 2022 that impact all dwellings, not only higher-risk buildings, also need to be considered when dealing with residential property. The BSA 2022 extends the limitation period for claims under the Defective Premises Act 1972 (DPA 1972) to 30 years retrospectively for claims under section 1 (in relation to the original construction of the dwelling) where the works were completed prior to 28 June 2022, and 15 years prospectively for works completed after 28 June 2022.

The BSA 2022 also introduced a new section 2A to the DPA 1972 which applies to works completed after 28 June 2022. Section 2A relates to any work carried out to a dwelling by a business, such as renovations and refurbishments. The business has a duty to ensure that the work is carried out in a professional/workmanlike manner, using proper materials to see that, as regards that work, the dwelling is fit for habitation. In a similar way to RCOs, liability under the DPA 1972 can be extended to associated companies, therefore the liability of a special purpose vehicle set up to carry out a development could be extended to a group company (see Building Liability Orders under section 130 BSA 2022). Again, appropriate enquiries should be raised.

Further regulations and guidance are expected from the government and the BSR regarding the BSA 2022 throughout 2023 and anyone dealing with property matters should look out for these.