Since our article, Grenfell Tower – taking action – The Building Safety Bill positive steps have been taken to address the fire safety issues in England and Wales. We summarise them here.
A – Higher-Risk Buildings
The Building Safety Bill1 (the Bill) has been amended and now contains definitions of “higher-risk buildings”. These definitions apply to England only.
1) Physical building definition: A “higher-risk building” is “a building in England that:
a) is at least 18 metres in height or has at least seven storeys; and
b) is of a description specified in regulations made by the Secretary of State.”
The government has already published draft Higher-Risk Buildings Regulations2 for buildings in England, which provide that the following types of building are “higher-risk buildings” for the purposes of b) above:
- a building that contains at least two residential units;
- a care home;
- a hospital.
It also lists the following exclusions from the definition:
- a secure residential institution;
- a temporary leisure establishment; or
- military premises.
2) Physical and use definition:
A building in England that:
a) is at least 18 metres in height or has at least seven storeys; and
b) contains at least two residential units.”
The draft Higher-Risk Buildings Regulations provide that buildings are excluded from this definition of “higher-risk buildings” if they are comprised entirely of:
- a care home;
- a hospital;
- a secure residential institution;
- a temporary leisure establishment; or
- military premises.
The definition of “higher-risk buildings” is likely to be the subject of debate as the Bill proceeds through Parliament.
B – Building Safety Regulator
In England only, the Building Safety Regulator (BSR) will have the power to recommend that certain types of building are added to the definition of “higher-risk buildings”.
In addition to the BSR being responsible for the key regulatory decisions regarding higher-risk buildings, it will also have enforcement powers. These include:
- exercising existing enforcement powers in relation to non-compliance with Building Regulations. The time limits for prosecution will be extended from one year to 10 years in respect of section 36 notices which require correction of non-compliant work. Section 35 Building Act 1984 currently allows the local authority to bring a case against developers for non-compliant work in the Magistrates’ Court within two years of completion of the work. This time limit will be removed under the Bill.
- exercising powers to prosecute all offences under the Bill and the Building Act 1984. Where a corporate body commits a criminal offence with the consent of a director, manager or other similar individual, that individual may be deemed to have committed that offence and may be prosecuted as well as the corporate body.
C – Gateway Regime
As discussed in our previous article, “Grenfell Tower – taking action”, the Bill proposes the Gateway Regime in England:
Gateway one is prior to the appointment of the Duty Holders and will be completed by those dealing with the planning process.
Gateway two is prior to the commencement of construction works. It is at this stage that the Duty Holders (who have now been appointed) are required to provide the BSR with their full design intention. Construction cannot start until permission is obtained from the BSR.
Gateway three- is following the completion of the construction but before occupation of the building. The Client will be required to submit various information to the BSR, such as as-built plans. At this point all Duty Holders are required to sign a declaration to the BSR that the building complies with building regulations.
By way of further update to the Gateway Regime, the Bill now includes provisions for a Gateway two levy (also known as the “building safety levy”) which will apply when a developer seeks permission to develop certain high-rise buildings in England. The levy will only apply to buildings that are subject to the Building Regulations’ regime for higher-risk buildings.
Sanctions for failure to pay the Gateway two levy will be defined in secondary legislation, but any failure to pay would result in the BSR refusing to sign off the gateway two application, preventing start of construction.
The government has published a consultation on the levy –Consultation on the Building Safety Levy – GOV.UK (www.gov.uk)
The consultation closes at 11:45pm on 15 October 2021. Until then, you may give your views on the design and calculation of the levy at Building Safety Levy – Ministry of Housing, Communities and Local Government Citizen Space – Citizen Space.
D – Residential Property Developer Tax
In addition to the Gateway two levy, the government is also introducing a new Residential Property Developer Tax3 on developers that undertake residential property development activities in the UK. It is proposed that the tax will only apply to the largest residential property developers, being those with profits exceeding £25m. The rate of the tax is yet to be decided. The new tax is expected to be introduced in 2022 and will be time limited. While the specific length of time is not clear, it is intended that the tax will raise at least £2bn over a decade. These funds will contribute towards the government’s removal of unsafe cladding.
E – Limitation Periods for Claims Relating to a Dwelling
The Defective Premises Act 1972 currently only extends to the initial ‘provision’ (meaning construction or conversion) of a dwelling. The Bill inserts a new section to the Act, which imposes a duty on developers to ensure that the dwelling is fit for habitation when the work is completed. This will apply where work is undertaken to any part of a building which contains at least one dwelling. This therefore expands the right to claim compensation to any work undertaken on a dwelling, including work undertaken on existing dwellings. The limitation periods for such claims will be extended to 15 years, which will apply both prospectively and, unusually, retrospectively.
The Bill will also bring section 38 of the Building Act 1984 into effect, which will give private individuals the right to claim damages against approved inspectors where they suffer harm because work on a building has not met Building Regulations standards. The limitation period for such claims will be 15 years and will only apply prospectively.
The new limitation periods will apply in both England and Wales.
F – New Homes Ombudsman
The Bill establishes a framework for a New Homes Ombudsman scheme in England, which will provide a right for owners of newly built homes to claim against developers and builders.
The Bill empowers the government to:
- require developers to join the New Homes Ombudsman scheme;
- introduce a code of practice identifying the standards of conduct and levels of workmanship which should be met by members; and
- set sanctions for breach4.
This scheme is intended to come into force 12 to 18 months after the Bill has been passed, however, the New Homes Ombudsman Service (NHOS) is expected to launch in 2021. It is likely that the NHOS will operate independently before being governed by specific legislation at a later date.
G – EWS1 Form Update
In March 2021, the RICS updated its mortgage valuation guidance5 for multi-storey, multi-occupancy buildings with cladding in the UK. The updated guidance aims to address concerns that lenders and insurers are demanding EWS1 forms on too wide a range of properties, thus harming the property market and property owners6. The guidance provides that:
- for buildings of over six storeys, an EWS1 form should be required where there is cladding or curtain wall glazing on the building, or there are balconies that stack vertically above each other, of which certain elements contain combustible material;
- for buildings of five or six storeys, an EWS1 form should be required where there is a “significant amount” of cladding on the building, there are aluminium composite material (ACM), metal composite material (MCM) or high pressure laminate (HPL) panels on the building, or there are balconies that stack vertically above each other, of which certain elements contain combustible material; and
- for buildings of four storeys or fewer, an EWS1 form should be required only if there are ACM, MCM or HPL panels on the building.
The Government has announced that it will support the recommendations made in the “Independent expert statement in building safety in medium and lower-rise blocks of flats7”.
This expert statement considers issues of building safety in medium and lower-rise blocks of flats and the impact this has on the housing market, together with proportionate responses that could be made by the government. The expert statement recommends that owners of blocks of flats under 18 metres should not be required to provide an EWS1 form on a sale or re-mortgage. Where fire risks are identified in these buildings, these should be addressed primarily through risk management and mitigation.
Several major high street lenders, such as HSBC and Barclays, have said that they will review their practices in light of the expert statement and the government statement8. It is expected that other lenders will follow suit quickly. This is some comfort to property vendors and purchasers struggling to sell their homes or obtain mortgages because they cannot get an EWS1 form.
On 10 August 2021, The Law Society announced it has issued new guidance on buying leasehold flats and the associated building safety risks. It highlights the new government guidance regarding EWS1 forms and explains why leaseholders will likely be liable to pay for the remediation works as the responsible owner. The Law Society’s new guidance can be accessed here: Building safety for flat buyers | The Law Society.
H – Regulator for Construction Products
The Bill creates powers to make provision for regulation of all construction products placed on the UK market, allowing them to be withdrawn if they present a risk. In doing so, the Bill creates the concept of a:
- “designated product”, which covers the same products regulated by the current EU framework; and
- “safety critical product”, which can be placed on a statutory list by the government and regulated separately.
For construction products which fall outside of these categories, the Bill creates powers for the government to make new regulations requiring manufacturers to ensure that their supplied products are safe.
The Bill empowers the government to create both new civil sanctions and criminal offences for any breach of the new regulations. It also creates powers for the creation of an enforcement regime to support the new regulations, which enables the government to set up a national regulator for construction products within the Office for Product Safety and Standards to discharge these powers.
Separately from the Bill, the government has organised an independent review of the system for testing construction products. The review will examine weaknesses in previous testing regimes for construction products and how to strengthen the current system for testing construction products to provide confidence that materials are safe and perform as marketed9. The results of the review are expected later this year.
I – Welsh Building Safety Fund
On 10 February 2021, the government announced a £5bn fund to replace unsafe cladding for leaseholders in residential buildings with heights of at least 18 metres or 6 storeys in England10. In July 2021, the Welsh government announced the “Phase 1 Welsh Building Safety Fund11 ”. This is grant funding available for responsible persons, building owners and managing agents to commission fire safety surveys of multi-occupied residential buildings with heights of at least 11 metres, with buildings of at least 18 metres or seven storeys being prioritised initially. This will identify and assess any fire safety defects present in the building, as well as measures that should be taken to address them. The surveys will adopt a “holistic approach” and will assess both internal compartmentation and external cladding issues. The idea is that this will help to understand the true extent of fire safety defects in Wales.
The findings from a survey will form the basis of a “Fire Safety – Building Passport”. As well as identifying defects and the necessary remedial works, the Passport will set out a proposed schedule and timeline of works bespoke to each building. The intention is that this will provide reassurance to residents, who can access clear information on their building’s remediation plans. It is important to note that the Passport does not replace the need for an EWS1 form.
The Welsh government is preparing Phase 2, which is expected to create a remediation fund. The details of this phase are expected to be announced shortly.
J – Fire Safety Act 2021
The Fire Safety Act 2021 (FSA 2021) amends the Regulatory Reform (Fire Safety) Order 2005 (RRO 2005)12. The RRO 2005 applies to all non-domestic premises in England and Wales, including communal areas of residential buildings with multiple homes and it imposes fire safety responsibilities on responsible persons. For buildings containing at least two domestic premises, the FSA 2021 clarifies that the RRO 2005 applies to the building’s structure, external walls and common parts, including any doors between domestic premises and common areas. The FSA 2021 also amends the RRO 2005 to promote adherence to risk-based guidance issued by the Secretary of State. Following such guidance will usually show that there has not been a contravention of duties under the RRO 2005, whereas failing to follow the guidance may suggest that there has been a contravention.
Conclusion
The government has been criticised for failing to fund the remediation of hundreds of high-rise buildings with fire safety defects similar to those of Grenfell Tower. In May 2021, a 19-storey residential building with Grenfell-style ACM cladding caught fire, causing hospitalisations13. Thankfully, there were no fatalities. The removal of defective materials from many similar buildings has been delayed by disputes between freeholders and leaseholders, with some freeholders refusing to pay for the removal of the fire safety defects, leaving blameless leaseholders facing bills of up to £100,000 each. The English government has made £5bn available to help, but it is estimated the true cost is three times higher. Many leaseholders are facing severe hardship and financial ruin as they live in unsellable and potentially dangerous high-rise homes. The government has opposed creating a fuller safety net for these leaseholders, as MPs have no less than five times rejected an amendment to the Bill to protect them from all remediation costs.
Within the Grenfell community, the demand for justice rightfully continues. A public inquiry was created to examine the circumstances leading up to and surrounding the fire at Grenfell Tower. Police are waiting until the end of the public inquiry to decide whether to bring any criminal charges. In the meantime, the Attorney General has undertaken that no oral evidence provided by individuals to the inquiry under the next phase will be used against the individuals in any criminal proceedings .
This article was written and researched by Ellie Menezes (Trainee Solicitor) and Jan Grimshaw (Head of the Construction Unit). If you have any further queries relating to this article, please get in touch with Ellie Menezes at Eleanor.Menezes@daviesandpartners.com or with Jan Grimshaw at Jan.Grimshaw@daviesandpartners.com
13 August 2021
References:
1 – Building Safety Bill publications – Parliamentary Bills – UK Parliament
2 – Building Safety Bill: draft regulations – GOV.UK (www.gov.uk)
3 – Residential Property Developer Tax: consultation – GOV.UK (www.gov.uk)
4 – Building Safety Bill 2021-22 | Practical Law (thomsonreuters.com)
5- Valuation of properties in multi-storey, multi-occupancy residential buildings with cladding (rics.org)
6- Form EWS1: RICS updates mortgage valuation guidance | Practical Law (thomsonreuters.com)
8 – Inside Housing – News – Banks will not change EWS1 policies until official guidance is revoked
9 – Independent Review of the Construction Products Testing Regime – GOV.UK (www.gov.uk)
12 – Fire Safety Act 2021 receives Royal Assent | Practical Law (thomsonreuters.com)
