Building Safety - Reflections and Projections 2022

Guest article written by Simon Lewis and Michelle Essen at Womble Bond Dickinson (UK) LLP

What a year 2021 was for building safety.

To give some perspective on how things have changed, we've looked at the biggest leaps forward in 2021 and have also looked at what we can expect this year. January 2022 has already lived up to expectations, as we will explain below.

Building Safety Bill

The most talked about legislative development in 2021 was the steady progress of the Building Safety Bill, which was officially laid before Parliament in July. While it was based in large part on the draft that was circulated for comment in 2020 and was therefore in many respects already familiar, its provisions are being increasingly scrutinised in its passage through Parliament.

The Bill's proposed changes are considerable, and include:

• massively extending the limitation period for bringing a claim for breach of s.1 Defective Premises Act 1972 (DPA). This requires residential buildings to be habitable and built in a professional and workmanlike manner with proper materials. The Bill increases that limitation period from 6 to 30 years – and it would apply retrospectively, meaning that claims that are currently time-barred would become an option again all the way back to 1992. The extension to 30 years (originally proposed to be 15) was announced in a statement from the Department for Levelling Up, Housing and Communities (DLUHC) on 10 January 2022,
   
• inserting a brand new s.2A into the DPA, which would extend the DPA to cover subsequent building works (as s.1 only covers the original construction of the building), with a limitation period of 15 years prospectively,

• bringing s.38 Building Act 1984 into force, to allow claims for damage caused by breach of Building Regulations, with a limitation period of 15 years prospectively,
   
• establishing a new Building Safety Regulator (BSR),

• creating a far more rigorous and extensive regulatory regime for building control officers by way of a new Section 2A inserted in to the Building Act 1984; and

• creating a new "duty-holders" regime – where duty-holders would have greater responsibility to explain how they are managing safety risks and to show the BSR that a building is safe for occupation. Duty-holders in the design and construct stage would include existing duty-holders under the Construction (Design and Management) Regulations 2015, such as (Principal) Contractors, (Principal) Designers, and the Client. During the occupational phase the new offices of Authorised Person and Building Manager fulfil the duty holder roles.  

As we have said before, we are still just at the start of our journey with the Building Safety Bill. The effects of the changes it will bring and its impact on industry, including around risk and insurance, are hot topics of discussion which we explored with industry leaders recently.

In the meantime, the Bill continues to make its way through Parliament, and is expected to receive Royal Assent at some time later this year. It is currently making its way through the House of Lords.

It is worth reiterating though that the Bill when it becomes law will have a more limited effect in Scotland, which has its own building and fire safety regime.

Fire Safety Act 2021

The Fire Safety Bill, which we have considered before, was given Royal Assent in April, becoming the Fire Safety Act 2021.

It was not smooth progress into law for the Bill, as the House of Lords requested leaseholder protection on three separate occasions because it wanted building owners to be responsible for the costs of remedial works, or a system of government grants or loans in place if leaseholders were to bear the cost of repairs themselves.

In the end, the Act did not take this leaseholder protection into account, and instead it is possible for building owners to pass the costs of fire safety works onto leaseholders via increased service charges or similar.

Again, the position in Scotland is different, as the Fire Safety Act only applies to England and Wales. 

Cladding Remediation – Government Funds

The Building Safety Fund (BSF) of £1bn, which was set up in 2020, has continued to provide support in 2021 to help landlords who own residential buildings of 18m or more in height to remove unsafe non-aluminium composite material (ACM) cladding.  The aim of this fund is to protect leaseholders from the cost of these remediation works through increased rent payments or service charges.

In January 2022 DLUHC published new guidance for leaseholders and residents on the Building Safety Fund process. The guidance provides additional information on the processes of registering their building, deciding whether the building is eligible for funding, legal checks and assessing the costs as a part of the fund's application, signing the funding agreement, starting building works, and the conclusion of building works. The government has also launched a new Leaseholder and Resident Service enabling those living in tower blocks to have access to updates on the status of their building's application to the Building Safety Fund.

2021 also saw a brand new fund created – the Waking Watch Relief Fund – to provide an additional £30m for applicants to the BSF to fund waking watch (i.e. building patrols to detect fire), since the cost of fire alarms are not covered by the BSF funding.  This fund was announced in December 2020 and opened for applications in January 2021. £22m of the £30m available was to be spent in cities where private-sector buildings were deemed most at risk due to their prevalence of built-up areas (namely Greater London, Greater Manchester, Birmingham, Leeds, Sheffield, Liverpool, Newcastle and Bristol), with the remaining £8m planned for other private-sector buildings in England plus all social-sector housing over 18m. The fund closed in April, reopened in May to distribute unused funding, and then closed again in June. The government has recently allocated another £27m to fund the replacement of waking watch schemes with fire alarms, which is expected to cover around 300 buildings.

It is also worth noting that in the Autumn Budget, the Chancellor said "we’re also confirming £5bn to remove unsafe cladding from the highest risk buildings partly funded by the Residential Property Developers Tax". We know about that Tax but details about what constitutes the rest of that funding is still awaited.

DLUHC continues to put pressure on developers to contribute towards the funding of remedial works on higher-risk buildings over 18m in height. In early January 2022 this was extended this to buildings of over 11m in height which may be in a dangerous condition. It remains to be seen how property developers will respond.   

Changes to Planning Permission Requirements

The Hackitt Report's recommendations included the addition of several "Gateways" to check that newly designed buildings are safe for residents to live in.

In August 2021, Gateway One came into force, in the form of new planning requirements.  Now high-rise developers must consider fire safety in new developments at the planning permission stage, to be evidenced as a part of the planning permission process through the submission of a fire statement. Local authorities are expected to engage with the Health and Safety Executive when reviewing the fire statements provided by developers, but this role is expected to be taken over by the new BSR when it is operational. 

Gateways Two and Three under the Building Safety Bill will be before the building works start and when the building works are completed respectively, and are anticipated to come into force around late 2023.

What to look out for this year

 We anticipate a number of other significant developments in building safety in 2022:

• Phase 2 Grenfell Inquiry - despite delays due to COVID-19, the Phase 2 hearings continued in 2021. So even with the Omicron variant, we expect that the hearings will continue in one form or another in 2022 – and that has been the case so far. At the moment, the hearings are expected to finish in the Summer, with the Phase 2 report potentially being published at the end of 2022.

• A new tax - between April and July 2021, the Government ran a consultation on a new Residential Property Developer Tax on residential property developers' profits above £25m p.a., to raise £2bn (over 10 years) towards remediating unsafe cladding in residential buildings over 18m. Draft legislation was then published for industry comment between September and October 2021.  In the Chancellor's budget in October 2021, he referred to the Residential Property Developers Tax saying, "I can confirm [it] will be levied on developers with profits over £25m at a rate of 4%". This is set to apply from 1 April 2022.

• A new levy – as part of the Building Safety Bill, a new Building Safety Levy is being proposed on developers of certain high-rise buildings at "Gateway Two" (the seeking of regulatory permission to construct high-rise buildings). A consultation on this levy ran from July to October 2021, seeking industry input on the design and structure of the levy, timings for implementing it, and any potential impacts on the supply of housing which may result from it. An update on the outcome of this consultation is expected in 2022.

• Building Safety Bill – as mentioned above, Royal Assent is expected later this year, with changes to the limitation periods under the DPA and Building Act expected to follow shortly after.

For more anticipated changes see Womble Bond Dickinson's Building Safety Timeline and for more information about Building Safety, visit their Hub.

	Simon Lewis Partner Womble Bond Dickinson (UK) LLP [email protected]
	Michelle Essen Managing Associate (Practice Development Lawyer) Womble Bond Dickinson (UK) LLP [email protected]

This article has been written by Womble Bond Dickinson (UK) LLP "Womble Bond Dickinson" and the opinions and views stated in this article are those of Womble Bond Dickinson and not Howden Insurance Brokers Limited (“Howden”). Howden is an insurance broker and is not authorised or regulated to advise on these developments. Howden shall not (i) owe or accept any duty, responsibility or liability to you or any other person; and (ii) be liable in respect of any loss, damage or expense caused by your or any other party’s reliance on this article.