The Building Safety Act (2022) came into force at the end of April as a response to Grenfell and the Hackitt Report. It contains regulatory reform and regulations to mitigate the risk of certain high-risk buildings, most of which are residential. The Act requires those responsible to provide evidence they are meeting fire safety measures, as well as structural safety of the building. It enforces them to undertake associated inspections and maintenance work, including rectification work.
The Act looks at the lifecycle of a building and splits it into ‘gateways’.
• planning and design
The building owner must demonstrate that safety is being considered at every stage of a building’s construction. Occupier safety risk considerations must be brought to the earliest stage of the planning process. This means, for example, that safety considerations continue throughout the construction and occupation of a building, not just at its inception.
The Act introduces the concept of a ‘Golden Thread’ of record keeping which will be available to relevant parties – residents, emergency services and potential purchasers. So, the complete and relevant records are available to everyone no matter at what stage they enter the building’s history. The information not only comes from those who have constructed it, but also those who manufactured the components used.
One of the most contentious issues running up to the publication of the Act is the source of funding to rectify the defective buildings, where it is apparent that the building requires repair works to bring it in line with current regulations. The Act gives some clarity here, with a form of cascading funding, whereby a party must exhaust one option before moving to the next in sequence.
Stage 1 Developers, contractors and product manufacturers
Stage 2 Landlords and building owners, including those who currently run the buildings, such as management companies.
Stage 3 Building Safety Fund. Launched in 2020 to protect leaseholders in residential blocks from having to pay costs of replacement cladding, the Building Safety Fund now stands at £5.1bn.
Stage 4 Leaseholders themselves. They are further protected because there is a capped level of contribution a leaseholder is required to pay if all other stages have been exhausted.
The question remains: what happens if the options above have been exhausted and there still isn’t sufficient funding to carry out the works or if the building has been enfranchised?
Most of the provisions in the Act are expected to take effect in 12-18 months’ time and will be supported by detailed regulations and guidance which are yet to be published.
There are new duties bestowed on landlords and freeholders under the new Act, and these relate to the building’s safety. The ‘Accountable Person’ is responsible for maintaining that Golden Thread of information, undertaking fire and structural safety risk assessments as required with the need for a strategy for resident engagement and show the steps taken to avoid a major incident.
Landlords or developers considering new buildings will have to consider Due Diligence in Construction, overseen by the Building Safety Regulator. This technical role, externally appointed by the HSE, will ensure the process is being followed throughout the construction process and will have the power to suspend construction if it isn’t.
Some of our landlord clients have been preparing for this for some time and have taken steps to repair buildings by undertaking opening up works or more in-depth investigations. However, the full remedial work is yet to be completed, and the complex process of determining who will be required to pay for that work is still ongoing.
The realities remain that investors could well be purchasing properties with inherent issues which only become obvious after undertaking intrusive investigations. They are not only costly but also likely to be challenged by the existing owner. Whatever the outcome, this will inevitably slow down the purchase of these buildings as prospective purchasers feel obliged to spend significant sums of money on a building they don’t own, to confirm the safety status of the fabric and presence of cavity barriers, then to determine the costs of any remedial action necessary. All before a decision on purchase is made on what will likely become a long-term investment.
Residents can feel slightly more protected under this new Act, through the cascading funding process. They also have more ways to raise concerns over a building’s safety through the proactive management of risks by the Accountable Person. They are also protected from punitive service charge increases which landlords might try to impose as a result of their extra responsibilities.