The Building Safety Act 2022 (‘the Act’) received Royal Assent on 28 April 2022. The Act introduced ground-breaking reforms to give residents more rights, powers, and protections. The Act has widespread implications, in particular for developers, owners, and occupiers of residential buildings.
The leaseholder protections introduced by the Act mark a significant intervention by the Government in placing the onus on building owners to pay for remedial cladding and fire safety works. The Act ensures that building owners who are – or are associated with – the developer must pay for the remediation of historical safety defects and leaseholders are protected from bearing the cost of remediation works for the same. These protections apply retrospectively, which means that any service charge demands for relevant works will need to be cancelled, and any payments made by leaseholders will need to be refunded.
Why is the Building Safety Act so important?
The Act introduces new liabilities in relation to extending existing rights of recourse under the Defective Premises Act 1972 for dwellings that are unfit for habitation. The Act also gives the Courts additional powers to impose orders requiring remediation works and/or financial contributions for certain buildings that pose a safety risk.
A leaseholder whose property is calculated as being worth less than £325,000 in Greater London (£175,000 elsewhere in England) or whose building owner has a group net worth of more than £2 million per relevant building, as of 14 February 2022, will be exempt from historical safety remediation costs by virtue of the Act.
The Act enables the High Court to exercise new powers to extend liability to associated companies. This ensures that civil cases for claims against defective buildings can be brought against companies associated with a developer, preventing the use of complex corporate structures to avoid liability.
Construction contracts are typically by deed and have a limitation period of 12 years. However, for building safety defects that render a building ‘unfit for habitation’, the Act introduces a limitation period of 30 years in respect of breaches that existed at 28 June 2022 – and a 15-year liability period for breaches that occurred thereafter.
In addition, the Act creates three new bodies to oversee the new regime: the Building Safety Regulator (will oversee the safety and performance of all buildings, as well as providing building safety risks assistance for high-risk buildings), the National Regulator of Construction Products (will oversee a more effective construction products regulatory regime) and the New Homes Ombudsman (will allow relevant owners of new-build homes to escalate complaints and enforce sanctions for breaching requirements).
What happens next?
The transition plans for the implementation of the Act over a 12–18-month period has comprised of three commencement regulations thus far with the most recent regulatory reform provisions put in force on 01 December 2022. The government’s transition plan provides notional guidance on when further provisions will come into effect and is available here: https://www.gov.uk/government/publications/building-safety-bill-transition-plan.
Whilst the implementation of the Act is due to take place in stages with the Act expected to become fully operational by October 2023, the regulations already put in force should reduce the problems with new build or newly refurbished properties and place some residents in unsafe buildings on a stronger footing when they approach their respective landlords and developers to require them to undertake necessary remedial works.
The new legal provisions and extended limitation periods are likely to give rise to a multitude of new claims. In order to envisage potential litigation exposure, it is prudent for landlords and developers to assess their liabilities by reviewing their corporate and contractual structures as well as their historic liabilities.
Contact our Litigation and Dispute Resolution Solicitors
Matthew Davies is a Paralegal in our Litigation & Dispute Resolution team. If you have a query concerning how you may be affected by the Building Safety Act 2022, then please contact our expert Litigation & Dispute Resolution team by emailing email@example.com or call on 020 7631 4141 and ask to speak to a member of the team.
This note is for guidance only. The above is correct as at 31 January 2023. The information above may be subject to change.
The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis.