Our Construction & Engineering team looks at The Building Safety Bill
On 8 November 2021, the Department for Levelling Up, Housing and Communities (DLUHC) published a factsheet on redress in relation to the Building Safety Bill.
It deals with changes to be made to the Defective Premises Act 1972, and the bringing into force of section 38 of the Building Act 1984.
As a first principle, those responsible for defective workmanship causing homes to be unsafe, must bear the responsibility to put those problems right (akin to ‘the polluter pays’ principle). To address this, the DLUHC is taking action to extend legal rights of redress for defective workmanship.
Changes to the Defective Premises Act 1972 (“the 1972 Act”)
Section 1 of the 1972 Act currently requires those involved in constructing a dwelling to ensure that the dwelling is ‘fit for habitation’ when the work is completed and for a reasonable time thereafter. If the work is completed to an unacceptable standard, a claim for compensation can be brought by the person who originally commissioned the dwelling, or any person subsequently acquiring a legal or equitable interest in the dwelling.
Currently, a claim for compensation can only be brought for unacceptable work related to the ‘provision’ of a dwelling. This means that refurbishment works are not normally within the scope of the 1972 Act. Furthermore, claims have to be brought within 6 years of the completion of the work.
The Building Safety Bill (“BSB”) which has just had its third reading in the House of Lords, and is expected to become law by around July 2022, will change both the time for bringing a claim for compensation and the scope of works subject to the 1972 Act.
The proposed new time limit
The time for bringing a claim will be increased from 6 years to 15 years by amending section 1 of the 1972 Act. This new limitation period will apply to works carried out before the BSB comes into force as well as works carried out afterwards (i.e. it will apply retrospectively and prospectively).
Although not stated in the factsheet it is understood the 15 year time limit will begin to run afresh if remedial works are attempted but fail to cure the defects.
Where the time limit for a retrospective claim expires as the BSB becomes law, there is a 90 day period of grace during which proceedings can be brought.
Extension of the types of work subject to the 1972 Act
The 1972 Act will be amended to apply to refurbishment and any other work such as alterations, repairs and improvements to an existing dwelling. It will cover work to parts of a building which are not part of the dwelling such as external cladding to a block of flats. This change will only apply prospectively (going forward).
Who is liable?
Compensation can be claimed from anyone responsible for the defective work, such as builders, other contractors, architects or designers who provide such work as part of their business. It will not apply to DIY work by individuals for their own or friends’ homes.
Building owners are responsible for ensuring their buildings are safe, and originally they are expected to meet the costs of remediation without passing those costs on to leaseholders wherever possible. Building owners will be expected to explore all other remedies such as claims against those responsible for the works, including those liable under the 1972 Act, and insurers. The original intention was to create a legal requirement on building owners to take all reasonable steps to recover the costs elsewhere before looking to leaseholders and to give leaseholders the right to challenge these costs in the courts.
However as the draft bill now stands, by amendment, leaseholders will not be require to contribute to the costs of fire protection remedial works. In so far as those responsible for the problems cannot be found or made to pay, the construction industry will be expected to fund the costs by way of a levy.
Strict Liability
Once it is shown on the facts that a dwelling was not fit for habitation at the time the work was completed, due to defective work, there is strict liability under the 1972 Act. It is not necessary to prove negligence or breach of contract.
The DLUHC estimates that around 1.16 million dwellings of all types will additionally fall within the scope of the BSB when the limitation period is retrospectively extended. In addition, 600 high-rise buildings and around 3,500 medium-rise buildings will fall within the scope of the retrospective extended limitation period.
The Building Act 1984
Section 38 of the Building Act 1984 has never been brought into force. The DLUHC has announced it will be brought into force alongside the changes to the 1972 Act. Once in force section 38 will allow claims for compensation to be brought for physical damage or injury caused by a breach of building regulations. This provision will only apply prospectively.
Jurisdiction
The BSB will apply in England, Wales, Northern Ireland and Scotland.
Significant changes to the BSB
As the BSB has progressed through it first stages, a number of amendments have been proposed in the Lords, the most significant of which for the Construction industry are summarised below.
- Through the BSB , the government will seek to introduce reforms to strengthen the whole building regulatory system. This includes measures to establish a Building Safety Regulator to enforce a new, more stringent regulatory regime for high-rise buildings in scope, and also oversee the safety and performance of all buildings. Regulations will place duties on those who procure, plan, manage and undertake building work. These duty holders will be required to actively consider and manage building safety risks throughout the commissioning, design and construction process, and ensure that designs, if built, as well as the building work, comply with building regulations requirements.
- As indicated above, there has been a shift in the responsibility for payment of remediation costs from the leaseholders in a building to the freeholders or the owners of a building. Currently when a an apartment is bought, the lease will typically provide that specify the leaseholder is to be liable for a share of the cost of maintenance or repair in the property, common parts including cladding, fire exits and fire alarm systems. The BSB will now include clauses that seek to change the terms of these leases, making building owners liable for the costs of remediating historical safety defects in a building for both cladding and non-cladding issues.
- Despite growing criticism from bodies such as the CICE, the limitation period of 15 years has remained within the Bill. The proposed extended limitation period is intended to apply retrospectively as well as prospectively, i.e. to claims that are currently already time-barred This could have a significant impact on professionals within the construction industry who design and carry out fire safety works or supply fire prevention materials for such works and their insurers, both in relation to historical claims previously statute barred and current and future work. It remains to be seen what will happen but the fear is that insurance will cease to be available or become too expensive and architects and engineers designing such works and specialist contractors who currently carry out such work, will be discourage from continuing to do so.
Our Construction & Engineering team
We will continue to monitor the progress of the Building Safety Bill through Parliament and provide additional updates where necessary.
If you require legal expertise regarding building safety and planning, you can contact us on 0161 969 3131 or fill in our contact form and the team will be in touch.