While it offers hope of reform, the content of the new Building Safety Bill has also caused some nervousness within the industry as developers, contractors, subcontractors and investors digest the impending legislation and assess how the new rules could impact their business.
Those involved in the design, construction and management of ‘high-risk’ buildings will be eager to establish, to the extent they are able, their exposure to risk, which will almost certainly be greater in the wake of the new measures.
The threat of criminal sanctions is not new where breaches of health and safety are concerned - however the extension of potential liabilities to parts of the industry which may not be accustomed to managing these types of risk will be of particular concern. An individual will now need to be made responsible for the safety of each high-risk building at each stage of its lifecycle, from design through to construction and for its maintenance during the building’s lifetime. These people must be registered and may be held accountable in the event of serious issues; even receiving a two-year prison sentence.
Custodial sentences also threaten those who fail to register a building with the regulator or give misleading or inaccurate information. It is certainly food for thought for building owners, who will be keen to ensure requirements are met.
However, as is the case with any new legislation, businesses do have some time to understand the new rules and ensure compliance.
While the contents of the Bill and its overarching purpose are clear, there are a series of practical concerns which could raise issues for the new Building Safety regulator and should be considered and addressed beforehand.
In practical terms, there are various factors which could make enforcement challenging in the event of a breach of an obligation under the Building Safety Act. Take record keeping, for example. The new Bill will extend the period during which residents can bring compensation claims, with the timeframe more than doubling from the current statutory limitation period of six years to 15 years. Those claims can also now be made retrospectively, so claims dating back 15 years before the date the provision comes into force can be made.
While new buildings will be required to retain all records relating to the property digitally in one place, for claims dating back long periods it is likely to be difficult to obtain the necessary evidence to support a potential claim. I recently advised on a case involving a building which reached practical completion 11 years ago, so there were huge difficulties in obtaining the necessary documents.
The scale of the challenge that will be posed by the regulator has also raised concerns within an industry which has been beset by skills shortages for years. With a new framework created to oversee building control bodies, new minimum performance standards for businesses and fixed reporting, there are questions around who will do the work? With that in mind, one of the biggest issues to grapple with will be how the industry will resource the increased requirements to learn the necessary new skills?
There are also potential issues around supply chain liability. While the developer inevitably shoulders the greatest risk in respect of the new legislation, where faults have occurred during a building’s construction, and liability is held by a contractor or subcontractor, they may seek to pass those liabilities on. That said, despite the increased length of the limitation period proposed by the Building Safety Bill in which claims may be brought, it may not automatically result in a successful course of action since the rate of insolvency within the construction industry means that there is a real risk that the business in question may no longer exist.
Similarly, at the top end, the establishment of a special purpose vehicle (SPV) to deliver a specific project is not uncommon, which are then dissolved after completion. While there are very real practical and commercial advantages offered by this structure, it is somewhat by design that they won’t exist long-term and we may well see this causing issues in the event of compensation claims many years down the line.
Where ‘older’ buildings are concerned, it will be important to establish the extent to which retrospective liability applies - many buildings will still be in good condition, but others may run the risk of coming to the attention of the regulator and potential hazards will need to be addressed.
The new legislation offers a significant departure from the current set of requirements, and will mean that contractors, subcontractors and developers will need to look carefully at building additional measures into new projects in advance of the Bill coming into effect.
With less than two years until it is expected to take effect, it is important to start this work as soon as possible. Those involved with high-rise residential properties must establish the potential risks, with a view to establishing new processes and procedures to protect the business and ensure that the firm is in the best possible position to tackle any issues.