Building Safety Bill – Key additions on remediation costs

Pauline Lam, Senior associate in the Russell-Cooke Solicitors, property litigation team.
Pauline Lam
4 min Read

The much anticipated Building Safety Bill ('the Bill') started its passage through Parliament on 5 July 2021. This came just over four years after the tragic Grenfell Tower fire on 14 June 2017, which prompted a review of fire safety issues in high-rise buildings and regulation of construction professionals and products. A draft version of the Bill was published for consultation on 20 July 2020.

The substantial Bill spans 218 pages and expands upon many familiar features from the draft such as the establishment of a Building Safety Regulator to maintain oversight of building safety with enforcement powers and the creation of a New Homes Ombudsman Scheme to investigate home owners' complaints against developers and order redress that will include payment of compensation and apology. It stipulates a new regime to address fire safety risks for higher-risk buildings that are, broadly, at 18 metres or seven storeys high or above containing two or more dwellings. The new regime includes measures to ensure fire safety issues are considered at key stages of the life cycle of a building's design and construction.

Amendments proposed to the Landlord and Tenant Act 1987 include the introduction of a building safety charge and requirement for a summary of leaseholders' rights and relevant information to be provided when it is demanded from a leaseholder of a higher-risk building. The Bill also provides scope to tighten regulation of construction products by way of secondary legislation to include powers to prohibit marketing of unsafe products as well as withdrawing or recalling such products. The introduction of a developer levy announced in February 2021 has also been included which will be implemented through secondary legislation.

Since the draft bill was published in 2020, there has been much debate on who should bear the burden of the remediation costs of rectifying unsafe cladding and fire safety defects. Two new additions in the Bill relate to this issue.

Time extension

The Bill introduces an extension to the time limitation period for bringing claims under the Defective Premises Act 1972 ('the DPA') to 15 years. Where works carried out to a building render a dwelling unfit for habitation on completion, building owners or leaseholders can now make such a claim, regardless of the height of the building, beyond the current limitation period of six years. Controversially the extension will take effect retrospectively and is expected to be in force two months after the Bill is passed. The current anticipated timeline for the Bill to receive Royal Assent is 9-12 months. By way of example, leaseholders of a building completed in 2010 may bring proceedings under the DPA up until 2025 when the extension comes into force.

The extension also applies to additional works following completion and section 38 of the Building Act 1984 giving individuals the right to claim damages where they suffer harm because the works did not meet Building Regulations standards, which are not yet in force. The extension to these additional provisions will apply prospectively.

However, a claim that is brought under the time extension will be dismissed if it contravenes a defendant's human rights, or if the claim had already been settled or dismissed.

Whilst this is welcome news for current freeholders, management companies and leaseholders, the reality is that many leaseholders will be unable to meet substantial legal costs involved in legal action against the original construction project team such as the developer, designer or contractor. Criticisms have been made as to the exclusion of unsafe buildings completed prior to the 15 year period. Furthermore, with the passage of time and recent increase of claims, the project team companies may well have ceased trading or do not have sufficient means or insurance cover to satisfy any part of or all of the remediation costs required. There is also the obstacle of any potential breaches of a defendant's human rights such as a right to a fair trial in previously time-barred claims.

Remediation costs

The Bill also imposes a duty on freeholders or management companies to first explore avenues to meet remediation costs before passing them onto leaseholders by applying for available grants and prescribed funding as well as seeking recovery from third parties such as warranty providers, developers, designers and contractors. Failure to provide evidence to demonstrate that reasonable attempts have been made will provide leaseholders with grounds to apply for such costs to be excluded from the calculation of service charge.

This is perhaps unsurprising as it falls in line with the requirements of the Building Safety Fund and provides leaseholders with means to challenge remediation costs. The new time extension therefore should ring alarm bells for freeholders and management companies on buildings that may previously be time-barred for any claims under the DPA but which may now benefit from this measure when it comes into force.

The Bill's passage through Parliament is at its early stages and it remains to be seen whether significant changes will be brought, including whether some of the higher-risk building measures will be extended to cover buildings below 18 metres in height.

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