Important Building Safety Bill Developments

England and Wales

The hugely anticipated draft Building Safety Bill (Draft Bill) was introduced to Parliament on 5 July 2021. The draft Bill sets out a pathway for the future of how residential buildings should be constructed and maintained. In addition to the Draft Bill, the Government published explanatory notes; fact sheets that cover dutyholders, industry competence, and buildings included in the new regulatory regime; and it’s response to pre-legislative scrutiny.

While the Draft Bill is largely similar to the version published in 2020 (you can read more about the 2020 Bill in our previous publication here), there are some notable changes that should be considered.

Key Changes

Building Scope

The Draft Bill now includes wording to confirm that the focus of management of building safety risks in occupied higher-risk buildings in England are buildings over 18 metres in height or at least 7 storeys and contain at last 2 residential units.

No Prescribed Fee

Under the 2020 Bill, a “prescribed person” had to accompany any notice requiring the regulator to review a decision with a “prescribed fee”. This is no longer a requirement.

Limitation periods

The Draft Bill increases the time limit for certain actions in respect of damage or defects regarding buildings to 15 years. You can read more about this here.

Principal Accountable Person

The Draft Bill introduces a new principal accountable person role. This is relevant to a building with more than one accountable person, in which case the principal accountable person is the one who holds a legal estate in possession in the relevant parts of the structure and exterior of the building. The Draft Bill allows an “interested person” to apply to the tribunal for determining the principal accountable person. It is now the principal accountable person’s duty (and not the accountable person’s duty) to register the building if occupied.

Building Assurance Certificate

There is no reference to a building assurance certificate which was set out in the 2020 Bill. Instead, where the regulator directs the principal accountable person for an occupied higher-risk building to apply to the regulator for a building assessment certificate in relation to the building, applications must be made within 28 days of such direction.

Building Safety Manager

Where there is more than one accountable person, the Draft Bill requires the principal accountable person to consult the other accountable persons in relation to the proposed appointment, and give them a document setting out the proposed terms of an agreement (to be made between all accountable persons) for sharing building safety manager expenditure.

Further, the Draft Bill does not provide the regulator with powers to veto the decision to appoint a building safety manager.

Resident Engagement

Regarding engagement with residents, the principal accountable person and not the building safety manager (as previously set out) is to operate the system for investigating relevant complaints.

Accountable Person

The accountable person had to previously take all reasonable steps to prevent a “major incident occurring”. This wording has been removed and replaced with a wider duty requiring the accountable person to take “reasonable steps to prevent a building safety risk from materialising”.

The outgoing accountable person must also provide “prescribed information” to the regulator (in the prescribed way) as soon as reasonably practicable.

Under the Draft Bill, the regulator has the power to apply to a tribunal for a “special measures order” in relation to an occupied higher-risk building. This will allow the regulator to appoint a person to be a manager to carry out the functions of an accountable person. The Draft Bill also introduces additional persons who must be notified of the regulator’s intention to make a special measures application such as each owner of a residential unit in the building; building safety manager for the building; any managing agent for the building or any relevant part of the building, etc. The draft bill also sets out that the notice must provide specific information such as the reasons for the application, etc.

The Regulator’s Objectives and Regulatory Principles

The Draft Bill requires the regulator to carry out its regulatory activities in a way which is transparent; accountable; proportionate and consistent; and targeted at cases in which action is needed.

Appealing a Regulator’s Decision

The Draft Bill stipulates that an affected person has to appeal the regulator’s decision on the grounds of the decision being based on an error of fact; the decision was wrong in law; or the decision was unreasonable.

Landlord and Tenant Relationship

The Draft Bill introduces a number changes which will impact on the relationship between landlord and tenants in the residential sector. Of particular interest to parties occupying, managing and owning residential developments will be the way in which the Bill proposes that the steps required to manage safety risks will be assessed and funded.

The Bill proposes that terms are implied into all leases of higher risk buildings which have a term of 7 years or more (not just ‘long leases’ as the original draft Bill proposed) and under which a tenant is liable to pay a variable service charge. These terms include for the landlord to comply with their duties relating to building safety and for the tenant to pay a building safety charge. The building safety charge is intended to be payable in respect of costs incurred (or to be incurred) in connection with “building safety measures” i.e. measures the designated accountable person will be entitled to take under the new legislative regime to assess and manage the building safety risk of the building – this does not include the cost of remedial works. However, it will include legal costs, other professional fees, fees payable to the regulator and management costs. The building safety charge will be payable separately (and in addition to) any service charge payable under the leases. However, a cost cannot fall within both regimes (i.e. there cannot be double recovery). The position for tenants paying fixed service charges does not appear to have changed and so landlords will not be able to recover a building safety charge from those tenants.

The Draft Bill also proposes similar statutory limitations and restrictions in respect of building safety charges to those which currently apply to residential service charges for example, in relation to reasonableness and consultation. It is also proposed that further amendment will be made to the statutory consultation process (relating to service charges) for building safety remedial works, which will require the landlord to take reasonable steps to identify whether any funding options are available for the works and if so, to seek to obtain that funding (and deduct any funding received from the remediation costs passed down via the service charge).

Whilst the Bill does propose a regime to ensure that ongoing building safety measures will be chargeable to tenants (through the separate building safety charge), the position in relation to the recovery of costs for the remediation of existing defective cladding systems/completing works to rectify historical defects which make a building unsafe remains unclear and will continue to be a source of dispute.

Timeline

The Government has set out 3 phases: phase 1; phase 2; and phase 3. The Government is anticipating Royal Assent within 9-12 months after introducing the Draft Bill to Parliament. For specifics of the timeline, please consider figure 1 below.

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Figure 1 - image taken from here

If you require specific advice on Fire Safety and Building Safety, please speak to Lukas Rootman, Kaleem Mahmood and Rosalind Morgan. For further advice on the Real Estate implications of these measures, please speak to Eleanor Murray and Sarah Pope.

The authors wish to acknowledge the assistance of and Lili Chaneva (Trainee, CMS) in preparing this article.