Updated Building Safety Bill – key new provisions

The original draft of the Building Safety Bill (BSB) was issued for consultation purposes in July 2020 (see our previous update).  On 5 July 2021 the Government tabled an updated draft of the bill to Parliament for its first reading. The Government's press release can be viewed here and a link to the final version of the Bill, and its Explanatory Note, can be viewed here.

The BSB is intended to significantly overhaul the building safety system in light of Dame Judith Hackitt's Independent Review of Building Regulations and Fire Safety post-Grenfell.  The current version of the bill primarily retains the overall format and content of the original draft, and:

• Creates a new regime to apply to 'Higher-Risk' residential buildings at or over 18m high (or with more than 6 storeys) (but with the ability for the Government to act quickly to change this definition in future should the need arise).
• Establishes a new 'Building Safety Regulator' to provide design oversight, whose powers will include increased enforcement and sanctions capability.
• Introduces changes to ensure increased competence of building control inspectors and architects.
• Introduces changes in relation to the regulation of construction products (including powers to remove products from the market which present safety risks and take enforcement action).
• Provides greater scope for residents and new build owners' concerns to be heard.

Some key new sections have been added, however, most notably in Part 5 of the BSB:

• Clause 124 provides that, in relation to remedial costs, the landlord must take reasonable steps to recover those costs via alternative avenues before passing on costs to their leaseholders;

• Clause 125 increases owners' access to redress via the Defective Premises Act 1972; and

• Clause 126 proposes to extend the limitation period for any Defective Premises Act 1972 claims from 6 years to 15 years, with retrospective effect.

We set out below a brief summary of the implications of these proposed new provisions.  

Landlords' obligations to pursue alternative recovery avenues (Clause 124)

The BSB provides for amendments to the Landlord & Tenant Act 1985, so that, before passing any costs onto leaseholders by way of service charge for certain "prescribed" works in relation to certain "prescribed" buildings, the landlord must take reasonable steps to ascertain:

• whether any grant is payable in respect of those works and, if so, to obtain the grant;

• whether all or any of the cost of those works may be met by a third party and, if so, to obtain monies from the third party (which is defined as including monies obtained from insurance, guarantee or indemnity, from the developer or from anyone involved in designing or carrying out works on the building); and

• whether any other funding is available, and to obtain such funding.

If a landlord fails to comply with those steps, the BSB allows the leaseholder to make an application for an order that all or any of the costs are not regarded as 'relevant costs' and therefore should not be taken into account when determining the service charge payable.  

What will qualify as "prescribed" works and a "prescribed" building will be set out in separate future regulation to be issued by the Secretary of State. No guidance is currently given on this in the Explanatory Note, but it can be anticipated that properties that require fire safety remedial works to their external walls, for example, may ultimately fall within the definition.   It is unclear if other costs associated with such remedial works, such as waking watch costs, might ultimately be covered.

Changes to the Defective Premises Act 1972

Section 1(1) of the Defective Premises Act 1972 (DPA) presently provides:

Duty to build dwellings properly.

(1) A person taking on work for or in connection with the provision of a dwelling (whether the dwelling is provided by the erection or by the conversion or enlargement of a building) owes a duty:

(a) if the dwelling is provided to the order of any person, to that person; and

(b) without prejudice to paragraph (a) above, to every person who acquires an interest (whether legal or equitable) in the dwelling;

to see that the work which he takes on is done in a workmanlike or, as the case may be, professional manner, with proper materials and so that as regards that work the dwelling will be fit for habitation when completed.

Case law has clarified that section 1 of the DPA only applies to new dwellings (with dwellings meaning a place of a "residential" character).  The Act also only allows claims to be brought for 6 years from the date when the dwelling was "completed".

At clauses 125 and 126 of the BSB, the Bill seeks to make two changes to how the Defective Premises Act 1972 (DPA) is to operate, namely:

• to amend the DPA and the Limitation Act, in order to extend the period in which legal action under section 1 of the DPA may be brought from 6 years to 15 years. This amendment is proposed to apply both retrospectively and in future; and 

• to extend the relevant duty under the DPA to make sure also it covers refurbishment or other works which are done to an existing relevant residential dwelling (i.e. rather than just to the construction of a new dwelling).

Clause 126 also proposes similarly to extend (although prospectively only) the time limit in relation to private civil actions for damages due to breach of building regulations under s.38 Building Act 1984 (which is not presently in force but may be brought into force in future).  However, at this stage it does not appear that limitation time periods in relation to any other causes of action (e.g. contract or tort) are going to be affected.

As presently drafted, the retrospective extension to the limitation period for DPA claims would mean that potential claims that are already long time-barred under the current law (or will become time-barred before the Act comes into force) will no longer be.   This obviously creates a significant new pool of prospective claims in relation to buildings which are subject to the DPA, which will stretch back up to 15 years from when the BSB is brought into force (i.e. potentially back to late 2006, if the BSB comes into force towards the end of this year). 

The impact of this is obviously going to be significant, both for all those in the industry involved in the design and construction of residential dwellings, and for their insurers.   It should also be remembered that a claim under s1 of the DPA could relate not only to "fire safety" claims but to any issue relating to design, workmanship or use of materials that is said to render a residential dwelling "unfit for habitation".

The Explanatory Note recognises the harshness of this consequence, noting that "[w]here a limitation period is extended retrospectively, i.e. where a previous six-year limitation period has expired, the clause sets out two safeguards to ensure fairness in the proceedings".  Those "safeguards" are that:

• The Court must dismiss a claim under s1 that would otherwise have previously been barred by the Limitation Act 1980, if the Court is "satisfied that it is necessary to do so to avoid a breach of [the] defendant's [Human Rights] Convention rights".

• where a claim has previously already been settled or determined on limitation grounds, the extended limitation period will not be sufficient to "re-open" that claim.

It remains to be seen how any human rights argument could be framed or might work in practice.  The second proposed safeguard may mean that, in matters presently before the Courts where limitation for claims under s1 DPA is clearly at issue, defendants may now be motivated to attempt to have such arguments heard very promptly as a preliminary issue, in order ensure they are accordingly "determined" before the BSB comes into force (although it will be very interesting to see what approach the Courts will take to such an attempt). Claimants who have previously settled claims, perhaps on unfavourable terms where limitation was in issue, may push to re-open or resurrect claims despite the second "safeguard".