Building Safety Bill Update – October 2021

The Building Safety Bill continues its way through the parliamentary process; the Select Committee has now concluded its first round of sittings, and is set to reconvene on 19 October 2021 for three final days, ending on 26 October 2021.

In this update, we provide a summary of some of the key points of interest from the submissions and evidence provided to the Committee so far. We also outline some of the more significant or controversial proposed amendments to the Bill that MPs have so far tabled.

You also may be interested in a video of our recent panel discussion on the Bill.

Select Committee: Submissions and evidence so far

The Committee has received a number of written submissions, and heard oral evidence, from a variety of Industry and affected participants, including Sir Ken Knight of the Independent Expert Advisory Panel; RIBA; the Construction Industry Council; LABC; ABI and also leaseholder and cladding action groups.

Details of the written and oral evidence submitted to the Committee can be found here (under the headings Written Evidence and Committee Debate).

Particular issues that were of interest to both the Committee and those making submissions and giving evidence included:

• Height threshold: One focus of both the submissions and the Committee’s questioning centred around the proposed 18m height threshold for “higher risk” buildings. A number of participants commented that they considered that the threshold should not be based on height, but on risk, and should cover lower height buildings. It was also clear from the discussions that the 18m threshold was considered by some as a “starter” to get the legislation passed, with it being anticipated that the Government will, in future, use the secondary regulation process to widen the scope in future. The height threshold is likely therefore to continue to be a key point for debate in future.

• Reliance on and further detail of secondary regulation: Another feature much commented upon was the fact that the Bill itself is, in a number of respects, still relatively high level, with queries about whether or not it is appropriate for so much of the detail to be left to secondary regulation. In particular, RIBA acknowledged that this was perhaps a chicken and egg situation, and that while the draft regulations which have so far been published are helpful (relating, for instance, to matters such as the “competency” requirements of dutyholders during the construction process), matters were still unclear and the more information which can come out the better. The CIC also felt that more detail is needed on the area of competencies, as these are going to be key.

• Risks of lack of professional indemnity cover: industry participants and Insurers commented on risks and market pressures relating to PI insurance, both in relation to future new builds, and also historic liabilities. RIBA noted, for instance, the creation of the new dutyholder roles may give rise to absolute obligations on professionals which might not be covered.

• Retrospective extension of a 15 year limitation period for s.1 DPA 1972 claims: this received a lot of attention from many quarters. On the one hand, insurers and professionals commented about the harsh implications of its retrospective effect, particularly as there had been no consultation. On the other, leaseholders and others were concerned that the change might really make little practical difference given that, particularly for older buildings, many entities such as developers and contractors may be out of business and have no insurance cover. Leaseholders were also concerned about the prohibitive cost of having to take legal action.

  Interestingly, the Committee also queried the impact of the “Human Rights Convention” exception to the limitation extension, and the barristers assisting the Committee gave a view that this was unlikely to be a valid basis for a defendant to challenge the clause, although they were concerned that it would give parties a licence to try, and create further litigation delays while the point was determined.

• Risk of a “two-tier” building control system and lack of other independent third party scrutiny of construction: several participants flagged a concern about the proposed approach of requiring the Building Safety Regulator to perform the building control function for Higher Risk Buildings, but leaving developers and contractors still able to choose their building inspection provider for other buildings. The CIC and RIBA also emphasised the possibility of requiring clients/developers to engage clerks of works to provide another level of independent scrutiny on the construction process, or to mandate a return to increased on-site levels of supervision by engineers and architects.

• Potential statutory indemnity scheme and other methods of redress: the Committee was interested in views about the possibility of one of the proposed amendments to the Bill, which creates a statutory indemnity scheme and other legal remedies to deal with remediating buildings (both existing and new buildings in future). Local government and housing association representatives, as well as leaseholder action groups, indicated support for the indemnity scheme. Other solutions proposed by participants in relation to recovery and redress included steps such imposing a personal director or parent company liability on contractors/developers, and making it possible to sue building control for economic loss.

• Duty holders regarding buildings in occupation: concern was expressed that there was a lack of clarity and potential unworkability surrounding the “accountable person” role (i.e. who will be responsible for building safety matters in a completed building). The fact that the “accountable person” and the “responsible person” under the Regulatory Reform (Fire Safety) Order 2005 (being the entity required to obtain Fire Risk Assessments) may well be different was also acknowledged, and concerns were raised about the ability of the Bill’s proposed co-operation provisions to deal with this disconnect.

Proposed Amendments

As at 24 September 2021, a significant number of proposed amendments had already been tabled by opposition and other MPs in relation to the Bill. The below are likely to be considered by the Select Committee shortly, and if put forward, may also be debated during the Bill’s third reading. It should be emphasised that, of course, not all amendments proposed to the Bill will be passed, and particularly those proposed by opposition members may be likely to be voted down by the Government majority. However, what the below does continue to make clear is that, at this stage the draft Bill remains very much in a state of flux, and that there may be significant changes between its current and future forms.

Proposed amendments of particular interest so far include:

• Further changes to retrospective Limitation Extension under DPA 1972: there are two proposals to extend this limitation period even further than 15 years – one amendment proposes 25 years, and the other 30 years. Another set of amendments also seeks to remove the Human Rights Convention“ exception.

• Expanding scope of “high risk” definition: a proposal that the Government be required to define certain buildings as high risk even though they are not 18m in height.

• Proposed Statutory Indemnity Scheme: a requirement that the Government establish a fund to provide grants to leaseholders remediate cladding and fire or other building safety defects in relation to any type of building, and whether existing or built in future. The Fund is to be paid for by levies on developers/contractors, building insurers and lenders.

• Creation of a Building Works Agency to audit and administer building safety works: a proposal to create an agency to administer a cladding remediation and audit programme, which would require an audit of cladding, insulation and other building safety issues in all buildings over two storeys. The Agency’s role would be to prioritise buildings for remediation based on risk; determine grant funding; monitor progress of works; and seek to recover costs of remediation from responsible parties.

• Implied term in residential building contracts: a proposal to create a statutory implied term into every residential building contract that the residential unit (and any common parts) are (i) fit for the purpose of ordinary residential occupation, and likely to remain so; (ii) constructed as described and stated on its approved plans; (iii) not subject to any building safety risk; (iv) use materials that are as described in the plans and are of satisfactory quality; (v) designed to a reasonable standard and with reasonable care and skill; (vi) constructed reasonable care and skill; and (vii) fully compliant with statutory requirements and building regulations. Similar provisions are proposed for renovation contracts.

  The implied term would also be enforceable by any owner of the residential property (that is, including future owners and not just the original counter-party), and the limitation period for bringing a claim for breach of the implied term would be 25 years.

• Requirement for consultation on secondary regulations: a proposal that secondary regulations under the Act can only be promulgated after fire safety experts, leaseholders and their representatives, local authorities and safety and construction industry bodies have been consulted on them.

• Government reviews on building safety issue and effects: proposals to require the Government to carry out reviews and report to Parliament in relation to:

  • the effect of construction industry payment practices, including in relation to how payment practices can drive poor behaviour e.g. value engineering;
  • the overall state of the building and fire safety defect remediation in England and to determine if the matter constitutes a civil emergency;
  • the impact of building safety issues on leasehold tenants’ mental health;
  • the impact of building safety issues (including the provisions of the Building Safety Act) on access to insurance, including buildings insurance for owners, professional indemnity insurance and the wider insurance market;
  • the impact of the building safety crisis since June 2017 on leaseholder access to mortgage finance and on the wider housing market; and
  • the impact of the Government’s advice on waking watches and whether this was effective.

The Select Committee is now part way through debating the Bill’s individual clauses and proposed amendments, but has not yet reached the stage of discussing Part 4, which relates to “Higher Risk Buildings; it will do so when they reconvene on 19 October.