Building Safety: New Plans for Low Rise Buildings Unveiled

Background

On 10 January 2022, the Secretary of State for the Department for Levelling Up, Housing and Communities (“DLUHC”) published a letter to the residential property industry to propose a fully funded plan of action for the remediation of unsafe cladding on low rise residential buildings.

What will be required of residential property developers?

The letter from the DLUHC Secretary of State published 10 January 2022 asks residential property developers to:

1. Make financial contributions in 2022 (and in subsequent years) to a dedicated fund to cover the full outstanding cost to remediate unsafe cladding on 11 – 18 metre buildings (the “Fund”) which would otherwise be passed to leaseholders.

Before it is decided which developers will fall within the scope of the Fund, it is proposed that a roundtable be held with the largest residential developers and trade bodies. However, it is expected that those developers attaining annual profits at £10m or above from residential work will be required to contribute to the Fund;

2. Undertake all necessary remediation of buildings over 11m (i.e., both 11-18 metres and over 18 metres) that they have played a role in developing. The costs associated with such remediation works will be treated as separate to the costs of cladding remediation that is paid by the Fund; and

3. Provide comprehensive information on all buildings over 11 meters which have historic safety defects and which they have played a part in constructing in the last 30 years.

The Secretary of State, in clear words, states in the letter to residential property developers that the Government is prepared to take “all necessary steps” to ensure compliance with the framework. Such steps are said to include restricting access to Government funding and future procurements, operating curbs on planning and taking legal action for non-compliance.

Commentary

The Secretary of State’s proposals afford greater protection to leaseholders in relation to cladding remediation costs and mirror the changes to be introduced by the Building Safety Bill to extend the period for claims under the Defective Premises Act 1972 from 6 years to 15 years (or further).

The plans revealed by the Secretary of State reflect the Government’s ongoing objective to improve building safety across the entire industry and not just in relation to buildings over 18 metres. However, at least for now, the Secretary of State’s proposals for remediation appear to apply only to cladding and do not extend to any other fire or building safety issues.

Residential developers will need to be aware of the Secretary of State’s proposals, what they are likely to require of them and the impending deadline for compliance.

It remains to be seen what effect the Secretary of State’s proposals will have on the rest of the construction industry. But we may well see a rise in claims by developers against contractors, sub-contractors and sub-consultants for recovery of financial contributions to the Fund and remediation costs, or as a result of legal action being taken against developers for non-compliance. The widening of requirements for remediation may further exacerbate the problems of access to members of the construction and fire safety industry able to carry out the work, and the availability of professional indemnity insurance.

For further insight on our series of publications and webinars relating to building safety, please visit our website. If you have any queries regarding the legal implications of the DLUHC’s letter and/or the Building Safety Bill, please do not hesitate to contact us.