Building Safety Act 101 – the key sections and terms explained

Introduction

The Building Safety Act (BSA), which received Royal Assent in April 2022, has 171 sections. Such a large complex and diverse piece of legislation cannot be explained, even in brief, in one article. In the latest edition of Cornerstone we chose to look at some of the provisions of importance to the building industry, and we will cover other aspects in future issues.

Limitation periods

The concept that you can only sue someone for your losses for a limited period of time has been a cornerstone of English law for several centuries. The actual period of time has varied over the years, but in the 1930s the deadline of six years for breach of a contract and 12 years for breach of a deed were finally enshrined in statute.

It is, then, a seismic upheaval that the BSA has extended these limitation periods at all, but the extent of which was truly shocking.

The BSA has extended the limitation period in respect of civil claims for breaches of two existing statutes, and has brought into being a wholly new right of action with equally long limitation.

Defective Premises Act

S1 of the Defective Premises Act (DPA) 1972 requires any person acting in the design or development of a dwelling (house or flat) in the course of business to ensure that it is fit for habitation. A failure to do so, whether by workmanship, design, or the use of inappropriate materials give the wronged party the right to sue for personal injury, property damage and economic loss for up to 6 years from the cause of action arising. This has been changed by the BSA:

• For causes of action arising after 28 June 2022 the limitation period is now 15 years
• For causes arising before 28 June 2022 the limitation is now 30 years.

The BSA has also inserted a new s2A into the DPA, stipulating that this right of action includes the conversion of existing buildings into dwellings. The 15-year limitation period from June 2022 onwards will also apply, but as this is a new provision there is no retrospective right to claim.

Building Act

The second existing statute that the BSA has amended is the Building Act 1984. This is the legislation underlying the Building Regulations.

S38 of the Building Act provides that if a person builds a building (of any sort, not just dwellings) that does not meet the Regulations then the wronged party can sue. The wording is unclear as to whether they can only sue for personal injury or property damage, or if it covers pure economic loss, but the courts have found over the years that a defence of “it was signed off by local authority building control” is not a defence.

The BSA applied the same extensions to the limitation period for actions on this basis as for the Defective Premises Act, but the surprising thing about this BSA provision is that it is, at present, of no use. S38 of the Building Act has never been brought into force. It had been expected that it would go live at the same time as the BSA, but it didn’t and at present there is no indication when it might do so.

Construction products

The wholly new right of action brought about by the BSA relates to defective construction products. S147 to 155 creates the right to sue construction product manufacturers and suppliers for breach of the Construction Products Regulations that causes a building or dwelling to become unfit for habitation. Liability also arises if a person marketing or supplying a product makes a misleading statement in relation to the product.

The limitation period for these claims is 15 years prospectively (after June 2002), but for cladding products there is a retrospective limitation period of 30 years. There is, however, a “buffer period” of a year for claimants getting close to the cut-off.

Obviously we won’t know exactly how this new right of action is going to work until the courts have had a chance to consider it, but there is one last unusual provision that shows how far the Government was prepared to change the law to assist potential claimants: the Government has given itself the right to order that defendants pay a “just and equitable” amount towards the claimant. How – and in what circumstances – this might be used has not been explained, so watch this space.

Building Inspectors

In the beginning there were local authority building control officers. Then the Building Act 1984 introduced Approved Inspectors: private practice consultants, registered with CICAIR Ltd, the Construction Industry Council Approved Inspectors Register, who are required to carry insurance from a scheme approved by the Secretary of State. Free-market principles were brought to the approval and certification of the design and execution of buildings as being in accordance with the Building Regulations. The Building (Approved Inspectors) Regulations 2000, and then 2010, set out their duties and liabilities.

There was some question about the possibility of taking legal action against Approved Inspectors; the leading case of Murphy v Brentwood District Council [1991] confirmed that it was not possible to make a claim in tort, but what about in contract?

Approved Inspectors were appointed by the client by agreement, and the terms of that agreement could presumably be breached. Although there is no contract between most claimants and the Approved Inspector, the cases of Crest Nicholson Operations Ltd and another v Grafik Architects Ltd and another [2021] did confirm that a breach of contract claim is possible, in accordance with the usual common law principles of contract law.

Now, however, the BSA has introduced a whole new system. Individuals and organisations will need to register as “building control approvers”. A new Building Safety Regulator (BSR) will maintain a register of building control approvers and set competence criteria for their role.

The BSR will have the power to set insurance requirements, but cover will need to be obtained from the wider insurance market, rather than a limited number of government-approved schemes, as s48 of the Act removes the requirement for an approved inspector to obtain insurance from a government-approved scheme. This provision came into force on 28 July 2022 in England and Wales via new regulations:

• In England and Wales, the Building (Approved Inspectors etc) (Amendment) (England) Regulations 2022 (SI 2022/718) amend the Building (Approved Inspectors etc.) Regulations 2010 (SI 2010/2215) by removing the requirement for an approved inspector to show that it maintains insurance from a government-approved scheme in certain situations.
• In Wales, the Welsh Government (WG) has made the Building Safety Act 2022 (Consequential Amendments) (Approved Inspectors) (Wales) Regulations 2022 (WSI 2022/767). The regulations make consequential changes to the underlying Building Regulations regime to cater for the removal of the insurance requirement.The WG subsequently issued a circular letter, Removal of criteria for Approved Inspector insurance (WGC 004/2022), which makes it clear that approved inspectors can obtain insurance in the open market that reflects the risk of the type of work they undertake. However, the amendments do not remove the need to comply with insurance requirements imposed through registration with the Construction Industry Council Approved Inspectors Register.

As well as changes to insurance requirements, the BSA sets out procedures both for the mandatory registration of building control approvers (which also apply to local authority building control officers) and also for breaches of the new scheme.

A person’s entry on the register can be for all purposes, or may be restricted to certain functions. They may be for a fixed time only, and can be subject to conditions. The register will be available for public inspection and there will be a code of conduct for those on it:

• inspectors will be expected to behave in a way that would be expected of such a person, and can be sanctioned for conduct liable to bring the profession into disrepute. This is not toothless: sanctions include cancellation of registration, suspension, the imposition of fines or conditions on working. Inspectors can be suspending for 3 months pending investigation into professional misconduct.

The new system is due to come into force by October 2023. The administrative burden on both inspectors and local authorities is going to be significant, and may reduce the number of approved inspectors. Nowhere have we seen an accusation that inspectors were the source of the problems in the industry; sledgehammers and walnuts spring to mind.

Prohibitions on development

In a completely new departure from the status quo, the regulator will have powers to prohibit persons from carrying out the development of land. The meaning of “development” in this context has not been defined, presumably to give the regulator as wide a remit as they feel is necessary.

The persons to whom it can apply will have to be members, or eligible for membership, of one of the new building industry schemes. In practical terms, individuals and companies deemed ineligible will not be permitted to apply for building regulations, or receive final certificates or other documentation for development, regardless of whether planning consent has been granted, land purchased or anything else.

It’s going to be very interesting to see what standards the regulator is going to use for making decisions to prohibit, and how those are challenged in court, and the evidential approach is going to be particularly difficult. Is it going to be based on a single development? Who the directors were? What sort of problems arose? With construction disputes being some of the most complicated cases around it’s difficult to see how this is going to be done fairly.

Remediation of defects

It is obvious that the remediation of defects – particularly in respect of cladding – is at the heart of this Act. It is not, therefore surprising that Parliament has taken a strong line on this. The courts can now order a contribution to costs: this can be from the landlord now or at the time of the defect arising, from the developer or from a person associated with development.

The provisions in respect of building liability orders came into force in June 2022.

The first case has just been started against a landlord who, in the Government’s view, has been too slow to do anything about defective cladding. The Department for Levelling Up, through the new Recovery Strategy Unit, has given Grey GR – owned by the Railways pension scheme – 21 days to commit to remediating fire safety defects at its 15-storey Vista Tower in Stevenage. There have been two years of delay, and the Secretary of State has said that “enough is enough”. The Unit was set up to identify and pursue companies who repeatedly refuse to fix their buildings, although it should be noted that in general the housebuilders have made huge financial commitments to remediation works. Landlords like Grey GR were described by the Unit as “outliers”.

The Act has even included specific provisions in respect of insolvent landlords, such is Parliament’s determination to address the problems. Insolvency Practitioners need to be aware that, under s125, companies have a duty to remedy defects or pay for the remediation, and allowances must be made in the winding-up of the company’s affairs. Further, the courts can order the body corporate associated with the landlord to pay an amount that the court considers to be just and equitable.

New schemes

The Act has set up some specific schemes in respect of new housing, but has also given the Secretary of State the power to establish schemes for any purpose which improves the standard of buildings and secures the safety of people in or about buildings,. This specifically includes schemes to remedy defects and make payments. These provisions were brought into force on 1 September 2022 by the Building Safety Act 2022 (Commencement No 2) Regulations 2022 (SI 2022/927).

One of the new schemes specified by the Act is the new homes ombudsman. It is aimed at providing a forum for owners of newly-built homes to seek redress against developers and builders. Membership of this scheme is open to all developers, and members will be required to abide by a code of conduct. The Secretary of State has been given the power to require developers to join the scheme, and it is possible that it will become mandatory.

This could pave the way for the New Homes Quality Code, published in December 2021 by the New Homes Quality Board, to become mandatory. The scheme allows any complaints to be investigated by independent individuals, removing the “you said/they said” from the process. The New Homes Quality Board has chosen Dispute Service Limited as its partner to establish and deliver the scheme. It is due to come into force by October 2023, but it is likely that it will be operational before that.

The Act also provide for new build home warranties, the beneficiaries of which will be owners, and owners of common parts. The warranty period will be 15 years, which fits with the new liability period under the Defective Premises Act, and will be insurance-backed. Under the warranty the developer will be required to remedy defects, Failure to provide a warranty will lead to a fine.