Update: The Building Safety Pledge Contract

Developers are given six weeks to sign the Building Safety Pledge contract.

In response to the Grenfell Fire, the Department for Levelling Up, Housing and Communities (“DLUHC”) wrote to major residential property developers and, where applicable, the Home Builders Federation, on 31 March 2022, inviting parties to sign a pledge letter setting out that leaseholders should not have to pay for any costs associated with life-critical fire-safety remediation work arising from the design, construction or refurbishment of buildings of 11 metres and above. This pledge was intended to be formalised by a legally binding contract, the first draft of which was published in July 2022 – as referred to in our article published in July 2022.

The final version of this legally binding contract; the ‘Self Remediation Terms and Deed of Bilateral Contract’ (“the Contract”) was issued to developers on 30 January 2023. Developers now have just six weeks (until 13 March 2023) to sign.

A copy of the Contract can be found here. It includes a number of obligations on the part of developers with the aim of “fix[ing] all life-critical fire safety issues in buildings over 11 meters which they had a role in developing or refurbishing in England“; such as:

• Identifying and assessing buildings which require work as soon as reasonably practicable after the date of the Contract being entered into between the developer and the DLUHC;
• Carrying out and completing the works at the developers own cost, as well as procuring suitably experienced and qualified sub-consultants, sub-contractors or suppliers or any other persons;
• Engaging with certain third parties no less than 40 business days after either entering into the Contract with the DLUHC or from when the building is identified as ‘a building requiring works’;
• Keeping residents informed of the progress towards meeting these commitments; and
• Reimbursing taxpayers where public money has been used to fix unsafe buildings.

Under the Contract, developers will commit an estimated £2 billion or more for repairs to buildings they developed or refurbished over the past 30 years. This means that together with the Building Safety Levy, the industry is directly paying an estimated £5 billion to make buildings safe.

Should a developer refuse to sign the contract, the Government may use its powers under sections 126 to 129 of the Building Safety Act 2022, to effectively black list the developer(s); preventing them from carrying out future developments in England. Michael Gove has warned that developers must sign, else “find another line of work”.

Conclusion

Whilst there is concern in the industry as to the feasibility of the task – both in terms of the deadline and the impact of the financial contribution at a time when contractor and supply chain insolvencies are high – it appears that innocent leaseholders who lack the means to pay for the cost of repairing building safety issues can now finally breathe a sigh of relief.