The Building Safety Act received Royal Assent on 28 April 2022 bringing some of the biggest changes to the construction industry in recent history. This may result in increased risk and cost to developers as well as delays to typical construction programmes. While a lot of the final detail is yet to be provided through secondary legislation, some changes came swiftly into force, and other proposed changes need to be considered now. Here we look at three important issues for lenders:
1. New extended periods for bringing claims
On 28 June 2022, extended limitation periods were introduced for certain claims alongside the new Section 2A of the Defective Premises Act:
- Section 1 - the limitation period for relevant claims is extended from six years to 30 years and applies prospectively and retrospectively so claims may be brought for relevant works carried out since mid-1992
- Section 2A - introduces new rights for building owners and leaseholders to claim for subsequent building works, subject to a 15 year limitation period
- Section 38 Building Act - allows claims in relation to damage arising from the misapplication of or failure to apply relevant Building Regulations, subject to a 15 year limitation period. "Damage" encompasses physical and mental damage plus money claims. Although the limitation period for Section 38 claims has been extended, the Section itself is at the time of writing not yet in force.
2. It's not just about buildings over 18 metres
There are separate definitions of "higher risk" and "relevant" building depending upon which part of the Building Safety Act applies.
- Part 3 - construction phase - "higher risk" is a building containing at least two residential units and at least 18 metres high or with at least seven storeys and is of a description specified in relevant regulations with some specific exclusions
- Part 4 - occupational phase - as above
- Part 5 - leaseholder protection - "relevant building" is a building of 11 metres in height or comprised of at least five storeys.
The final definitions are subject to a secondary legislation in the draft form of the Higher Risk Buildings (Descriptions and Supplementary Provisions) Regulations currently being laid before Parliament.
3. Better protection for leaseholders
Remediation orders can now be issued against landlords requiring them to remedy relevant defects that cause a "building safety risk" (not limited to cladding issues). This includes risks to the safety of people in or about the building arising from spread of fire, or collapse of the building or any part of it.
For more information, please visit our Building Safety Hub.