Section 170(3) of the Building Safety Act 2022 (the “BSA”) sets out a number of provisions which will come into force on June 28, 2022 – two months after the BSA received Royal Assent ( April 28, 2022).
These changes include new protections for tenants against fire safety relining and repair costs, updates to the Defective Premises Act 1972; the Building Act 1984 and other rights of recourse against building manufacturers.
Protection of tenants
We’ve all seen stories of individual tenants facing bills of tens of thousands of pounds for repairs and, in some cases, declaring themselves bankrupt.
For the first time, eligible tenants living in buildings over 11 meters high or at least five stories will be legally protected from building security costs:
- Eligible tenants (those who live in their own home or who own up to three properties in the UK in total) will be fully protected from the costs associated with remediating hazardous coatings. They will also benefit from cost protections associated with non-coating defects, including measures such as wake-up watches.
- It will be illegal for freehold owners to pass on the cost of historic building repairs or cladding removal to any of their tenants, including ineligible tenants, if they are related to the developer of the building.
- It will be illegal for freeholders to pass on historic building security costs to eligible tenants if they pass a prescribed wealth test.
- Where a developer cannot be held liable and the building owner is not required to bear the full cost, tenants with non-coating issues will also be protected by a cap on the amount that they must pay for these costs, if the value of their property exceeds a certain amount (renters of properties below this ceiling will not pay anything). Where tenants have purchased condominiums, their cap will reflect their ownership share in the property.
Any costs that are not recoverable from tenants will have to be borne by building owners and landlords. Secretary of State Michael Gove MP wrote to landowners yesterday outlining their new legal responsibilities and alerting them to the consequences of non-compliance, including criminal penalties.
See below for ways building owners and landlords can recover the costs they have to bear.
The Defective Premises Act 1972 (the “DPA”)
It is a misconception that the changes on June 28, 2022 only apply to high-rise buildings and fire safety works – they are broader and more important than that.
Prior to June 28, 2022, Section 1 of the DPA required those involved in the construction of dwellings to ensure that the dwelling is ‘fit for habitation’ when finished.
If, due to the way it is built, the dwelling was not considered suitable for habitation, then a claim could be brought by the person who originally commissioned the work. A claim could also be brought by any person or entity subsequently acquiring an interest in the dwelling, such as a freehold owner of a block, an owner occupier or a lessee.
Prior to June 28, 2022, a claim could only be brought to the extent that it related ‘arrangement’ of a dwelling. This meant that any claims under the DPA were limited to those original construction or conversion works.
Similarly – by June 28, 2022 – any claim under the DPA had to be filed within six years of the date of completion of such work.
Extension of the scope of the DPA
The BSA inserts a new section 2A in the DPA. Section 2A expands the scope of obligations due to any work performed on a “relevant building” giving rise to a DPA claim arising from “Any job undertaken on an existing dwelling, provided that the work is carried out within the framework of a company”.
This means that claims arising from any work undertaken on a dwelling which renders it unfit for habitation may be carried out, provided the work is undertaken by a company (i.e. it is chargeable and not undertaken by the owner or a friend, for example).
Government Remedies Fact Sheet refers to liability under the DPA as “strict”. This means that no fault or negligence must be shown in a claim.
If a building is unfit for habitation due to faulty work, a claim can be brought – the claimant does not have to prove that the builder was at fault.
Nor is it a valid defense in a DPA claim for the builder to claim to have followed established practice at the time. What must be demonstrated to the court is that the dwelling was not habitable at the time of the completion of the work because of the work that was carried out. The Civil Liability (Contribution) Act 1978 may allow a defendant of a DPA claim to claim contribution from another party involved in the work, but this will depend on the facts in question.
It remains to be seen in due course whether the courts will adopt this interpretation of the provisions – as it could have very significant consequences for those involved in housing construction, both historically and in the future.
Two changes are made to the time period within which a claim under the DPA can be filed, such that:
- For claims under Section 1 and Section 2A of the DPA, the statute of limitations has been extended from six to 15 years prospectively i.e. for any project that ends on or after June 28, 2022.
- For Section 1 claims only for work that has been completed on historical projects six to 30 years old retrospectively.
Section.38 Building Act 1984 (the “BA”)
BA Section 38 has been in the bylaws book since 1984, but has never been put into effect. It provides that a “violation of an obligation imposed by building regulations insofar as it causes damage” is actionable.
BSA is making Section.38 effective June 28, 2022. In addition, BSA is also extending the statute of limitations for claims under Section.38 to 15 years – this will not take effect until prospectively (i.e. for buildings completed after June 28, 2022).
It is important to note that the BA is not limited to housing/residential properties alone, but extends to all buildings falling under building regulations.
The BSA provides a new cause of action against manufacturers of building products where a product has caused/contributed to defects in a home. This new cause of action largely follows the extended statutes of limitations for the DPA and Section.38 BA, as manufacturers of “coating products” may be responsible for:
- a retrospective 30-year period for damages (personal, material and economic); and
- for all construction products, prospectively for a period of 15 years.
There are specific elements that must be proven to make such claims being that:
- a product fails to comply with a construction product requirement (such as non-compliance with regulations at that time);
- the manufacturer makes a misleading statement regarding the capabilities of this product; Where
- the product is determined to be inherently defective.
Since this is a new cause of action, it will be interesting to see how the courts will apply these provisions in the future.
The government has promised that the BSA will make the biggest changes to building safety in over 40 years and, at the same time, it has strengthened the rights of landlords, tenants and occupiers to complain about faulty work.
Extensions to torts, particularly those that operate retroactively (including a new cause of action that operates retroactively), are highly unusual and only time will tell what the true impact of these changes will be.
Unfortunately, however, these provisions do not guarantee a remedy for those with defective homes or buildings. The company concerned may no longer exist or may be insolvent. Even if it is still in business, professional indemnity insurance policies may not respond in the event of a claim because they generally only respond in the event of negligence. Since the Grenfell tragedy we have already seen insurers limit or refuse to provide fire safety design cover and with longer statutes of limitations this is likely to be even more prevalent. In these circumstances, claimants will depend on the responsible party having sufficient financial means to pay!