REUTERS | Mohammad Ponir Hossain

What are the new rights of recourse under the Building Safety Act?

After many months of wrangling, both in the House of Commons and the House of Lords, the Building Safety Bill finally received Royal Assent at the end of last month. Now known as the Building Safety Act 2022 (BSA 2022), the new building safety regime that is being introduced is going to have a significant impact on many of us.

Given the breadth of change on the horizon, I’m going to focus on just a few bits of the BSA 2022 – the enhanced rights of recourse available to those affected by building safety defects – but what do I mean by this?

What are the new rights of recourse?

Although we haven’t seen the Act as enacted, we know what was in the Bill and there is also the government’s redress factsheet to look at.

Essentially what I mean by new rights of recourse in this context are:

  • Extended rights for homeowners under the Defective Premises Act 1972.
  • Section 38 of the Building Act 1984 coming into force.
  • New rights to sue construction products manufacturers for defects.
  • Increased limitation periods for building defects and cladding in particular.
  • New building liability orders.
  • Developers obliged to provide a new home warranty lasting for 15 years.

I think these are worth highlighting not least because two of these changes come into force soon (by the end of June 2022). That feels scarily soon to me, especially as there is so much to get our heads around.

Extended rights under the Defective Premises Act 1972

The Defective Premises Act 1972 (DPA 1972) currently imposes a duty on those involved in designing and building new dwellings to work in a professional and workmanlike manner, to use proper materials and to see that the completed dwelling is fit for habitation. As such, it applies to property developers, professional consultants and contractors (but not those who are simply following instructions) and gives homeowners a right to sue when defects appear.

However, the DPA 1972 has its limitations. For example, it only applies to new builds and conversions and the defects must be sufficiently serious to render the dwelling unfit for habitation. Also, any claim must be made within six years of the dwelling being completed.

The BSA 2022 will change this, as it is extending the right to claim to cover any work undertaken on an existing dwelling (that is, it will include refurbishment works), provided that work is done in the course of a business. It is also extending the limitation period from six to 15 years for work done after the change comes into force (a prospective period), and will also introduce an even longer, 30-year retrospective limitation period for claims that accrued before the BSA 2022 takes effect. There is also a buffer period for potential claimants who find themselves perilously close to the limitation deadline when the change takes effect in June. In such cases, the limitation period will not expire until one year after the new limitation period comes into force.

Section 38 of the Building Act 1984

Section 38 of the Building Act 1984 (BA 1984) has been on the statute books for a very long time but, until now, it was never brought into force.

Once brought in by the BSA 2022, section 38 will give private individuals – homeowners – the right to claim where they suffer damage because work on a building fails to comply with the Building Regulations. However, section 38 is not limited to just homeowners and dwellings – it will apply to all buildings in England and Wales. Interestingly, “damage” in section 38 is defined to include the:

“… death of, or injury to, any person (including any disease and any impairment of a person’s physical or mental condition).”

Once again, the BSA 2022 extends the limitation period for claims under section 38 to 15 years. This change is not retrospective and so will only apply to work done after the section comes into force.

Suing construction product manufacturers

In addition to all the rights mentioned above, the BSA 2022 creates a completely new right to sue construction products manufacturers for damages arising from breaches of the Construction Products Regulations if that breach causes a building or dwelling to become unfit for habitation.

Again the limitation period for this is 15 years and it applies prospectively. However, for claims relating to defective cladding products, the limitation period applies retrospectively for 30 years. This mirrors the changes to the DPA 1972. Like those proposals, the amendments for construction products provide a buffer period for potential claimants who find themselves perilously close to the limitation deadline when the change takes effect. In such cases, the limitation period will not expire until one year after the new limitation period comes into force.

We will also see new regulations for construction products, with new terminology for regulated products, such as a “safety critical product” and “safe”.

Increased limitation periods

As I’ve mentioned above, increased limitation periods will apply to claims under the DPA 1972, section 38 of the BA 1984 and to claims against construction product manufacturers.

This means many of the people who are affected by historical defects may have a right to sue to get those defects remedied.

Building liability orders

As far as I’m aware, the concept of a “building liability order” is a new one and is referred to in the redress factsheet. As I read it, by applying to the court for a building liability order, a party will be trying to pierce the corporate veil. It will be trying to get to parties (generally developers) who may otherwise escape liability for safety defects because they carried out projects through shell companies or special purpose vehicles (SPVs).

If the application for an order is successful – if the court considers it “just and equitable” – the order will extend specific liabilities of one company (presumably the shell or SPV) to any of its associates, who will be jointly and severally liable. The BSA 2022 tells us that “associated” means being controlled by another company (for example, parent companies) or if both are controlled by a third company (for example, sister companies). There are also details regarding what “control” means and it will apply to a company based overseas if it is an associated company.

The scope of these orders is limited to a claim under the DPA 1972, section 38 of the BA 1984 or any other claim resulting from a “building safety risk” (which is also defined in the BSA 2022 and means “a risk to the safety of people in or about the building arising from the spread of fire or structural failure”). However, as many projects are procured through SPVs, this could have significant implications.

Again, the devil may be in the detail, and much of that is still awaited.

New home warranties

The BSA 2022 obliges developers to provide a purchaser with a new home warranty lasting for 15 years (in contrast to the usual ten years that is currently the norm). There will also be penalties for not procuring a new home warranty.

In its factsheet, the government explains that it opted for 15 years to mirror the enhanced rights given under the DPA 1972. Also, that:

“… mandating the length and parameters of coverage will set clear expectations and transparency for all concerned of what is and is not covered.”

When does this all happen?

We know the changes related to the DPA 1972 and section 38 of the BA 1984 come into force two months from Royal Assent, so on 28 June 2022 new, longer limitation periods will apply to that legislation. Although we know the overall timetable is 12-18 months and there is a transition plan that people can consult, the timetable for all the other changes is less clear. That means there is still some uncertainty over what will happen and when, and we still have to wait for the conclusions from the Grenfell public inquiry.

Clearly building safety is something we will be discussing for some time to come and this might not be my last post on the topic!

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