Building Safety Act 2022 – Developers to be ‘Responsible Actors’

Yesterday the Government made good on its promise to make developers responsible for the remediation of building-safety defects by passing into law The Building Safety (Responsible Actors Scheme and Prohibitions) Regulations 2023 (the “Regulations”) thereby establishing the Responsible Actors Scheme (“RAS”).

A building industry scheme provided for under the Building Safety Act 2022, the RAS is intended to improve the safety and standards of buildings by requiring members to identify and remediate (or pay for the remediation) of life-critical fire safety defects in residential buildings 11 metres or higher which were developed or refurbished between 5 April 1992 and 4 April 2022 (the “relevant period”).

As the Government detailed in its 30 January 2023 letter to ‘pledge’ developers, the Regulations establish prohibitions to planning and building control which will restrict developers who are eligible but elect not to join the RAS from carrying out any further developments irrespective of whether planning permission for such development has been previously obtained.

To date, the Government has been focused on major house builders and large developers who have developed/refurbished residential buildings known to have life-critical fire safety defects. However, the RAS’ eligibility criteria captures developers:

• whose principal business is residential property development (being where 50% or more of its total adjusted operating profits for the financial years ending 2017, 2018 and 2019 (the “specified period”) were derived from the development of residential property in the UK or the Secretary of State concludes that during the specified period the developer’s principal business was the development of residential property) and who were responsible for the development/refurbishment of one (1) or more relevant buildings in the relevant period; or
• who are responsible for the development/refurbishment of two (2) or more buildings which have been assessed as eligible for one of the Government remediation schemes.

The above is subject to a proviso in both cases that the developer also meets the ‘profit condition’ being where the developer’s average adjusted operating profits for the specified period are £10 million or more.

Additionally, developers who are responsible for relevant buildings but who do not meet the above criteria can voluntarily join the RAS, although at this point it is hard to envisage a developer who might be tempted to do so!

It is important to note that a developer is considered as being “responsible for” the development/refurbishment of a relevant building if any corporate body in the same group was responsible for developing/refurbishing in the relevant period, irrespective of whether the applicable building was developed/refurbished before the entities were in the same group. Therefore, developers need to examine the development history of all the Companies within their group in order to determine the buildings over which they may have obligations.

The conditions of RAS membership include:

• signing the developer remediation contract (the “Contract”);
• remediating, mitigating and/or paying for the remediation/mitigation of life critical fire safety defects in any defective buildings developed/refurbished by the developer;
• reimbursing the Government for works paid for by any of the tax-payer funded remediation schemes; and
• generally meeting all other obligations of the Contract.

Failure to comply with the RAS’ obligations can result in membership being revoked and enforcement of the planning and building regulations prohibitions.

In relation to the prohibitions, the Regulations stipulate that carrying out major development (which includes some commercial developments) will be prohibited both directly and/or via any agent or contractor. Any development carried out in breach of the prohibition will constitute a breach of planning control, and existing enforcement powers and offences will be applicable. The building control prohibition prevents an applicable person (again directly or via any agent/contractor) from submitting or being given various building control documents including (but not limited to) initial notices, plans certificate, final certificate and completion certificates.

While there are exceptions to each of the prohibitions, one wonders the extent to which the prohibitions may in fact impact smaller developers’ ability to undertake remediation works where it is through these continuing developments that such developers are generating the funds to remediate defective buildings.

Both leaseholders and developers also need to remember that notwithstanding the developers’ obligations within the Contract, resident management companies (“RMCs”), right to manage companies (“RTMs”) and other entities responsible for a building’s maintenance are not party to the Contract. Accordingly, not only is it inappropriate for developers to look to pass all the obligations from the Contract to RMCs/RTMs, given the nature of the remediation works, proper construction contracts, appointments and/or collateral warranties with/from any contractors and consultants involved in the remediation of such buildings are required.

In its Guidance, the Government has indicated it intends to launch the RAS this summer. Thus, developers should be on the watch for a notice from the Secretary of State ‘inviting’ the developer to apply to become a member of RAS. As with all matters relating to the remediation of building safety defects and the Building Safety Act, the next few months looks to be a very interesting time for the industry.

Edwin Coe regularly assists both leaseholders and developers in relation to cladding, build safety matters and the Building Safety Act. Should you have questions about the RAS, the Contract, any agreements or contracts required when remediating a building, the Building Safety Fund or any cladding issues, please contact Brenna Baye or any other member of our Cladding Team.

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