The Building Safety Act (BSA) is not yet fully implemented and further provisions may come into force in 2024. The industry could face further costs in respect of residential development, with the implementation of the Building Safety Levy provided for under s.58 of the BSA.
The full details of the levy will be set out in secondary legislation that is yet to be published. However, the scope is potentially wide - applying to buildings in England containing one or more residential dwellings and other temporary accommodation, such as hotels or hospitals. This could raise an estimated £3bn over the next 10 years, contributing to the cost of remedying building safety defects.
In addition, s.144 of the BSA provides for new build home warranties to be provided by developers of new homes. Further regulations will contain the details of the warranties, including what defects will need to be remedied and the insurance requirements. When implemented, it will be a statutory obligation to provide a new-build warranty with a policy term of at least 15 years.
Prompt the Building Safety Act
Regulations will also set out that failure to provide a warranty will result in a financial penalty. It is unclear whether the insurance industry will have the appetite to offer the products necessary for the requisite level of insurance. Without backing from the insurance industry, implementing a statutory requirement for new build home warranties will be challenging.
S.38 of the Building Act 1984 has remained dormant on the statute books despite the BSA providing that liability will be subject to a 15-year limitation period - applying prospectively when the provision is brought into force. S.38 allows for a claim for compensation for physical damage caused by a breach of the Building Regulations and it was anticipated that this section would be brought into force shortly after the BSA was implemented, but it is not clear if and when this will happen.
Wales is also due to implement its higher-risk building regime which will differ in some respects to the regime implemented in England. The Welsh government recently confirmed that oversight of new higher-risk buildings will be restricted to local authority building control from April 2024.
On 1 January 2024, The Building Safety (Description of Higher-Risk Building) (Design and Construction Phase) (Wales) Regulations 2023 came into force confirming the definition of a higher-risk building in Wales. This differs from the definition in England, for example, a higher-risk building in Wales need only contain one residential unit - as opposed to two in England.