Will the Building Safety Bill achieve the recommendations in the Hackett report?
The Building Safety Bill (the Bill) was introduced to the House of Commons in July 2021. The Bill aims to address shortfalls in the existing regulatory standards of the construction industry, as identified by an Independent Review commissioned after the Grenfell Tower Fire. The core recommendations of this review, and the government's response to them, is usefully summarised by our Sam Phillips, here.
In recent months, attention has increasingly turned to the limitations of these proposals, and particularly to a perceived lack of recourse for the owners and occupants of residential tower blocks with unacceptable fire prevention measures. Apparently with this in mind, in November the government published its intention to extend legal rights to redress for defects in dwellings and for breach of building regulations.
With the passing of the Building Safety Bill, changes will be made to the Defective Premises Act 1972 and the Building Act 1984 to enhance the ability of building owners, homeowners, and leaseholders to seek compensation. The most significant changes include extending limitation periods and widening the pool of potential applicants. Though made primarily in response to fire safety defects, the wider implications of these changes for contractors, and for the construction industry in general, are considerable.
The Defective Premises Act 1972
As the law stands, Section 1 of the Defective Premises Act 1972 (the DPA) provides that those involved in work 'for or in connection with the provision of a dwelling' must ensure that it is done in a workmanlike or professional manner with proper materials, such that it is fit for habitation. Meeting this obligation requires a) that the work meets the relevant standards and regulations in force when the work is completed (this is 'workmanlike' or 'professional'); and b) that the dwelling is capable of occupation for a reasonable time without risk to health or safety, and without undue inconvenience or discomfort ('fit for habitation'). Previous cases have shown that the standard demands (among other conditions) that the building's foundations are not significantly defective; that no defect undermines the security of the home; that access points and escape routes are free of hazards; and that no essential element of the building, such as a roof or a damp-proof course, is missing.
Under the bill, where the obligation under Section 1 is breached, the dwelling's commissioner, and any who acquire a legal or equitable interest in the dwelling (freeholders and leaseholders), will be able to claim compensation.
It is an essential element of a breach of the Section 1 duty that defects are caused by unprofessional workmanship. This raises the vexed question of compliance with historic regulations. In the case of Rendlesham Estates plc v Barr Limited  EWHC 3968, the Technology and Construction Court held that the workmanship of defendants must be assessed according to the prevailing regulations and standards at the date of completion – especially Building Regulations. It follows that work which was compliant when completed cannot be deemed unprofessional by standards imposed since its construction. Therefore, in relation to combustible cladding for example, it is not yet certain whether the presence of combustible cladding alone will render a dwelling unfit for habitation, but it is conceivable that if the cladding did not breach professional standards and regulations when it was installed, the defect will not be caused by 'unprofessional work' within the meaning of Section 1, and the claim will fail.
What is going to change?
The existing limitations to this principle are that compensation cannot be claimed for refurbishment works, and claims must be brought within six years of the work's completion. This is set to change as the scope of the Act will soon be widened to encompass any work on any dwelling in England & Wales. This will include the building of flats and houses, as before, but will also apply to work such as extensions, repairs, the installation of insulation, and of course the fitting of external cladding.
A key point here is that the duty under Section 1 of the DPA, to ensure 'fitness for habitation', will apply even if work is done to a non-residential part of the building. Accordingly, contractors who complete defective work on a block of flats will be vulnerable to claims by the building owner and residents, even if the work was limited to repairing a lobby or stairwell, for example.
Perhaps the most consequential change is that the limitation period for claims is set to more than double, from 6 to 15 years. The new limits will apply retrospectively in respect of works currently covered by the DPA, and prospectively to work brought within its scope by the Bill. This means that if the Bill becomes effective in the summer of next year, as intended, formerly time-barred claims can be brought for work completed between 2007–2016.
The Building Act 1984 (Section 38)
The Building Act 1984 ('the Building Act') is the primary legislation under which building regulations are made. It sets acceptable standards for health, safety and welfare, and applies to all buildings (residential or otherwise) in England & Wales. The Act imposes criminal liability on those who breach building regulations—often builders, contractors and building owners—and empowers local authorities to prosecute them.
What is going to change?
The Building Safety Bill will bring into effect Section 38 of the Building Act, which has been on the books since the Act was approved but has never been in force. Once enacted, this Section will impose civil liability for breaches of building regulations that cause physical damage. Effectively, any individual who can prove personal injury or property damage caused by a breach of building regulations can seek compensation from the person responsible for the breach.
In addition to bringing Section 38 into force, the Bill will extend the limitation period for claims from 6 to 15 years, in line with the amended DPA 1972. Unlike the DPA, this extension will only apply to works completed after its enactment.
The general effect of these changes is to dramatically increase the number of claims that will be actionable once the Building Safety Bill becomes law in mid-2022. However, the claimant's prospect of success will not be improved by extending limitation periods alone.
Though it is estimated that an additional 1.16 million dwellings will be brought within the scope of the DPA 1972, if the Section 1 standards of 'fitness for habitation' and 'workmanlike and professional work' are unaltered, it is not obvious that all fire safety defects will meet it.
The implications of the changes to the Building Act 1984 are more obviously consequential. Where before only a local authority bringing criminal charges could seek redress on behalf of the occupants of non-compliant premises, now anyone may bring a civil claim. On the face of it, claims under the Building Act will also provide wider grounds for redress than the DPA 1972 because they are not limited by a test of habitability, and avoid the complex task of proving the three elements of breach of duty under Section 1.
If the courts adopt the principle that a sufficiently serious breach of Building Regulations will make a dwelling 'unfit for habitation' under the DPA, it is possible that the new civil action under the Building Act may serve to support a subsequent DPA claim. It is hard to imagine that a claimant that successfully brings a claim under the Building Act could not use the proven breach of Building Regulations as evidence of unprofessional work for the purposes of Section 1. However, the DPA has been subject to decades of judicial interpretation, and the bar it sets for breach of duty is high. Without an explicit change to Section 1 of the act, particularly in relation to 'unprofessional work' and historic regulations, it is doubtful that the proposals of the Building Safety Bill are significant enough to achieve the objectives which its proponents have set for it.
While the judicial response to these changes is uncertain, the industry response to these changes may be easier to anticipate. With longer liability tails and exposure to a much wider class of stakeholders, we can at least expect the greater risk to be reflected in an increase in claims, construction fees and insurance premiums.
This article is for general information only and does not, and is not intended to, amount to legal advice and should not be relied upon as such. If you have any questions relating to your particular circumstances, please get in touch with a member of our team.