Building Safety Act 2022

Part 5: Other provisions about safety standards, etc.

Remediation of Certain defects

Section 116 – Remediation of certain defects

Effect

909. Section 116 provides an overview of sections 117 to 125, and Schedule 8, which make provision about the remediation of certain defects in relevant buildings.
910. The section does not have any legal effect, rather it guides the reader through the relevant provisions.

Background

911. Sections 116 to 125 and Schedule 8 make provision about the remediation of certain defects in certain buildings. They are collectively referred to as the "leaseholder protections", as they protect leaseholders in multi-occupied residential buildings from certain costs associated with remediating historical building safety defects.
912. Most multi-occupied residential buildings in England, such as blocks of flats, are owned by a freeholder, with the individual flats owned on long leases. A leasehold property is owned by the leaseholder for the length of the lease agreement with the freeholder, after which point the ownership of the property returns to the freeholder. The freeholder typically owns the land on which the building is built, as well as the structure and common parts of the building (such as the staircases and hallways). Leases of over 21 years are generally known as long leases and it is not uncommon for 999-year leases to be granted. Leaseholders have certain rights to extend the length of their lease if they wish to do so.
913. The ownership structures of multi-occupied residential buildings can be complex with multiple additional landlords who own the building or parts of it, separate to the freeholder of the land on which the building sits. In the most straightforward cases, there will be a freeholder who owns the land and the building itself, and leaseholders who own the long leases of dwellings contained within the building; this explanatory note uses that straightforward case for illustrative purposes.
914. It is the freeholder’s responsibility to ensure the safety of the building and the upkeep of the structure and common parts, and the costs associated with these responsibilities can normally be charged to leaseholders through the service charge, as per the terms of the lease. The service charge will commonly cover the costs associated with routine maintenance and repairs.
915. Since the Grenfell Tower fire in 2017, it has become apparent that a number of residential blocks of flats have serious historical fire safety defects, often, but not always, associated with their original construction. Most notably this has included the use of unsafe cladding on the external walls of these buildings. Due to the risk to life posed by these defects, extensive and often costly remediation work to make buildings safe can be needed.
916. The terms of most leases, which are contractual agreements between the leaseholder and freeholder, will allow the costs associated with this remediation work to be passed on to individual leaseholders through the service charge. The costs per lease to remediate historical building safety defects have sometimes been very high and frequently run into the tens or hundreds of thousands of pounds. These costs have put strain on leaseholders who are often unable to meet these costs.
917. The Government has brought forward a series of interventions to protect leaseholders from the costs associated with remediating historical building safety defects, including direct grant funding for the costs of remediating unsafe cladding on certain buildings, and agreeing with developers that they will fix buildings they have had a role in developing or refurbishing. This Act also contains a number of provisions to allow those directly responsible for creating building safety defects to be held accountable through the Courts.
918. The leaseholder protections measures further protect certain leaseholders in law by preventing altogether, or otherwise limiting, the costs that can be passed through the service charge to the leaseholder in respect of certain historical building safety defects.

Section 117 – Meaning of "relevant building"

Effect

919. This section defines a "relevant building" for the purposes of section 119 to 125 and Schedule 8; it defines the types of building to which the leaseholder protections apply.
920. A "relevant building" is defined as a self-contained building or part of a building containing at least two dwellings which is at least 11 metres in height, or which has at least five storeys.
921. Subsection (3) sets out that leaseholder-owned buildings are not included in the definition of "relevant building". Those types of buildings that are not included in the definition are those in which the building has undergone collective enfranchisement, or which are on commonhold land.
922. Subsections (3)(a) and (3)(b) capture the statutory routes by which a building can undergo collective enfranchisement. These are under Parts 1 or 3 of the Landlord and Tenant Act 1987, and under Chapter 1 of Part 1 of the Leasehold Reform, Housing and Urban Development Act 1993. Subsection (3)(c) provides a power for the Secretary of State to specify, by regulations, other routes by which a building can become leaseholder owned, and which will also not be included in the definition of "relevant building". Subsection (3)(d) captures buildings which are on commonhold land, which has the same meaning as in the Commonhold and Leasehold Reform Act 2002.
923. Subsections (4), (5), and (6) set out the meaning of "self-contained". A building is self-contained if one part of it could be redeveloped independently of the rest of the building.

Background

924. The problems associated with historical building safety defects in multi-occupied residential buildings are concentrated in medium- and high-rise buildings. There is a greater risk to life in taller buildings when fire does spread, and so defects in taller buildings are more likely to need to be remediated, and it is leaseholders in those buildings that have found themselves more likely to face significant remediation costs. Section 117 defines a relevant building (one that is within scope of the protections) as a building containing at least two or more dwellings and which is at least 11 metres in height or has at least five storeys.
925. Buildings which are below 11 metres in height, and which have fewer than five storeys are not within the scope of the leaseholder protections as evidence shows that there is no systemic issue with historical fire safety defects in these buildings. Costly remediation is unlikely to be needed, and there are likely to be more proportionate mitigations, such as the installation of fire alarms. It is not, therefore, necessary for low-rise buildings to be included within the definition of relevant building.
926. The ownership structures of multi-occupied residential buildings are discussed in the explanatory note for section 116 and set out that (in simple terms) in most cases the building and the land on which it sits is owned by the freeholder, and the long leases of the individual dwellings are owned by the leaseholders. The freeholder (that is, the owner of the freehold) can be, for example, a private company, an individual, a local authority, or a charity.
927. It is also possible for some or all of the leaseholders to purchase their building’s freehold; this is known as collective enfranchisement. Where enfranchisement occurs, the leaseholders become the owner of the freehold. There are several statutory routes to collective enfranchisement. The statutory routes are under Parts 1 or 3 of the Landlord and Tenant Act 1987, and under Chapter 1 of Part 1 of the Leasehold Reform, Housing and Urban Development Act 1993. It is also possible for leaseholders to purchase the freehold of their building through non-statutory means.
928. An alternative to the leasehold model of ownership of multi-occupied residential buildings is commonhold. When a building is on commonhold land, each unit-holder (owner of a dwelling) within the building also owns the freehold of the unit. Commonhold is a different model of ownership to leasehold, but commonhold buildings are similar to those which have collectively enfranchised in the sense that the building, and the land which the building is on, are collectively owned by the owners of the dwellings contained within the building in both circumstances. The legal framework which governs commonhold is the Commonhold and Leasehold Reform Act 2002. There are far fewer commonhold buildings in England than multi-occupied leasehold buildings.
929. The leaseholder protections measures work at a fundamental level by limiting or preventing the costs that can be passed through the service charge to leaseholders by the freeholder. When costs cannot be passed on through the service charge, the freeholder, who is responsible for undertaking works to maintain the building, becomes liable for these costs. In situations where the building is collectively owned by the leaseholders, there is no separate entity to bear the costs – the leaseholders are the freeholder. Consequently, the definition of "relevant building" does not include leaseholder-owned buildings.

Proposed use of power

930. The power at subsection (6)(c) will be used to make regulations setting out other circumstances (other than those set out in subsections (6)(a) and (6)(b)) where a building can be leaseholder-owned.

     Example A block of flats is 15 metres high and contains 50 flats. It is not collectively owned by the leaseholders. The block falls within the definition of "relevant building" and is in scope of the leaseholder protections. A block of flats is 18 metres tall. It contains primarily office space and shops but contains three flats near the top. It is not collective owned by the leaseholders. The block falls within the definition of "relevant building" and is in scope of the leaseholder protections

Section 118 – Section 117: height of buildings and number of storeys

Effect

931. This section applies for the purposes of section 117. Section 117 sets out that a building is defined as a "relevant building" if it contains at least two dwellings and is at least 11 metres in height or has at least five storeys. Section 118 details how the height of the building and its number of storeys is to be determined.
932. Subsection (2) sets out how the height of a building is to be determined. The height is measured from ground level to the floor of the top storey.
933. Subsection (3) sets out how the number of storeys is to be determined. Any storey below ground level (such as a basement) is to be disregarded. A mezzanine floor counts as a storey if the floor area is at least half the floor area of the largest storey in the building.
934. Subsections (4) and (5) make further provision as to how "ground level" is to be determined and what is to count as a storey "below ground level" for the purposes of this section.

Background

935. This section sets out the definition of a "relevant building" in terms of the building’s height and the number of storeys it has. This section sets out important detail that will allow these factors to be determined.
936. A higher-risk building, as defined in section 31 (for the purposes of Part 3) and section 65 (for the purposes of Part 4), is one that is at least 18 metres in height or has at least seven storeys. For the purposes of Parts 3 and 4 of the Act, the details of how height and number of storeys are to be determined as set out in regulations made under sections 31 and 65. The concept of a higher-risk building does not apply for the purposes of the leaseholder protections, but the method by which a building’s height and number of storeys are to be determined is the same as set out in the draft Higher-Risk Building (Descriptions and Supplementary Provisions) Regulations which were published alongside the Building Safety Bill.

     Example A building is 10.5 metres tall and has five storeys all of which are above ground level. Although the building is under 11 metres tall, because it has five storeys it falls within the definition of a "relevant building" provided the other criteria within section 117 are met

Section 119 – Meaning of "qualifying lease" and the "qualifying time"

Effect

937. This section sets out the meaning of "qualifying lease" and "the qualifying time" which apply for the purposes of sections 122 to 125 and Schedule 8.
938. The "qualifying time" is defined in subsection (2) as the beginning of 14 February 2022.
939. A "qualifying lease", defined in subsection (2), is a lease to which the leaseholder protections measures apply. For a lease to be qualifying, it must be a long lease of a single dwelling within a relevant building (see section 117 for the definition of "relevant building"). A "long lease" is defined in subsection (4)(a) as one which exceeds 21 years in length. The tenant under the lease must also be liable to pay a service charge, where "service charge" has the meaning given under section 18 of the Landlord and Tenant Act 1985. The lease must also have been granted before the qualifying time.
940. Subsection (2)(d) sets out the categories of leases that are qualifying. For a lease to be qualifying, at the qualifying time the lease must have been the tenant’s only or principal home, or it must have been the only property they owned in the United Kingdom (even if it was not their only or principal home), or the relevant tenant must have owned no more than two additional properties in the United Kingdom in total. A "relevant tenant" is defined in subsection (4)(c) as a person who is a tenant under the lease (in other words, a leaseholder) at the qualifying time.
941. The provision at subsection (2)(d) means that a leaseholder will qualify for the leaseholder protections for their properties if they own up to three properties in the United Kingdom in total. If more than three properties in total are owned, then the principal home qualifies for the protections, but the other properties do not.
942. Subsection (4)(b) sets out that a person "owns" a dwelling in England, Wales, or Northern Ireland if they have either a freehold or leasehold interest in it (capturing the two types of property ownership in those jurisdictions). The word "owns" suffices for property in Scotland because Scotland does not have a system of leasehold; ownership in Scotland is a generally understood term which does not need a separate definition. This means that all types of residential property ownership count against the total of three properties in the United Kingdom for the purposes of the leaseholder protections.
943. Subsection (3) makes provision for the situation where a dwelling was let under two or more leases at the qualifying time. It sets out that any lease which is superior to any other lease is not a qualifying lease. This ensures that it is always the lease at the end of any chain of demised leases that qualifies for the protections, rather than any superior landlord (see the explanatory note to paragraph 12 of Schedule 8 for more detail about superior landlords and demised leases).
944. This section makes clear the terms on which a lease becomes a qualifying lease. It is not a leaseholder that becomes a qualifying leaseholder – it is the leasehold interest itself that is qualifying. Because whether a lease is qualifying is determined as regards the position as at the qualifying time, the status of the lease (as qualifying or otherwise) became fixed on 14 February 2022. That status will then transfer automatically to future buyers of the lease should it be sold. This means that if a lease is qualifying, it will be automatically qualifying for any future buyer of that lease. Similarly, if a lease is non-qualifying, it will also be non-qualifying for any future buyer.

Background

945. The leaseholder protections apply to leasehold dwellings in multi-occupied buildings in England that are at least 11 metres tall or have at least five storeys. Further detail on the leasehold model of ownership in England is set out in the explanatory note to section 116. Subsections (2)(a) and (2)(b) of this section set the parameters for what is to be determined as a leasehold dwelling for the purposes of the leaseholder protections. It applies to a lease which is at least 21 years in length; this type of lease is generally known as a "long lease".
946. The leaseholder protections do not apply to all leasehold dwellings. They are designed to protect leaseholders living in their own homes as well as those who may have moved out and are subletting due to building safety issues in their property or for other reasons. In addition, the protections apply to people owning small numbers of additional properties, with people owning up to three residential properties in total in the United Kingdom qualifying. For people who own more than three properties in total, their principal home always qualifies for the protections if it is otherwise in scope.
947. The section also defines the "qualifying time" as the beginning of 14 February 2022; the qualifying time is relevant elsewhere in the leaseholder protections and applies to a number of different tests which are applied under the provisions. Liability under the leaseholder protections became fixed and immutable at the qualifying time. This is important to give certainty to all parties who will be affected by the leaseholder protections provisions and to the housing market, which is important to ensure, for example, that lending on properties can take place with confidence.
948. The "qualifying time" is defined as the beginning of 14 February 2022, as that was the date on which the leaseholder protections provisions were first tabled as amendments to the Building Safety Bill at Committee stage during the Bill’s passage through the House of Lords, and as such the point at which the provisions first become public knowledge. Although the leaseholder protections only take legal effect at commencement, two months after Royal Assent, the choice of qualifying time means that the provisions could not be manipulated or preemptively avoided in the period between the original publication of the amendments and the provisions becoming law.

     Example 1 A person owns three flats in England, all of which are contained within relevant buildings. They do not own any other property in the United Kingdom. All three flats are qualifying leases and qualify for the leaseholder protections. Example 2 A person owns two flats in England which are contained within relevant buildings, and a house in Scotland. As three properties in the United Kingdom are owned in total, the two flats fall within the definition of qualifying lease and qualify for the leaseholder protections. Example 3 A person owns four flats in England which are contained within relevant buildings, one of which they live in (and lived in on 14 February 2022). The flat the person lives in qualifies for the leaseholder protections as it was their principal home at the qualifying time. The other three flats do not qualify, as the person owned more than three properties in the United Kingdom in total. Example 4 A person owns two flats in England and two houses in Wales. They live in one of the houses. As the person owns more than three properties in the United Kingdom in total, neither of which was their principal home at the qualifying time, the flats do not qualify for the leaseholder protections. Example 5 A person owns a flat which has a qualifying lease. The lease is qualifying because the flat was their principal home on 14 February 2022. They sell the flat on. The leaseholder protections automatically transfer to the future buyer of the flat. The protections transfer irrespective of the identity of the buyer, because the status of the lease as qualifying was determined with respect to the position on 14 February 2022. Example 6 A person owns a flat which has a non-qualifying lease because on 14 February 2022 they owned nine flats in total in England. They sell it on to a buyer who intends to live in the flat. Even though the flat will be the buyer’s principal home, the lease remains non-qualifying because on 14 February 2022 it was not a qualifying lease

Section 120 – Meaning of "relevant defect"

Effect

949. This section defines "relevant defect" for the purposes of sections 122 to 125 and Schedule 8. Schedule 8 provides that the costs associated with remediation of historical building safety defects cannot be passed to qualifying leaseholders through the service charge. This section defines the types of defects to which the Schedule, and other relevant sections, apply.
950. In subsection (2) a "relevant defect", in relation to a building, is defined as anything done (or not done), or anything used (or not used) in connection with relevant works that also causes a building safety risk. The reference to anything done (or not done) in this subsection would capture a defect arising due to, for example, shoddy building work. Subsection (4) sets out that the reference to anything done (or not done) includes the provision of professional services, for example those of an architect. The reference to used (or not used) would capture, for example, the use of inappropriate or defective construction products in the building.
951. For a defect to be a "relevant defect" it must cause a building safety risk. A "building safety risk" is defined in subsection (5) as a risk to the safety of people in or about a building arising from the spread of fire or the collapse of the building or any part of it.
952. Subsection (3) defines "relevant works" and "the relevant period" which apply for the purposes of the definition of "relevant defect". "The relevant period" is defined as the 30-year period prior to commencement of this section, which is two months after Royal Assent of this Act.
953. Relevant works are those that have resulted in the creation of a relevant defect and are defined as works relating to the initial construction of the building, or its conversion into a residential building; or those undertaken or commissioned by or on behalf of the building’s landlord or management company (which are defined in subsection (5)), where the works were completed in the relevant period.
954. In addition to works completed in the 30 years prior to commencement, works which were done after commencement for the purpose of remedying a relevant defect are also relevant works. This means that where work has been done after commencement to fix a defect, if that work is faulty and further work is subsequently needed, then that work is also defined as relevant works.

Background

955. As described in the explanatory note to section 116, since the Grenfell Tower fire in 2017, it has become apparent that many blocks of flats have serious historical building safety defects which require often costly remediation. Most flats in multi-occupied residential buildings in England are owned as leaseholds, meaning that the building and the land which it is on are owned by a freeholder, and the long leases of the dwellings within the building are owned by the leaseholders. The freeholder is responsible for the safety and upkeep of the building. The terms of most leases, which are contractual agreements between the freeholder and leaseholder, allow the costs associated with maintaining the building to be passed through the service charge by the freeholder to leaseholders.
956. The leaseholder protections provisions protect leaseholders by preventing or otherwise limiting the costs associated with historical building safety defects being passed through the service charge. Section 120 defines the defects which fall within the scope of the leaseholder protections.
957. The leaseholder protections deal only with historical building safety defects; they are backward-looking only. They are a one-off intervention designed to deal with the current serious problems with historical building safety defects in medium- and high-rise buildings. The protections afforded only apply to defects created in the 30-year period prior to commencement of the provision, so in practice between mid-1992 and mid-2022. A 30-year period has been chosen as evidence shows that this period captures all buildings affected by the relevant safety issues. It aligns with changes this Act makes to the limitation period under section 1 of the Defective Premises Act 1972 (to which see section 135) and the relevant limitation period under the new cause of action relating to cladding products (sections 150 and 151). The Government has also agreed with major residential property developers that they will remediate buildings they had a role in developing or refurbishing in the past 30 years.
958. Subsections (2) and (5) define what is meant by a "relevant defect" and set out that for a defect to be a relevant defect, it must give rise to a building safety risk. A "building safety risk" is one that puts people’s safety at risk due to either the risk of the spread of fire or structural collapse of a building.
959. The definition of building safety risk mirrors the definition in section 62. The Independent Review focused on fire and structural safety risks and recommended that these were the initial scope for building safety risks in the new regime, as the spread of fire and structural failure represent the most serious risks to safety in and about buildings. This definition of building safety risk is mirrored for the purposes of the leaseholder protections, as fire and structural safety risks represent the most serious risks to safety in and about buildings and are therefore the risks that are most likely to need to be mitigated, often through costly remediation – the costs associated with which leaseholders need protection from.
960. Section 62 includes a power to prescribe other matters within the definition of a building safety risk. Although it is not proposed to expand that definition at this time, that power gives important flexibility for the future regime in Parts 3 and 4 of this Act should new building safety risks materialise. The leaseholder protections are backward-looking only, in the sense that they only apply to historical building safety defects. They are a one-off intervention designed to deal with current issues associated with historical defects in certain buildings and so it is not necessary to mirror a power to expand the definition of building safety risk in this section.

     Example 1 A fire safety risk in a high-rise building was created due to the installation of flammable cladding in 2005. The cladding gives rise to a fire safety risk, as it could put people’s safety at risk by accelerating the spread of fire. The cladding would fall within the definition of a relevant defect, as the defect was created within the past 30 years and gives rise to a building safety risk. The leaseholder protections would therefore apply to the costs associated with mitigating against the risk posed. Example 2 A contractor built a medium-rise block of flats with defective foundations in 1995 which now need remedial work to mitigate against the risk of structural collapse of part of the building. The defects in the foundations fall within the definition of a relevant defect as the building was completed within the past 30 years and give rise to a building safety risk. The leaseholder protections therefore apply to the costs associated with remediating the foundations

Section 121 – Associated persons

Effect

961. This section sets out the circumstances in which a person is associated with a partnership or body corporate for the purposes of sections 122 to 125 and Schedule 8.
962. Subsection (2) sets out that if an interest in a relevant building is held on trust at the qualifying time, then any body corporate or partnership which is a beneficiary of the trust at the qualifying time is considered associated. The "qualifying time" is defined in section 119 as the start of 14 February 2022. The five-year period leading up to the qualifying time is defined as "the relevant period". Subsection (11) defines partnership for the purposes of this section.
963. Subsections (3) and (4) set out the circumstances in which a person is associated with a body corporate. Subsection (5) sets out the circumstances in which a body corporate is associated with another body corporate.
964. Subsection (3) sets out that a partnership is associated with any person who was a partner, other than a limited partner, in the partnership in the five years ending at the qualifying time.
965. Subsection (4) provides that a body corporate is associated with any person who was a director of the body corporate in the five years leading up to the qualifying time.
966. Subsection (5) sets out the circumstances in which a body corporate is associated with another body corporate. Subsection (5)(a) sets out that two bodies corporate are associated if, in the five years leading up to 14 February 2022, they had a director in common. Subsection (5)(b) sets out that two bodies corporate are associated if, before 14 February 2022, one of them controlled the other or a third body corporate controlled both of them.
967. Subsections (6) to (8) set out the cases in which a body corporate is regarded as controlling another body corporate by looking at the ownership of the share capital and setting out how differing voting rights at general meetings have an impact on whether or not the companies are associated.
968. Subsection (6) sets out what control looks like between differing companies. In particular, it sets out that one body corporate controls another if one of them possesses or is entitled to acquire: at least half of the issued share capital of the other; half the voting rights exercisable in the general meetings of the other; at least half of the other’s income if all the income was distributed amongst the shareholders; or, rights which would entitle it to half the assets of the other which are available for distribution amongst the shareholders in the event of the other winding up.
969. Subsection (7) sets out how to work out the circumstances when a body corporate (X) controls a limited liability partnership (Y). In this case, X has control of Y if: X holds the majority of the voting rights in Y; X is a member of Y and has the right to appoint or remove a majority of other members; or, X is a member of Y and controls the majority of the voting rights in Y (either alone or through agreements with other members).
970. Subsection (8) sets out if a body corporate has the power to ensure another acts in the way in which it wishes, then that body corporate has control of the other.
971. Subsection (9) defines voting rights for the purposes of subsection (7). Voting rights are the rights conferred on members in respect of their interest in Y to vote on matters decided on by a vote by members of Y.
972. Subsection (10) sets out that a body corporate is treated as possessing any rights and powers possessed by a person as nominee for it (such as a director) and any rights and powers possessed by a body corporate which it controls. The effect of subsection (9) is that bodies corporate which are not directly associated can be taken as associated if there is a chain of associated bodies corporate which connects them.
973. Subsection (12) provides a power for the Secretary of State to set out in regulations that the application of subsections (3) to (5) can be modified for the purposes of sections 122 to 125 and Schedule 8. This allows the application of this section to be modified in relation to any reference to associated persons.

Background

974. Sections 122 to 125 and Schedule 8 include several references to associated persons. Sections 124 and 125 give powers to the courts to require persons associated with freeholders, superior landlords, and developers to make certain payments in respect of relevant defects. Paragraph 2 of Schedule 8 provides that no service charge is payable in respect of a relevant defect for which a relevant landlord, or a person associated with a relevant landlord, is responsible. Paragraph 3 provides that no service charge is payable if the landlord’s group meets the contribution condition, where the landlord group is defined as the relevant landlord and any person associated with the relevant landlord.
975. It is common practice for owners of freehold and superior lease interests in multi-occupied residential buildings to use thinly capitalised subsidiary companies, often termed special purpose vehicles, to hold these interests. This can result in highly complex corporate structures where the ultimate beneficial owner of the interest is obscured.
976. The leaseholder protections provisions impose new liabilities on freeholders and superior landlords (defined in paragraph 2 of Schedule 8 as "relevant landlords") to pay in full for or contribute to the costs of the remediation of relevant defects. It will often be the case that the entity that owns the interest in the building is a thinly capitalised company with limited assets but is part of a well capitalised wider group structure. The associated persons provision, when taken alongside the relevant provisions in sections 124 and 125 and Schedule 8 allow the assets of the wider group structure to be accessed in connection with the remediation of relevant defects.
977. As well as allowing companies associated with freeholders and superior landlords to be required to make payments in respect of relevant defects, section 124 also gives the First-tier Tribunal the ability to require developers and their associated companies to make payments. It is also common practice for developers to use special purpose vehicles which are wound up after the completion of the development. The associated persons provision similarly allows the assets of the wider group structure to be accessed.
978. The definitions used within this section have a basis in the Petroleum Act 1998 and the Corporation Tax Act 2010. Section 131 of this Act contains a similar definition of associated persons which applies for the purpose of allowing the High Court to make building liability orders (to which see section 130).

Proposed use of power

979. The power at section 121(12) will allow modifications to be made to subsections (3) to (5) in respect of the application of those subsections to the application of the associated persons tests in sections 122 to 125 and Schedule 8. This is because a slightly different definition of associated persons may be appropriate to the circumstances in which the test is used.

     Example A body corporate A shares all of its directors with a body corporate B. It could be argued that A is able to ensure that B acts how A wishes B to conduct its affairs. B controls 100% of the voting rights exercisable in the general meetings of body corporate C. C is a member of a limited liability partnership of which bodies corporate D and E are also members. D controls the majority of the voting rights in the limited liability partnership. Due to these connections and subsection (6), A, B, C, D and E are associated under section 121. If B is the freeholder of a building for which A was the developer, then B is classed as being associated with the developer. For the purposes of paragraph 2 of Schedule 8, this means that B is responsible for any initial defects contained within the building. If a relevant building contains relevant defects, and any of A, B, C, D or E had an interest in the building, then the First-tier Tribunal could require A, B, C, D and E to make payments in respect of remediating the relevant defects through a remediation contribution order under section 124

Section 122 – Remediation costs under qualifying leases

Effect

980. This section inserts new Schedule 8 – Remediation costs under qualifying leases etc.
981. Schedule 8 makes provision about the payment of service charge amounts relating to relevant defects (defined in section 120). It provides that certain service charge amounts relating to relevant defects in relevant buildings are not payable under certain leases.
982. Schedule 8 also makes provision for the recovery of amounts which are not recoverable under leases from landlords of the building.

Background

983. The explanatory note to section 116 sets out the context of the leaseholder protections provisions. Most flats in multi-occupied residential buildings in England are owned on long leases, where (in the simplest cases) a freeholder owns the building and the land it sits on, and the leaseholders own the units within the building on long leases. The freeholder is responsible for the maintenance and upkeep of the building. The leases, which are contractual agreements between the leaseholder and freeholder, allow the costs associated with maintenance to be passed by the freeholder through the service charge to the leaseholders. Since the Grenfell Tower fire in 2017 it has become apparent that a large number of multi-occupied residential buildings have serious building safety defects which need to be remediated, often at significant cost to the leaseholders.
984. Schedule 8 makes provision for service charge payments in respect of relevant defects not to be payable by leaseholders in certain circumstances. By limiting or preventing altogether the amounts that are payable in respect of these defects from being passed on to the leaseholders through the service charge, leaseholders are protected from the costs associated with their remediation.
985. Schedule 8 removes the existing legal presumption under most leases that leaseholders are liable in full for the costs associated with remediating relevant defects. The Schedule and powers contained within it make provision for liability to sit in the first instance with landlords who are deemed to be responsible for the creation of those defects, and then with landlords that can afford to meet the costs in full. Where neither of these circumstances applies in respect of any relevant landlord, the Schedule provides for an equitable spread of costs, commensurate with a party’s likely ability to contribute to costs, by allowing for capped leaseholder contributions to be recovered (up to "the permitted maximum") in certain circumstances; and for relevant landlords to be liable for any amounts that are not recoverable from leaseholders.
986. The Schedule sets out that, in relation to historical building safety defects, "no service is payable" in certain circumstances, and in other circumstances that the service charge is only payable if it "does not exceed the permitted maximum". These provisions in the Schedule apply from commencement (two months after Royal Assent of the Act, or 28 June 2022): from that date, the service charge protections apply. The protections apply equally irrespective of when any service charge demands were issued by landlords or managing agents. This means that, even if a valid service charge demand was issued prior to commencement, provided that the service charge had not already been paid by the leaseholder, the demand is no longer valid after commencement insofar as it does not comply with the provisions set out in the Schedule. In practice, this means that managing agents and landlords will need to rescind service charge demands issued prior to commencement where they relate to historical building safety defects. Where landlords are entitled to recover some costs from leaseholders according to the Schedule, they will need to issue new service charge demands which comply with the provisions set out in the Schedule.
987. Further detail on the provisions contained within Schedule 8 are set out in the explanatory notes to the Schedule.

Section 123 – Remediation orders

Effect

988. This section makes provision about remediation orders. Subsection (1) provides a power for the Secretary of State to make regulations for and in connection with remediation orders. Subsections (2) to (7) make further provision about remediation orders.
989. Subsection (2) sets out that a remediation order is made by the First-tier Tribunal. A remediation order can be made by the Tribunal on the application of an interest person (defined in subsection (5)). A remediation order can require a landlord to remedy specified relevant defects in a specified time (the meaning of "specified" is set out at subsection (6)). This means that the Tribunal can order a landlord to undertake certain work to remediate their building within a specified timeframe.
990. Subsections (3) and (4) define a "relevant landlord" against which the Tribunal may make a remediation order. "Relevant landlord" means a landlord who has an obligation to repair or maintain the building and subsection (4) sets out that the term includes, for the purposes of this section, persons who are party to the lease even if they are not a landlord or tenant. This means that remediation orders can be made against management companies with repairing obligations, as well as against freeholders and superior landlords such as head lessees with repairing obligations.
991. Subsection (5) provides a definition of "interested person" meaning the persons who are eligible to apply for to the First-tier Tribunal for a remediation order against a relevant landlord. These persons are the Building Safety Regulator, the local authority for the area in which the building is located, the fire and rescue authority for the area in which the building is located, and any person with a legal or equitable interest in the building or any part of it. A person with a legal or equitable interest in the building will include, for example, leaseholders of flats within the building, as well as the freeholder and other relevant landlords for the building. Subsection (5)(e) provides that the list of interested persons may be expanded through regulations made by the Secretary of State.
992. Subsection (6) provides that "specified" means specified in the order, which means that the First-tier Tribunal can determine, for example, to whom a remediation order applies, to which relevant defects it applies, and the period in which defects need to be remediated.
993. Subsection (7) ensures that decisions made by the First-tier Tribunal in connection with remediation orders are enforceable. It means that any decision of the First-tier or Upper Tribunal under or in connection with a remediation order, other than a decision ordering the payment of a sum, will be enforceable with the permission of the county court in the same way as orders of the county court. The general position is that the Tribunal does not have enforcement powers of its own, other than powers to enforce payment for a sum of money. As such, where it is necessary to have powers to enforce other decisions of the Tribunal, it is usual to insert a provision in legislation to enable the county court to enforce those decisions.

Background

994. As discussed in the explanatory note to section 116, flats in most multi-occupied residential buildings in England are owned on long leases. The building itself and the land on which it is located are owned by a freeholder, and the flats within the building are owned on long leases by the leaseholders. The freeholder is responsible for the maintenance and upkeep of the building and the terms of most leases allow the costs associated with the building’s maintenance and upkeep to be passed through the service charge to leaseholders.
995. Significant decision-making power rests with the landlord responsible for maintaining the building in determining whether a building should be remediated, and the extent of work that is to be commissioned. Where leaseholders have been liable in full for these costs this has at times resulted in some landlords taking an overly risk-averse approach and commissioning costly remediation which may not be needed. At the same time, some landlords have been slow to commission and undertake even life-safety critical work on buildings, even where the Government is providing funding for the work.
996. Schedule 8 makes changes to the preexisting legal position that leaseholders are liable in full for these costs by limiting the costs that can be passed through the service charge in respect of relevant defects. Landlords will now be liable for some or all these costs. It is expected that this change will reduce instances of the commissioning of unnecessary work as landlords will now be disincentivised from taking an overly risk-averse approach to remediation, due to being liable to at least part-fund the work themselves.
997. Remediation orders will ensure that essential remediation work needed to remedy relevant defects can take place, especially where landlords are not fulfilling their obligations as regards the safety of the building. Remediation orders will allow interested parties to apply to the First-tier Tribunal for an order requiring a relevant landlord to remedy specified relevant defects. This will redress the balance of power in favour of leaseholders by allowing leaseholders and other interested parties to apply to the Tribunal to insist on remediation work being done.
998. Parties with the ability to apply for remediation orders are those with a regulatory or oversight function – the Building Safety Regulator, the relevant local authority, and the relevant fire and rescue service; and those with a direct interest in the building, including leaseholders.

Proposed use of power

999. The power at subsection (1) allows the Secretary of State to make regulations for and in connection with remediation orders. This will allow further detail in connection with remediation orders to be set out. The power also provides important flexibility for the future. It is expected that the Government will monitor progress with remediation following the commencement of these provisions. Should further provision need to be made in connection with remediation orders to facilitate the remediation of buildings with relevant defects, this power will provide that flexibility to respond.
1000. The power at subsection (5)(e) will allow the Secretary of State to prescribe further persons who can apply for a remediation order, should the need to do so become apparent.

      Example A high-rise residential building has a number of historical cladding and non-cladding defects. Despite the remediation of these defects being life-safety critical, work to remediate them has not yet started, three years after they have been identified. The fire and rescue authority inspects the building and considers that the work needs to begin to make the building safe. The landlord does not undertake the work despite leaseholders and the fire and rescue authority attempting to contact them to insist on the work getting underway. The fire and rescue authority applies to the First-tier Tribunal for a remediation order. The Tribunal issues a remediation order, ordering the landlord to remedy the defects within a specified period.

Section 124: Remediation contribution orders

Effect

1001. This section makes provision about remediation contribution orders. Subsection (1) sets out that a remediation contribution order can be made by the First-tier Tribunal (the Tribunal) if it considers it just and equitable to do so.
1002. Subsection (2) provides that the Tribunal can make a remediation contribution order in relation to a relevant building (defined in section 117). A remediation contribution order can be made by the Tribunal on the application of an interested person (to which see subsection (5)) to require a company to make payments in connection with the remediation of relevant defects.
1003. Subsection (3) sets out that a remediation contribution order can be made against a landlord for the building, a person who was a landlord at the qualifying time (the start of 14 February 2022), or the building’s developer; as well as any person associated with any of these parties (where "associated" has the meaning given in section 121).
1004. Subsection (4) sets out that a remediation contribution order can require payments to be made to fix relevant defects in a building and at a specified time.
1005. Subsection (5) sets out definitions that are relevant to the section. "Associated", "partnership", "relevant building" and "relevant defect" are all defined in the preceding sections. "Developer" is defined as a person who built or commissioned the construction of the building or part of the building, with a view to granting or disposing of interests in the building or parts of it, for example by selling flats in the building following its construction. "Specified" means specified in the order, which means that the Tribunal can determine, for example, to whom a remediation contribution order applies, to which relevant defects it applies, and to whom payments under the order need to be made.
1006. An "interested person" is defined in subsection (5). An interested person is a person who may apply to the Tribunal for a remediation contribution order. These persons are the Secretary of State, the Building Safety Regulator, the local authority for the area in which the building is located, the fire and rescue authority for the area in which the building is located, and any person with a legal or equitable interest in the building or any part of it. A person with a legal or equitable interest in the building will include, for example, leaseholders of flats within the building, as well as the freeholder and other relevant landlords for the building. Paragraph (f) provides that the list of interested persons may be expanded through regulations made by the Secretary of State.
1007. Subsection (6) allows the Secretary of State to expand, by regulations, the provision under this section to buildings that would be relevant buildings but for section 117(3). Section 117(3) provides an exemption from the definition of "relevant building" for collectively enfranchised buildings and those which are on commonhold land. The effect of subsection (6) is to allow the Secretary of State to provide that remediation contribution orders can apply to this class of buildings, in addition to those which are defined as relevant buildings in section 117.

Background

1008. The explanatory note to section 121 discusses how it is common practice for owners of freeholds of multi-occupied residential buildings (as well as owners of other superior lease interests in those buildings) to use thinly capitalised companies such as special purpose vehicles to hold the interests. While the freeholder itself often has very limited capital, these entities are often part of well-resourced wider group structures.
1009. The explanatory note to section 122 explains how the leaseholder protections provisions in Schedule 8 operate. The provisions protect leaseholders by preventing altogether or otherwise limiting the costs that can be passed through the service charge to leaseholders in connection with relevant defects. Where costs are not otherwise recoverable under leases, the Schedule, and powers made under it, make provision for those amounts to be recovered from landlords under leases of the building including the freeholder and superior landlords such as headlessees. This means that under the provisions of Schedule 8, landlords, including freeholders and headlessees, are liable for some or all of the costs connected with remediating their buildings.
1010. It is important that, where costs in relation to relevant defects are not recoverable from leaseholders, that funding is made available so that work to remediate defects can take place promptly and buildings can be made safe. Remediation contribution orders support this aim in two ways.
1011. The first way in which remediation contribution orders are intended to contribute to the timely remediation of buildings is by providing a new legal remedy to require developers to pay for the costs of remediation. If the Tribunal considers it just and equitable, it can require a developer for the building to make payments in connection with remedying relevant defects. A wide range of parties can apply for remediation contribution orders: as well as the Secretary of State and regulatory bodies such as the Building Safety Regulator, persons with a legal or equitable interest in the building can apply for an order. Persons with a legal or equitable interest include, for example, the freeholder of the building, superior landlords such as headlessees, and leaseholders.
1012. As discussed above, freeholders and landlords will have new liabilities to pay for remediation costs under Schedule 8. Remediation contribution orders will allow landlords to seek to recover these costs from the building’s developer by applying to the Tribunal for an order against the developer. Similarly, leaseholders would have the ability to apply for an order against the developer; for example, if leaseholder contributions are required under Schedule 8, or if leaseholders have already paid costs towards remediation before the coming into force of the leaseholder protections, they may wish to seek to recover these costs using a remediation contribution order.
1013. As discussed in the explanatory note to section 121, it is also common practice for residential property developers to use special purpose vehicles which are wound up on completion of the project. Remediation contribution orders can also be made against persons associated with the developer; this will include, for example, parent companies where developments have been run through special purpose vehicles which are thinly capitalised or have since been wound up.
1014. The term "developer" is defined at subsection (5). The Government has agreed with large residential property developers that they will remediate buildings that they had a role in refurbishing or developing in the past 30 years. It is therefore unlikely that remediation contribution orders would need to be made against this group of developers. However, developers who have not made an agreement with the Government will be in scope of remediation contribution orders.
1015. Remediation contribution orders made against developers complement other legal remedies expanded and created by this Act, which allow those responsible for building safety defects to be held to account. These other remedies include the extension of the limitation period under section 1 of the Defective Premises Act (section 135), building liability orders (sections 130 to 132), and the new cause of action against the manufacturers of defective construction products (sections 147 to 151).
1016. The second way in which remediation contribution orders are intended to contribute to timely remediation is by ensuring landlords meet their obligations under the leaseholder protections provisions. Schedule 8 makes provision for liability in connection with the remediation of historical building safety defects to sit with freeholders and landlords. This liability applies irrespective of whether costs can be recovered from a third party such as a developer. Where the developer does not step forward or cannot be identified, and external sources of funding cannot be found, this means that building owners and landlords will need to meet the costs of remediation from their own resources. Even where legal claims are possible, the Government has been clear that seeking to recover costs from third parties cannot delay remediation taking place, and that building owners and landlords must not wait until the outcome of legal claims before commencing building work, meaning that in some circumstances, freeholders will need to forward-fund remediation to ensure that work can take place.
1017. It is expected that landlords will comply with their new obligations to forward-fund, or fund in full from their own resources, the remediation of their own buildings. Should a party with a liability in relation to building safety remediation be failing to meet its obligations, remediation contribution orders will allow the Tribunal to require payments to be made. In particular, remediation contribution orders will allow companies associated with relevant landlords to be required to make payments in connection with remediation; this will allow, for example, well-capitalised wider group structures of thinly capitalised special purpose vehicles to be ordered to contribute to remediation costs.
1018. A wide range of parties are able to apply for remediation contribution orders. This includes the Government and regulatory bodies with a role in monitoring, regulating, and enforcing building safety – the Secretary of State, the Building Safety Regulator, the relevant fire and rescue authority and the relevant local authority. In addition, those with a legal or equitable interest in the building can apply for an order. This includes leaseholders as well as freeholders and landlords for the building. Remediation contribution orders will ensure that all relevant landlords with a liability to pay for remediation under the Schedule meet their obligations.
1019. Subsection (1) provides that the Tribunal can only make a remediation contribution order if it considers it just and equitable to do so. This is intended to ensure fairness in proceedings while giving the Tribunal a wide decision-making remit which it is expected will allow it to take all appropriate factors into account when determining whether an order should be made, including the wider public interest in securing the safety of buildings, as well as the rights and interests of the individual against whom an order might be made.

Proposed use of power

1020. The power at subsection (5)(f) will allow the Secretary of State to prescribe further persons who can apply for a remediation contribution order, should the need to do so become apparent.

      Example 1 The freeholder for a building is liable for the costs of remediating it under Schedule 8. Having forward funded the remediation, they apply for a remediation contribution order against the parent company of the developer who developed the building. The Tribunal considers that it would be just and equitable to order the developer to make payments to the freeholder in connection with the remediation of the building. The Tribunal issues an order against the company, ordering it to make payments in connection with fixing specified relevant defects. The order specifies that the payments must be made within a specified timeframe. Example 2 The freeholder for a building is liable for the costs of remediating it under Schedule 8. Two years after the identification of the relevant defects, the freeholder has failed to commission or pay for the work that is needed. The freeholder is a thinly capitalised shell company which is part of a wider group of companies that own multiple freeholds. The fire and rescue authority applies to the Tribunal for a remediation contribution order. The Tribunal consider that it is just and equitable to issue a remediation contribution order and orders the freeholder’s parent company to make payments to remediate the defects in the building.

Section 125 – Meeting remediation costs of insolvent landlords

Effect

1021. This section makes provision in connection with the insolvency process as it applies to landlords under leases of relevant buildings.
1022. Subsection (1) sets out the circumstances under which section 125 applies. Section 125 applies in relation to the winding up of a company which is also a landlord under a lease of a relevant building (to which see section 117) or any part of it, for example the freeholder or headlessee of the building. There are a number of different ways in which a company can be "wound up" including compulsory liquidation and company voluntary arrangements.
1023. Subsections (1)(a) and (1)(b) set out that section 125 applies if, in the winding up of the company that is a landlord under a lease of a relevant building, there are relevant defects (to which see section 120) relating to the building, and the company is under an obligation to remedy those defects or is liable to pay costs in relation to remedying the defects.
1024. Subsection (2) sets out that section 154 applies when the insolvency practitioner in relation to the winding up of the company makes an application to the court. "Insolvency practitioner" is defined in subsection (4) as having the same meaning as in section 388 of the Insolvency Act 1986. "The court" means the court with the jurisdiction to wind up the company.
1025. On the application of the insolvency practitioner, the court can make an order against a body corporate or partnership (which has the meaning given in section 121) associated with the company being wound up.
1026. The order made by the court can either require the associated company to make contributions to the assets of the company being wound up, or to make payments for the purpose of meeting the costs associated with remedying relevant defects. In both cases, the court must consider that it is just and equitable to make the order.

Background

1027. The explanatory note to section 122 discusses how Schedule 8 protects leaseholders from costs associated with remediating historical building safety defects, and imposes liability on landlords under leases of relevant buildings, in connection with costs associated with relevant defects that are not recoverable from leaseholders.
1028. It is important that, where costs cannot be recovered from leaseholders, funding is available to ensure the timely remediation of defects. Section 125 is intended to secure funding for remediation should a company with an obligation to remediate or pay for the remediation of relevant defects go through the insolvency process.
1029. Insolvency is the process by which a company stops doing business. The insolvency process in the United Kingdom is governed by the Insolvency Acy 1986. There are a number of different ways a company can be "wound up" which are covered by the Act including compulsory liquidation, where a company cannot pay its debts; and voluntary liquidation, where a company can pay its debts, but its directors choose to close it down. Section 125 covers all these processes.
1030. When a company is wound up, an insolvency practitioner will be appointed to manage the insolvency process. There are different types of insolvency practitioner depending on the type of insolvency process the company is going through – these are set out in section 388 of the Insolvency Act and include liquidators and administrators.
1031. The explanatory notes to sections 121 and 124 discuss how it is common for freehold interests in multi-occupied residential buildings to be held as thinly capitalised special purpose vehicles which are part of much bigger group structures, which are often well-capitalised. Section 121 defines "associated company" for the purposes of this section.
1032. Section 125 mitigates against the use of the insolvency process for freeholders and landlords to avoid responsibilities to pay for remediation of defects for which they are liable under Schedule 8 of this Act. In the process of winding up a company, it allows the insolvency practitioner to apply to the court to make an order requiring companies associated with the landlord to make contributions in connection with the remediation of relevant defects.
1033. The order can be made in one of two ways. First, it can require an associated company to contribute directly to the assets of the company being wound up. However, if the company has debts not related to the remediation of relevant defects, the contribution would in these circumstances preferentially be directed towards meeting the company’s debts, and this would not secure the remediation of the building. Therefore, the second way in which the order can be made allows the court to order that the associated company must make specified payments directly in connection with the remediation of those defects. This will ensure that the payments made by the associated company pay towards remediating the building.
1034. Similar to the provisions at section 124, the court can make an order under section 125 if it considers that it is just and equitable to do so. This is intended to ensure fairness in proceedings while giving the court a wide decision-making remit which it is expected will allow it to take all appropriate factors into account when determining whether an order should be made, including the wider public interest in securing the safety of buildings, as well as the rights and interests of the individual against whom an order might be made.

      Example A freeholder for a relevant building has a liability to pay for the remediation of certain defects in a relevant building. The company which owns the freehold goes insolvent. An insolvency practitioner is appointed to oversee the insolvency process. Because the building has a number of defects which are yet to be remediated, the insolvency practitioner applies to the court for an order against the parent company of the freeholder. The court considers that it would be just and equitable to make the order against the parent company and orders the company to make payments to remediate the defects for which the freeholder is responsible.

Building industry schemes

Section 126: Building industry schemes

Effect

1035. This section gives the Secretary of State a power to establish through affirmative regulations a scheme or schemes for the building industry.  
1036. A scheme may be established for any purpose connected with securing the safety of persons in or about buildings in relation to risks arising from buildings, or improving the standard of buildings, including by securing those persons in the building industry remedy defects in buildings or contribute to costs associated with remedying defects in buildings.  
1037. Regulations under this section may, among other things, prescribe eligibility for a scheme, the conditions eligible persons must meet to become and remain members of a scheme and may provide for different categories of membership.  
1038. The measures set out in section 58, which covers the Building Safety Levy, and sections 128 and 129, which cover the planning and building control prohibitions, may be applied to persons who are eligible for membership of a scheme but who are not members. 

Background 

1039. This is a new provision.  

Proposed use of power 

1040. This provision gives Government a wide power to establish a building industry scheme. Such a scheme may distinguish between building industry actors that have committed to act responsibly and make buildings safe, and irresponsible actors who have failed to do so. A scheme supports the objective of holding industry to account with regard to fixing building safety defects and in respect of other obligations which may be prescribed in connection with membership of a scheme.  Conditions for membership may include, for instance, conditions relating to the remedying of defects in buildings to which an industry actor has a connection and making financial contribution towards remediation of defects in other buildings. The existence of a scheme and its membership will enable the Government and other parties to identify industry actors who are acting in a responsible way with respect to building safety, including in connection with remedying historic safety defects.  
1041. Secondary legislation will be laid as soon as practicable. Regulations to establish a scheme will define who is eligible to be a member and set out membership conditions which may include conditions relating to the matters mentioned above; conditions restricting or prohibiting members’ use of prescribed construction products; conditions relating to the provision of information to the Secretary of State; and to the competence or conduct of individuals connected with a person who is eligible for scheme membership. This section also allows for differential membership categories and for the maintaining of lists, including in relation to scheme eligibility and scheme membership. 

      Example The Secretary of State may set up a building industry scheme for residential property developers (or a specified group of residential property developers). The Secretary of State may in regulations set the eligibility criteria and membership conditions for this scheme. Developers who meet the eligibility criteria but who elect not to join the scheme because, for example, they do not wish to comply with the applicable membership conditions may be subject to the measures in Sections 128 and 129.

Section 127: Building industry schemes: supplementary

Effect

1042. This section is supplementary to section 126 and provides further detail of regulations which may be made in connection with the establishment of a building industry schemes under section 126.   

Background 

1043. This is a new provision. 

Proposed use of power

1044. Regulations will provide further detail on how a building industry scheme/s may operate, including membership processes (such as those relating to joining, suspension and termination of membership) and further detail on membership conditions, as well as provision for the charging of fees, the determination of disputes relating to a scheme and winding down a scheme/s once its aims have been achieved.  
1045. This section also sets out the meaning of key words in relation to this section.

Prohibition on development and building control

Section 128: Prohibition on development for prescribed persons

Effect

1046. This section confers power on the Secretary of State to prohibit a person of a prescribed description from carrying out development of land in England, including where development has planning permission, through affirmative Regulations. This includes persons who are eligible to be members of a Building Industry Scheme (sections 126 and 127) but are not members of that scheme. 
1047. This section also sets out other provisions that the regulations may make, including that they may make provision for enforcement, including applying, with or without modifications, the enforcement provisions of Part 7 of the Town and Country Planning Act 1990. 
1048. This provision, together with the powers to make regulations to impose building control prohibitions detailed in section 129, may be imposed on persons who are eligible to join a building industry scheme but who do not join (because, for example, they do not meet or comply with the scheme membership conditions prescribed) and will encourage eligible persons to join and remain members of a scheme.
1049. A prohibition may be imposed for any purpose connected with securing the safety of persons in or about buildings in relation to risks arising from buildings, or improving the standards of buildings, including by securing that persons in the building industry remedy defects in buildings or contribute to costs associated with remedying defects in buildings.
1050. This section also sets out other provisions that the regulations may make, including that they may make provision for enforcement, including applying, with or without modifications, the enforcement provisions of Part 7 of the Town and Country Planning Act 1990.

Background

1051. This is a new provision.

Proposed use of power

1052. This power will enable the Government to impose a prohibition on a person for any purpose connected with securing the safety of persons in or about buildings or improving the standards of buildings, including by securing the remedying of defects in buildings or contribution to costs associated with remedying defects in buildings. It may be used to support the above principle and ensure that the industry responsible for building unsafe buildings takes responsibility for remedying defects in buildings and contributes to costs associated with building remediation
1053. This provision, together with the powers to make regulations to impose building control prohibitions detailed in section 128, may be imposed on persons who are eligible to join a building industry scheme but who do not join (because, for example, they do not meet or comply with the scheme membership conditions prescribed) and will encourage eligible persons to join and remain members of a scheme.

      Example The Secretary of State may, in particular, make Regulations to prohibit persons who are eligible to be members of a Building Industry Scheme (sections 126 and 127) but are not members of that scheme from carrying out development of land in England through affirmative Regulations. These Regulations may also require developers to submit a notification relating to development and may make provision about the content and form of a notification and the way in which it is to be given. For example, a notification requirement could include information about when development is expected to begin or has begun and who the persons carrying out development will be or are, and if different persons will be carrying out development. Another example is that they could require persons to identify their status in relation to a building industry scheme and whether they are controlled by any other persons and those persons’ scheme status. Regulations may also specify the prescribed development that will be affected by a prohibition; for example, they may limit a prohibition to different types of development based on size of a proposed development or a proposed use. Regulations may make provision for enforcement, including applying, with or without modifications, Part 7 of the Town and Country Planning Act 1990. For example, by making the carrying out of development in breach of a prohibition a breach of planning control to which the enforcement powers in Part 7 apply, including the powers to issue a notice requiring cessation of development. The Regulations may also provide that a certificate under the Town and Country Planning Act 1990 may not be granted in particular circumstances. For example, they could remove the ability to obtain a certificate of lawful development in respect of development carried out in breach of the prohibition.

Section 129: Building control prohibitions

Effect

1054. This section gives the Secretary of State powers to impose a building control prohibition in relation to a person of a prescribed description.
1055. The persons who may be prescribed under this section may include persons who are eligible to be a member of a building industry scheme (as detailed in sections 126 and 127) but are not members of such a scheme.
1056. A building control prohibition according to this section will apply despite any provision made by or under the Building Act 1984. This section also details that the regulations may contain exceptions and may provide that anything done in contravention of the regulations is of no effect.
1057. This section is not retrospective. Building control approval that has already been granted to a prescribed person will not be revoked.

Background

1058. This is a new provision.

Proposed use of power

1059. This power will enable the Government to impose a building safety prohibition on a person for any person connected with securing the safety of persons in or about buildings or improving the standards of buildings, including by securing the remedying of defects in buildings or contribution to costs associated with remedying defects in buildings. It may be used to support the above principle and ensure that the industry responsible for building unsafe buildings takes responsibility for remedying defects in buildings and contributes to costs associated with building remediation.
1060. The building control prohibitions, together with the prohibition on development detailed in section 128, may be imposed on persons who are eligible to join a building industry scheme but who do not join (because, for example, they do not meet or comply with the scheme membership conditions prescribed) and will encourage eligible persons to join and remain members of a scheme.

      Example The Secretary of State will have the authority to provide those local authorities (and approved inspectors/registered building control approvers) must refuse building control approval to person prescribed under this section. For example, if a developer who is eligible to join a building industry scheme but is not a member applies for building control approval, by giving an initial notice or depositing plans for a development, this will not be granted where that developer has been prescribed by regulations made under this section. Prescribed persons will also be prevented from obtaining a certificate of completion or final certificate for developments which have received other building control approval at earlier stages.

Building liability orders

Section 130: Building liability orders

Effect

1061. This section confers a power on the High Court to grant building liability orders if they consider it just and equitable to do so. 
1062. Subsection (2) provides that a building liability order will extend a relevant liability of a body corporate (A) so that it will also be a liability of another specified body corporate (B) and that A and B can be made joint and severally liable for the relevant liability. 
1063. The effect will be that a person with a claim arising from a relevant liability can sue both A and B and, if the claim is successful, the assets of both A and B can be considered when damages are awarded. 
1064. Subsection (3) defines which liabilities are relevant liabilities for the purposes of building liability orders. The relevant liabilities are liabilities under the Defective Premises Act 1972., section 38 of the Building Act 1984, or liabilities which are incurred as a result of a building safety risk. A building safety risk is a risk to the safety of people in or about a building arising from the spread of fire or structural failure.   
1065. Apart from under the Defective Premises Act 1972, which relates to the provision and refurbishment of dwellings, there is no constraint on the types of buildings a relevant liability can be incurred in relation to and therefore no constraint on the types of buildings for which a building liability order may be requested. 
1066. Building liability orders may be granted in relation to a relevant liability which was incurred prior to this section commencing as long as the limitation period for the relevant liability has not expired. 
1067. Subsection (4) states that B can only have a building liability order applied to it if it has been associated with A at any point between the time when A started carrying out the works which incurred the relevant liability and the building liability order being applied. The definition of "associates" is provided by section 131 of this Act. 
1068. Subsection (5) states that a building liability order can be applied to B even when A has dissolved. A building liability order also continues to apply to B if A dissolves after the order has been made. 
1069. Subsection (6) defines terms used in this section. 

Effect on Wales

1070. This section applies to England and Wales. 

Background 

1071. This is a new provision. 
1072. A practice used in property development is where a subsidiary company (which may be thinly capitalised) is set up to own and manage a development on the behalf of the corporate group it is a part of. The subsidiary company is often wound up once the development has been completed. A consequence of this practice is that the corporate group has no long-term liability for its developments.  
1073. Building liability orders have been designed to address the consequence described above, given the context of the wider building safety issues which have been discovered within medium and high-rise buildings.  
1074. The assessment is that relying upon English common law to address this consequence would be insufficient. 

      Example A 14 storey residential building is developed by a body corporate A. A few years after it is completed later, it is discovered that there are serious fire compartmentation issues within the building and the local fire and rescue authority order the building to be evacuated until the risk from fire is reduced. To seek recompense for the remediation costs, the freeholder speaks to lawyers about whether they can make a civil claim. The lawyers advise the freeholder that they can make a claim under the Defective Premises Act as the building is unfit for habitation. The freeholder discovers the development company was dissolved once the building was completed and the freehold sold off. The freeholder’s lawyers advise that they can establish that the development company’s parent company is associated, as the parent company directly controlled the actions of the development company. The freeholder applies to the High Court for a building liability order to be applied to the parent company. The freeholder must show that the parent company is associated with the development company. The High Court must consider whether it is just and equitable to grant the building liability order, for example whether the parent company can receive a fair trial. In this example, the request for a building liability order is granted. The freeholder can now make a claim under the Defective Premises Act against the parent company. The court proceedings would then proceed as normal.

Section 131: Building liability orders: associates

Effect

1075. This section defines when bodies corporate are associated for the purposes of section 130. When two bodies corporate are associated then section 130 confers a power on the High Court to apply a Building Liability Order to them.
1076. Subsection (1) defines a body corporate (A) as being associated with a body corporate (B) if one controls the other, in which case they would have a parent and subsidiary relationship, or if both A and B are controlled by a third company, in which case A and B would be sister companies.
1077. Subsections (2) to (4) provide further definitions.
1078. Subsection (2) sets out that one body corporate controls another if one of them possesses or is entitled to acquire: at least half of the issued share capital of the other; half the voting rights exercisable in the general meetings of the other; at least half of the other’s income if all the income was distributed amongst the shareholders; or, rights which would entitle it to half the assets of the other which are available for distribution amongst the shareholders in the event of the other winding up.
1079. Subsection (3) sets out when a body corporate (X) controls a limited liability partnership (Y). X has control of Y if: X holds the majority of the voting rights in Y; X is a member of Y and has the right to appoint or remove a majority of other members; or, X is a member of Y and controls the majority of the voting rights in Y (either along or through agreements with other members).
1080. Subsection (5) defines voting rights for the purposes of subsection (3). Voting rights are the rights conferred on members in respect of their interest in Y to vote on matters decided on by a vote by members of Y.
1081. Subsection (4) sets out if a body corporate has the power to ensure another acts how it wishes it to, then that body corporate has control of the other.
1082. Subsection (6) sets out that for the purposes of subsections (1A) to (4) of this section, a body corporate is treated as possessing any rights and powers possessed by a person as nominee for it (such as a director) and any rights and powers possessed by a body corporate which it controls.
1083. The effect of subsection (6) is that bodies corporate, which are not directly associated, can be taken as associated if there is a chain of associated bodies corporate which connects them.
1084. Subsection (7) sets out that if an interest in a building is held on trust, and a relevant liability is incurred in relation to that building (as defined by section 130), a body corporate which is a beneficiary of the trust is considered associated.

Effect in Wales

1085. This section applies to England and Wales.

Background

1086. This is a new provision.
1087. The definitions used within this section have a basis in the Petroleum Act 1998 and the Corporation Tax Act 2010.

      Example A body corporate A shares all of its directors with a body corporate B. It could be argued that A is able to ensure that B acts how A wishes B to conduct its affairs. B controls 100% of the voting rights exercisable in the general meetings of body corporate C. C is a member of a limited liability partnership of which bodies corporate D and E are also members. D controls the majority of the voting rights in the limited liability partnership. Due to these connections and subsection (6), A, B, C, D and E are associated under this section. Under this section, if any of A, B, C, D, or E have a claim brought against them which is the result of a relevant liability being incurred, then the High Court may apply a building liability order to any or all of the others, if the claimants request it and if the High Court considers it just

Section 132: Order for information in connection with building liability order

Effect

1088. This section gives the Secretary of State a power to allow the High Court to order a specified body corporate to share information about their associated companies. It allows for prescribed persons to petition the High Court to request such an information order. This section also allows the Secretary of State, by regulations, to prescribe the description of persons who can apply to the court for such an order.  
1089. Subsection (1) provides that prescribed persons may apply to the High Court for an information order. It allows for the Secretary of State, by regulations, to prescribe the description of persons who can apply to the court for such an order. 
1090. Subsection (2) defines what an information order is. It provides that an information order is an order which once granted will require a specified body corporate to give, in a specified time defined by the courts, information or documents related to persons who are or have been associates of that body corporate.  
1091. Subsection (3) defines the circumstances in which the High Court can grant an information order. It provides that information orders may only be granted if it appears to the court that the body corporate is subject to a relevant liability as defined by subsection (3) of section 130. Relevant liabilities include liabilities under the Defective Premises Act 1972, section 38 of the Building Act 1984, or liabilities which are incurred as a result of a building safety risk. A building safety risk is a risk to the safety of people in or about a building arising from the spread of fire or structural failure. The court must also be convinced that the information and documents to be provided support the applicant in making or considering whether to make an application for a building liability order as defined in section 130.  
1092. Subsection (4) sets out that prescribed means prescribed in regulations made by the Secretary of State and specified means specified in the information order.
1093. This section should be considered in conjunction with sections 130 and 131. Section 130 defines relevant liability for the purposes of this section. Section 131 defines the circumstances in which a body corporate can be considered associated with another body corporate for the purposes of this section. This section supports those who wish to be granted a building liability order under section 130.  

Background 

1094. This is a new provision. 
1095. This section has been created to prevent companies using more complex and opaque structures to prevent a building owner, landlord or leaseholder from being able to prove how companies are associated and therefore undermine the intended outcome of building liability orders as defined in section 130. Information orders provide a route for persons to obtain information in order to support them applying for a building liability order and to support them in receiving adequate recompense to correct building safety defects.  

Proposed use of power

1096.  This section allows for the Secretary of State, by regulations, to prescribe the description of persons who can apply to the court for an information order. We intend to create regulations to define these persons.  

      Example  A 14 storey residential building is developed by body corporate A. A few years after it is completed, it is discovered that there are serious fire compartmentation issues within the building and the local fire and rescue authority orders the building to be evacuated until the risk from fire is reduced. To seek recompense for the remediation costs, a leaseholder within the building speaks to lawyers about whether they can make a civil claim. The lawyers advise the leaseholder that they can make a claim under the Defective Premises Act as the building is unfit for habitation. The leaseholder discovers the development company was dissolved once the building was completed and the freehold sold off. The leaseholder suspects that the development company’s parent company is associated, therefore, they wish to be able to apply for a building liability order in order to seek damages from the parent company. However, the leaseholder is unable to show that the parent company is associated to the degree needed to be granted a building liability order. The leaseholder applies to the High Court for an information order to be applied to the parent company. The leaseholder must show that they intend to seek damages under a relevant liability (in this instance the Defective Premises Act) and that the information order could support them in applying for a building liability order. In this example, the request for an information order is granted. The High Court places an information order on the parent company, and they are then required to share with the leaseholder details of all companies which were associated with them during a time period specified by the courts. The leaseholder now has the information required to show that the parent company is associated with the development company, as the parent company directly controlled the actions of the development company. The leaseholder is then able to apply for a building liability order, to support them in making a claim under the Defective Premises Act against the parent company.

Remediation and redress: other provisions

Section 133: Service charges in respect of remediation works

Effect

1097. This section amends the existing section 20 consultation process in the Landlord and Tenant Act 1985. Subsection 133(4) inserts new section 120D Landlord and Tenant Act 1985, which sets out additional steps the landlord must undertake when embarking on defined remediation works. 
1098. Subsection (2) of new section 20D Landlord and Tenant Act 1985 provides that, for specified remediation works, the landlord must take reasonable steps to seek other cost recovery avenues before passing on the costs to leaseholders and must inform the leaseholders about what those steps were. The landlord must: 
      • ascertain whether any grant is payable in respect of the remediation works and, if so, to obtain the grant; 
      • ascertain whether all or any of the cost of remediation works may be met by a third party and, if so, to obtain monies from the third party (which is defined as including monies obtained from insurance, guarantee or indemnity or from the developer or anyone involved in designing or carrying out works on the building); and 
      • ascertain whether any other prescribed kind of funding is available and to obtain such funding.  

1099. Subsection (8) of new section 20D Landlord and Tenant Act 1985 clarifies that the landlord is not required to comply with their duty to seek cost recovery avenues (subsection (2)) before carrying remediation works.  
1100. Subsection (4) of new section 20D Landlord and Tenant Act 1985 provides that, where funding is obtained, the landlord must reduce the remediation costs passed on to leaseholders accordingly.  
1101. If the landlord does not comply with the above steps, subsection (5) of new section 20D Landlord and Tenant Act 1985 provides that a tenant can make an application for an order that all or any of the remediation costs are not regarded as relevant costs and therefore should not be taken into account when determining the service charge payable by the tenant or anyone else specified in the application.  
1102. Subsection (9) of new section 20D Landlord and Tenant Act 1985 provides a power for the Secretary of State to issue guidance in relation to the steps set out in subsection (2).  
1103. Subsection (10) of new section 20D Landlord and Tenant Act 1985 provides that failure to follow guidance may be relied upon as tending to establish proof of failure to comply with the requirements in subsection (2), and conversely proof of following the guidance can be taken to establish that there was no such failure. 
1104. Subsection (11) of new section 20D Landlord and Tenant Act 1985 provides for definitions of key terms ("developer", "prescribed", "remediation costs" and "third party").   
1105. Subsection 133(4) also inserts new section 20E Landlord and Tenant Act 1985. New section 20Esets out the procedures for regulations made under new section 20D, notably that these regulations will be made using the negative procedure.  
1106. Proposed use of Powers
1107. The Secretary of State will have the power to prescribe reasonable steps that a landlord must take and to set out how a landlord might demonstrate that they have met this requirement in statutory guidance.  
1108. The Secretary of State will have the power to prescribe additional alternative sources of funding that the landlord must explore in regulations. 
1109. The Secretary of State will be able to specify in regulations the information that the landlord must provide to the leaseholders about what steps they have taken, and the reasons for their course of action. This will enable leaseholders to be provided with accurate, up to date information and will enable them to make informed choices and to challenge when they   feel their landlord has not taken reasonable steps. 

Background

1110. There is currently no legal obligation on the landlord to seek alternative forms of cost recovery for remediation works before passing these costs onto leaseholders. This clause amends section 20 in the Landlord and Tenant Act 1985 so that the landlord has new duties to take reasonable steps to seek other cost recovery avenues before passing on remediation costs to leaseholders.  
1111. This change to the law is being made to give leaseholders further rights and protection by ensuring other cost recovery routes are appropriately explored.  

      Example A leaseholder is given a service charge bill for a large amount of money for remediation works. The leaseholder challenges the validity of the service charge at the First-tier tribunal, because they do not feel the landlord has taken reasonable steps to explore other forms of cost recovery. It transpires that the landlord has not made a claim against a warranty and the claim of the leaseholder is upheld by the First-tier Tribunal. The landlord must take reasonable steps to seek cost recovery via this route, before passing any costs on to the leaseholder.

Section 134: Duties relating to work to dwellings

Effect

1112. Subsection (1) of this section amends the Defective Premises Act 1972 by inserting new section 2A into that Act.
1113. New section 2A(1) sets out that this section applies where a person takes on work in relation to any part of a relevant building in the course of a business. It does not apply, for example, to homeowners doing work on their own properties.
1114. New section 2A(2) defines a "relevant building" as a building consisting of or containing one or more dwellings (e.g. a house or a block of flats).
1115. New section 2A(3) sets out that the person who takes on work to a relevant building owes a duty to the person for whom the work is done and any person who holds or subsequently acquires a legal or equitable interest in a dwelling in the building (this includes homeowners and leaseholders). The duty applies to work done directly to a dwelling, and to work done to other parts of a building (such as to the communal parts of a block of flats). This section sets out that the person undertaking the work owes a duty to ensure that, as regards the work, the dwellings in the building are fit for habitation when the work is completed. This test is also used in section 1 of the Act (in relation to the original provision of a dwelling). The phrase "as regards the work" means that the person is responsible only for their own work and not any existing defects in the building (although the person will be responsible for their own work in relation to any defects which are within the agreed scope of the work).
1116. New section 2A(4) sets out that new section 2A(3) does not apply where the existing section 1 duty applies (i.e. where work is taken on in connection with the "provision" of a dwelling), or where it is expected that the dwelling will cease to be a dwelling on the completion of the work (e.g. converting flats into offices) or if the dwelling will have otherwise ceased to exist (e.g. demolition of a house).
1117. New section 2A(5) sets out that, where a person (A) takes on work for another person (B), and it is agreed that the work will be done in accordance with instructions provided by or on behalf of B, then if A does that work properly and in accordance with those instructions, then A will have discharged the duty and no claim would be able to be brought. There is an exception where there are defects in the instructions provided by B. In this case, if A has a professional duty to inform B that the instructions are defective but fails to do so, and carries out work in accordance with the defective instructions, then A fails to discharge their duty to B.
1118. New section 2A(6) makes clear that, for the purposes of new section 2A(5), the person commissioning the work is not treated as having given instructions just because they have agreed with the person doing the work that the work will be completed in a specified way.
1119. New section 2A(7) sets out that, if a person doing work to a relevant building arranges for another person to take on that work (e.g. subcontracting part of a project) then those persons (i.e. the subcontractors) also owe a duty for the work they take on.
1120. New section 2A(8) relates to the limitation period in respect of a breach of a duty imposed by new section 2A, as set out in the Limitation Act 1980, as amended by section 135. This section sets out that the 15-year limitation period starts when the work is completed. As with a time limit under section 1, if a person subsequently does work to rectify original defective work, the 15-year limitation period starts again when that further work is finished.
1121. Subsection (2) of this section makes clear that new section 2A will apply only to work completed after this section comes into force.

Effect in Wales

1122. This section will apply equally in Wales.

Background

1123. This section amends the Defective Premises Act 1972.
1124. The Defective Premises Act 1972 creates a right to claim compensation in the civil courts for defective work connected with the provision of a dwelling, where the work renders the dwelling not "fit for habitation". The Defective Premises Act currently extends to the "provision" of a dwelling, meaning construction (i.e. new builds) or conversion (e.g. offices into flats). In practice, the claimant will need to show that the work made the dwelling not fit for habitation, and it is up to a court to decide based on the facts of the specific case.
1125. The Defective Premises Act does not currently extend to work undertaken on a dwelling beyond its initial "provision", meaning that work undertaken on existing buildings that has made the dwelling not fit for habitation does not fall within scope of the Act, even for highly complex, major works. This section expands the right to claim compensation to any work undertaken on a dwelling, provided that work is done in the course of a business.

      Example Work to refurbish an existing block of flats is done by a contractor. As a result of that work, one or more of the flats are no longer fit for habitation. This would constitute a breach of the duty under new section 2A of the Defective Premises Act 1972 and leaseholders of the affected flats would be able to bring a claim through the civil courts against the contractor for the cost of rectifying the defective work.

Section 135: Limitation periods

Effect

1126. This section makes a number of changes to extend the limitation periods (i.e. the period within which legal action must be brought) in respect of action under section 1 of the Defective Premises Act 1972, (the yet to be commenced) section 38 of the Building Act 1984, and new section 2A of the Defective Premises Act 1972 (see section 134). The changes to limitation periods are achieved primarily by inserting new section 4B into the Limitation Act 1980 (subsection (1)). The Limitation Act currently provides that the limitation period with respect to these causes of action is six years.
1127. This section extends the limitation period under section 1 of the Defective Premises Act (relating to the "provision" of a dwelling) to 30 years retrospectively and 15 years prospectively. This means that relevant work completed prior to the commencement of this section will be subject to a 30-year limitation period, and work completed after commencement will be subject to a 15-year limitation period.
1128. This section also provides for 15-year limitation periods under section 38 of the Building Act and new section 2A of the Defective Premises Act. These changes will apply prospectively only.
1129. This section provides in subsection (4) that, in respect of section 1 of the Defective Premises Act, where a revived limitation period would last for less than one year (known as "the initial period"), it will instead last for one full year, in order to give potential claimants the necessary time to take advice and lodge a claim.
1130. Where a limitation period is extended retrospectively this section sets out two safeguards to ensure fairness in the proceedings. First, subsection (5) provides that, where a claim is lodged and the continuation of the claim would breach a defendant’s human rights, the court must dismiss the claim. Secondly, subsection (6) provides that, where a claim has previously been dismissed or otherwise concluded (for example, if settled), the extended limitation period will not, of itself, be sufficient to reopen the claim.

Effect in Wales

1131. This section will apply equally in Wales.

Background

1132. This section is a new provision. To complement the redress provisions for newly built homes that are being introduced through the Act, the Government wishes to go further and extend redress provisions for existing buildings.

      Example 1: Extended limitation period Work on a new build block of flats is completed in 2024 and, seven years later, the leaseholders of a flat in that block find that, during the building work, there was a breach of a requirement imposed by the building regulations. Under section 38 of the Building Act 1984 the leaseholders can lodge proceedings to have their claim heard by the court within 15 years of the completion of the work. Example 2: "Revived" limitation period Work on a new build block of flats was completed in 2000 and in 2019 leaseholders discovered that there were defects in the original work to the extent that the flat is unfit for habitation, potentially giving rise to a cause of action against the housebuilder under section 1 of the Defective Premises Act 1972. However, the limitation period had already expired in 2006, so no claim was brought. Due to the retrospective extension of the limitation period to 30 years, the leaseholders could now bring proceedings up until 2030.

New Homes Ombudsman scheme

Section 136: Establishment of the New Homes Ombudsman scheme

Effect

1133. This section requires the Secretary of State to arrange for there to be a redress scheme for England, Scotland, Wales and Northern Ireland, to be known as the "New Homes Ombudsman scheme", which must meet the conditions in section 137(1), including the requirements set out in Schedule 9.
1134. The provision gives examples of how the obligation in subsection (1) might be achieved. The scheme may be an external or "in-house" redress scheme. For example, the Secretary of State could either select a third party to establish the scheme and maintain it, or the scheme could be an "in-house" arrangement whereby the Secretary of State establishes and maintains the scheme directly or establishes the scheme and appoints another person to maintain it. This will provide flexibility for how the scheme is established and maintained, and who will deliver the New Homes Ombudsman scheme. For completeness, the examples set out in the provision also cover the Secretary of State having to make arrangements for transfer, to allow the scheme to be maintained by a different person to the person who established it. This might become necessary if the external scheme provider which established the scheme could no longer fulfil its contract.
1135. In line with the flexibility around how the scheme is established and maintained, this section also provides for flexibility in terms of funding the scheme. It allows the Secretary of State to provide financial assistance to the New Homes Ombudsman scheme, including through non-repayable forms (grants) as well as repayable forms of assistance (such as loans). In the alternative, if the scheme is procured and is not self-financing there is also provision to allow the Secretary of State to pay for the service. The intention is for the New Homes Ombudsman scheme to cover its own costs and to finance itself through fees charged to developers.
1136. Before making the arrangements for the New Homes Ombudsman scheme under this section, the Secretary of State must consult the Welsh Ministers and Scottish Ministers and the relevant Northern Ireland department. If in future, alternative arrangements are required for the New Homes Ombudsman Scheme, the Secretary of State will be required to consult with the Scottish and Welsh Ministers and the relevant Northern Ireland department again.
1137. The relevant Northern Ireland department is the department of the Northern Ireland Executive designated by the First Minister and deputy First Minister in Northern Ireland acting jointly, or the Executive Office in Northern Ireland, where a department has not been designated.

Background

1138. This is a new provision. There is no previous provision for owners of new build homes specifically to complain to an ombudsman or redress scheme. Redress schemes already exist in relation to management, lettings and estate agency work in the private residential sector, and for social housing residents.

      Example The Secretary of State may make arrangements with a third party to establish a scheme and maintain it by way of a government procurement. There may already be a voluntary scheme in place that could bid, alongside other potential providers. It is anticipated that an independent board incorporating the housebuilding industry, consumer groups and others will bring forward arrangements to set up such a voluntary scheme prior to Royal Assent. Where no suitable providers of a scheme come forward, the Government may establish a scheme itself and ask someone else to maintain the scheme. If necessary, the Government could make a loan to establish a scheme which could be recouped once fees have been received under the scheme. Before making arrangements for the scheme the Secretary of State will consult with the Scottish and Welsh Ministers, and the relevant Northern Ireland department, and intends to work with the devolved administrations as the policy is developed.

Section 137: The New Homes Ombudsman scheme

Effect

1139. The scheme must meet the conditions set out in this section and in Schedule 9.
1140. The purpose of the New Homes Ombudsman scheme is to enable relevant owners of new build homes across the United Kingdom to make complaints against scheme members (developers) and to have such complaints investigated and determined by an individual who will act as an independent ombudsman.
1141. Membership of the scheme must be open to all developers. The scheme must manage complaints made by qualifying complainants about those members. The definition of "qualifying complainant" covers a person who is a "relevant owner" of a "new build home" in England, Scotland, Wales or Northern Ireland at the time of a complaint, which is a complaint within the first two years from the first purchase of the property from the developer. "Relevant owner" and "new build home" are defined in section 138. "Relevant owners" include individual owners who occupy the new build home, and certain residential landlords. Complaints can be made for certain new build homes constructed or converted after this section comes into effect, subject to further conditions in section 138.
1142. This section does not restrict the New Homes Ombudsman scheme from receiving complaints from "qualifying complainants" only. It may include provision for other people or organisations to have complaints investigated.
1143. To avoid duplication, the scheme will not be required to investigate a similar complaint being dealt with under another redress scheme, such as complaints against a developer who is a member of another redress scheme.
1144. This could include a situation where a complaint has been made to the Housing Ombudsman Service for a new build home in England which has not been resolved yet. The New Homes Ombudsman scheme will also not be required to investigate complaints that are subject to legal proceedings. The same applies to complaints already resolved by other redress schemes or the courts.
1145. This section also introduces Schedule 10 which inserts reference to the New Homes Ombudsman into the Local Government Act 1974 and the Housing Act 1996 to make sure that the Local Government and Social Care Ombudsman and the Housing Ombudsman can work effectively together with the New Homes Ombudsman.
1146. In this section, the term "redress scheme" is to include schemes that involve statutory corporations , amongst others, such as the Public Services Ombudsmen available in Wales Scotland and Northern Ireland, the Local Government and Social Care Ombudsman and the Housing Ombudsman.

Background

1147. This is a new provision. There is no previous provision for owners of new build homes specifically to complain to an ombudsman or redress scheme. Redress schemes already exist in relation to property management, lettings and estate agency work in the private residential sector, and for social housing residents.

      Example An individual who owns and occupies a new build home will be able to bring a complaint against a developer who is a member of the New Homes Ombudsman scheme about the developer’s conduct and standards of work. The complaint can be raised about matters occurring within two years from the date the home was first purchased from the developer. A complaint does not have to be made by the original purchaser, if the home has changed hands – see further below at section 138. There is flexibility for the New Homes Ombudsman to include provision in its rules so that it can receive complaints where the purchaser wasn’t an individual (for example, small organisations who purchase a new build home from a developer and do not have the capacity to pursue cases through the courts). It will be up to the New Homes Ombudsman scheme to set out who can complain to it in these circumstances. This could include prospective purchasers of new build homes who did not complete the purchase of the property as a result of a developer’s actions, or it could include organisations such as smaller housing associations who bought new build homes for occupation by tenants.

Section 138: "Relevant owner", "new build home" and "developer"

Effect

1148. This section defines the key concepts used in sections 136 and 137: who is a relevant owner, what is a new build home, and what is a relevant interest in land. This section also defines who is a developer, the category used to establish who may become a member of the New Homes Ombudsman scheme.
1149. This section also allows the relevant national authority to set out, in regulations, an additional category of persons (for example by reference to their connection with a "developer" as defined in the first part of this section), so that anyone of such a description is also a "developer" for the purpose of the legislation.
      
1150. This section also provides a description of who the relevant national authority is in relation to homes in England, Scotland, Wales and Northern Ireland.

Proposed use of this power

1151. If, based upon experience in administering the scheme, it transpires that alternative company structures are utilised so that the definition of a developer is inadequate and is not able to capture all those intended to be members of the New Homes Ombudsman scheme, regulations can provide additional provisions to supplement the definition under this section, for example by adding companies connected to those fitting the definition of developer to the "developer" category in subsection 6(a).
1152. Before making regulations under this section, the intention is that the relevant national authority bringing forward regulations is to consult each of the other relevant national authorities listed in subsection (7A). This will make sure that the other "relevant national authorities" are provided with an opportunity to engage on the regulations and to consider bringing forward similar regulations in relation to their respective countries.
1153. Section 139 sets out how these regulation-making powers are exercisable in relation to England, Scotland, Wales and Northern Ireland.
1154. The relevant national authorities are the Secretary of State, the Welsh and Scottish Ministers, and the department of the Northern Ireland Executive designated by the First Minister and deputy First Minister in Northern Ireland, acting jointly.
1155. If a department has not been designated as "the relevant national authority" for the purposes of section 139, the relevant national authorities, for homes in England, Wales and Scotland, must consult with the Executive Office in Northern Ireland before making regulations.

Background

1156. This is a new provision.

      Example: Review the definition of a developer The Welsh Ministers may review the definition of a developer after a certain period of time and decide that another category of persons should be included in it (for example where a new development or sales structure has emerged). This provides flexibility to ensure those who are intended to be members of the New Homes Ombudsman should be. If the Welsh Ministers identify an additional category of persons who they consider should be included in the category of developer in Wales, before regulations are made, the Welsh Ministers must consult with both the Secretary of State and Scottish Ministers, and the designated Northern Ireland department before bringing forward regulations. If the relevant national authority chooses to make regulations, the respective procedure for the relevant national authority will be set out in section 139. For example, in England, the relevant national authority is the Secretary of State and if the Secretary of State decides to make such regulations, and the consultation requirements are met, a draft of the regulations will be subject to approval by each House of Parliament.

Section 139: Regulations under section 138

Effect

1157. This section provides for the parliamentary procedure and other matters connected to the power to make regulations under section 138(6)(b) to add to the description of who is a developer.

Proposed use of the power

1158. It is envisaged that the definition of developer in section 138 will capture those persons who Government intends to become members of the redress scheme. However, it is acknowledged that developers use a variety of corporate structures and vehicles, and this will be kept under review.
1159. The relevant national authorities for homes in England, Scotland, Wales and Northern Ireland may have specific policy priorities or identify specific issues in relation to those respective countries. The power within section 138(6)(b) has therefore been granted to the Welsh and Scottish Ministers, and a designated Northern Ireland department as well as the Secretary of State.
1160. This section sets out that regulations made for this purpose must be made by statutory instrument using the affirmative procedure within the UK Parliament, the Senedd Cymru and the Scottish Parliament, and by statutory rule using the affirmative procedure within the Northern Ireland Assembly. This section further sets out that those regulations may make different provision for different purposes or may contain consequential, supplementary, incidental, transitional or saving provision in relation to regulations regarding an additional description of a developer. For example, there may be circumstances in future where the legislation does not work as intended in the context of a new person described as a developer without some further consequential or supplementary provision.
1161. Other circumstances may arise where transitional or saving provision are required, such as where regulations are made by the national relevant authority to add a description of a developer and those now included within that definition need time to become members of the new homes ombudsman scheme. Likewise, there may be some circumstances where exceptions should be made in relation to a new additional description of developer set out in the regulations.

Background

1162. This is a new provision.

Section 140: Power to require persons to join scheme and provide information

Effect

1163. This section creates a power for the Secretary of State to make regulations which will require developers of new build homes, who are within scope, to join the scheme and remain members of the scheme for a specified period. The Secretary of State may also in regulations set out certain publicity requirements for members of the scheme, requiring developers to provide information about the scheme, which may include requiring developers of new build homes to obtain a certificate to prove or advertise their membership. The regulations may require scheme members to inform certain persons, such as purchasers of new build homes, that the New Homes Ombudsman scheme exists.
1164. In such regulations the Secretary of State may set out the framework for enforcement including: the investigation of suspected breaches in relation to these duties, conferring functions on a person in relation to sanctions and investigations, types of sanctions for failing to comply, and the right to appeal the sanctions. This section also provides the Secretary of State with a power to make payments to any person on whom the regulations confer enforcement functions. Any person on whom the regulations confer enforcement functions may be required to have regard to statutory guidance concerning the exercise of those functions.
1165. There are differences in law, custom and practice across the United Kingdom and the regulations will need to accommodate these differences, particularly in relation to any enforcement framework and civil sanctions. To make sure that the regulations take into account the differences across the United Kingdom, before making regulations under this section, the Secretary of State must consult the Welsh and Scottish Ministers, and the relevant Northern Ireland department.
1166. The relevant Northern Ireland department is the department of the Northern Ireland Executive designated by the First Minister and deputy First Minister in Northern Ireland acting jointly, or the Executive Office in Northern Ireland, where a department has not been designated.

Proposed use of power

1167. It is intended that when a New Homes Ombudsman scheme is available and developers are aware of the new requirements, affirmative procedure regulations will be laid which, once approved by both houses of Parliament, will require developers to belong to the New Homes Ombudsman scheme, and publicise their membership of the same. It is also intended that the regulations will set out how those provisions are to be enforced. The Regulations may provide exceptions to the requirement to be a member.
1168. Consultation is necessary so that the scheme can work as intended across the United Kingdom by ensuring that differences in law, custom and practice, are considered, particularly where judicial systems differ.

Background

1169. This is a new provision.
1170. There is presently no statutory obligation upon developers of new build homes specifically to belong to a redress scheme, nor a way to enforce the requirements. This represents a significant gap for purchasers of new build homes.

      Example The UK Government will work with the Scottish, Welsh and Northern Irish administrations so that the regulations are operable in England, Scotland, Wales and Northern Ireland. For example, this would take into account the different legal regimes in different territories. The Government’s intention is for consultation with the Scottish and Welsh Ministers, and the relevant Northern Ireland department, to be conducted at an early stage and before decisions have been taken. This may include a UK Government and devolved administration working group to facilitate joint working between these authorities. Once the regulations have been approved, developers of new build homes within scope will be required to belong to the New Homes Ombudsman scheme. Developers may have to remain members of the scheme until such a time that they are no longer bound by scheme’s terms. The Government may want developers to be able to confirm or prove their membership (for example, by displaying a copy of their membership in their sales offices). This section provides for regulations to be laid regarding the enforcement of any duties introduced by this section. Developers that breach requirements may face civil sanctions. The regulations must allow for a right of appeal against such sanctions. In addition, this section allows the Secretary of State to designate the person to impose the sanctions or investigate suspected breaches of requirements. This could, for example, allow a new or existing body to undertake the enforcement role, and this section allows the Secretary of State to make payments for that body to undertake the role. The power is flexible to take into account both the existing and new regulatory environment. When the Secretary of State chooses to make regulations, a draft of the regulations would be subject to approval by each House of Parliament.

Section 141: Register of members

Effect 

1171. This section places a requirement on the person who maintains the scheme to keep and publish a register of the scheme’s members that can be inspected by the public at all reasonable times. This will mean that consumers can check if a developer is a member of the New Homes Ombudsman scheme.

Background 

1172. This is a new provision.

Section 142: Developers’ code of practice

Effect

1173. This section allows the Secretary of State to give approval to a code of practice that covers the standards of conduct and standards of quality of work which should be met by members of the New Homes Ombudsman scheme. Alternatively, if the industry or others do not come forward, this section allows the Secretary of State to issue a code.
1174. If a code is issued or approved, it must be published by the Secretary of State. If the code of practice needs adjustment or replacement in the future, there is provision to allow this to happen. The Secretary of State can revise or replace it, or approve its revision/ replacement, and again such revised or replaced code must be published. In accordance with Schedule 9, where there is a code of practice which has been issued or approved then the scheme may accept complaints about non-compliance with such a code. In considering a complaint under the scheme, whatever the issue, the scheme must have regard to any code of practice that has been issued or approved.
1175. The Secretary of State must consult the Scottish and Welsh Ministers, and the relevant Northern Ireland department, before issuing, revising or replacing the code of practice; or before approving the code or its revision or replacement. This is designed to ensure that the Code of Practice takes into account the views of the devolved administrations, in order to take into account their policy priorities and to reflect differences in law, custom and practice between Scotland, Wales, Northern Ireland and England.
1176. The relevant Northern Ireland department is the department within the Northern Ireland Executive designated by the First Minister and deputy First Minister in Northern Ireland acting jointly, or the Executive Office in Northern Ireland, where a department has not been designated in this way.

Proposed use of power

1177. The Secretary of State is not required by this section to issue or approve any code of practice. The ability of the Secretary of State to issue or replace a code of practice is included as a potential option only.

Background

1178. This is a new provision.

      Example A code of practice may be used by developers (who are members of the New Homes Ombudsman scheme) and the purchasers of new homes so that all parties are aware of the standards expected. These standards could be in relation to the sales, marketing, and after-sales services expected of the developer of the new build home, and in relation to the standards of conduct and standards of quality of work expected of developers during the construction process. It is expected that, if a code of practice is issued or approved by the Secretary of State, the New Homes Ombudsman Scheme will require its members to follow it and will consider compliance with the code when investigating complaints. The Code can be changed over time. The Secretary of State may, following consultation with the Scottish and Welsh Ministers, and the relevant Northern Ireland department, revise or replace a code of practice to reflect changing circumstances and practice or approve its revision or replacement. To enable purchasers and developers to be aware of the code of practice and expected standards, the Secretary of State will ensure it is published and could publish it on the Government’s website or signpost to where the code of practice is published Any code could also require developers to make prospective purchasers aware of the code during the sales process.

Section 143: Amendment of the Government of Wales Act 2006

Effect

1179. This section modifies Senedd Cymru’s legislative competence by removing the need for the consent of the UK Secretary of State to a provision of an Act of Senedd Cymru which removes or modifies any function of the new homes ombudsman or which confers power to do so.

Background

1180. This is a new provision. This section lists the New Homes Ombudsman in sub-paragraph 10(2) to Schedule 7B to the Government of Wales Act 2006, so that the Senedd is not restricted from bringing forward legislation to remove or modify the New Homes Ombudsman’s statutory function in relation to Wales in future. Housing is devolved to the Senedd, the Scottish Parliament and the Northern Ireland Assembly, and in the future those bodies may decide to pursue alternative arrangements regarding redress for new build homebuyers which may necessitate changes to the New Homes Ombudsman’s functions as regards those countries.

Section 144: New build home warranties

Effect

1181. This section sets a legal requirement for the developer of every new build home to provide a warranty for the benefit of a purchaser (subsections (2) and (3). The warranty must meet minimum standards, which will be set in regulations. The warranty must be for a minimum term of no less than 15 years (subsection (5)). 

Background 

1182. At present, 10-year warranties are provided on new homes as a requirement to obtain mortgage finance rather than as a legal requirement. As part of the Act’s general aim of improving the safety and standards of buildings, this section mandates provision of such warranties in law, extends the minimum term from 10 to 15 years (subsection 5) and also provides powers for the Secretary of State to set a range of minimum requirements in regulations (subsection (4)).  
1183. The minimum warranty term of 15 years mirrors the extended limitation period to bring litigation under section 1 of the Defective Premises Act 1972 and section 38 of the Building Act 1984, set by section 144 of this Act. 

Proposed use of power

1184. The Government intends to consult widely on the proposed minimum standards to be set in regulations made under this section. It intends to delay commencement of this section to allow industry the opportunity to consider the outcome of that consultation and make appropriate warranties available for sale. 

      Example 1 Once this provision comes into effect, it will be unlawful for a developer of a new build home (whether a house, flat, maisonette or other type) to sell it without providing a warranty covering at least the prescribed minimum standards for at least the minimum term. Where the new home is a flat in a block with common parts, those parts would also need to be covered by a warranty (subsection (2)(b)). Example 2 If a new build home were to be sold, after commencement of this section, without a warranty, enforcement action could be taken against the developer under regulations made under the following section.

Section 145: New build home warranties: financial penalties

Effect

1185. This section enables the Secretary of State to set out in regulations i) the level of financial penalties that could be issued to developers selling new build homes without a compliant warranty in breach of section 144, including provision for interest or additional penalties for late payment and ii) the process for considering and issuing such penalties and the right to appeal. 

Background

1186. At present, 10-year warranties are provided on new build homes as a requirement to obtain mortgage finance rather than as a legal requirement. There is therefore no provision at present to mandate warranties in law or to impose penalties for selling a new build home without a warranty.  
1187. In order to deter developers from considering selling new homes without a compliant warranty, subsection (1) enables the Secretary of State, or a person designated by them, to issue financial penalties for doing so in the absence of a reasonable excuse. Subsection (2) provides that the level of penalties, the process for issuing them, provision for interest or additional penalties for late payment and conferring rights of appeal will be set in regulations; subsection (3) provides that the maximum penalty prescribed in regulations may not exceed £10,000 or 10% of the sale price of the new home, whichever is the greater. 

      Example If a new home were built and then sold for £250,000 without a warranty, and the developer had no reasonable excuse for not providing a warranty, the Secretary of State (or person designated by them) could issue the seller with a financial penalty of up to £25,000, or such lower maximum as may be prescribed in regulations.

Construction products

Section 146: Construction products

Effect

1188. The current regulatory framework covering some construction products placed on the UK market, is derived from the EU Construction Products Regulation 2011. This regime was brought into UK law, as retained EU Law, via the European Union (Withdrawal) Act 2018. The enforcement regime in the UK is governed by the Construction Product Regulations 2013. Both sets of regulations were amended for the UK by the Construction Products (Amendment etc.) (EU Exit) Regulations 2019.
1189. They were further amended by the Construction Products (Amendment etc.) (EU Exit) Regulations 2020, implementing the Northern Ireland Protocol for construction products by enabling the continued application of the EU Construction Products Regulation 2011 in Northern Ireland and implementation of the amended retained EU law in Great Britain.
1190. Currently this framework applies only to products with an EU harmonised standard or conforming to a European Technical Assessment (now, in the UK, a designated standard and a United Kingdom Technical Assessment). The Secretary of State has powers to add further products for the GB market. Certain other construction products where they are used by consumers may fall under the requirements of the General Product Safety Regulations 2005 for products to be safe. There are many construction products where there is no existing EU harmonised standard, or European Technical Assessment, and they are not used by consumers – Aluminium composite material (ACM) cladding being one example and some types of fire doors another. This gap in regulation became apparent after the Grenfell Tower Fire.
1191. It is intended that all construction products which are made available on the UK market should fall under a regulatory regime. The Building Safety Act does this in two ways, by taking powers to:
      • Require construction products to be safe; and
      • Create a statutory list of "safety critical" construction products.

1192. This is in addition to the current regulatory regime. The Act also creates powers enabling the Secretary of State to amend the current regime to ensure that it remains fit for purpose.
1193. This section gives the Secretary of State the power to regulate construction products.
1194. The power applies to the whole of the United Kingdom.

Proposed use of this power

1195. The power will be used to set out a detailed regime in regulations. The detail of the extent of the power is set out in Schedule 11.
1196. This power will be used by the Secretary of State to create regulations for the marketing and supply of construction products in the United Kingdom. The new regulations will work in three ways:
      1. they will create a new requirement for construction products to meet a general safety requirement;
      2. they will retain existing requirements for products which perform to a designated standard or products which conform to a technical assessment, adding some further requirements to enhance the existing market surveillance and enforcement regime, and provide for regulation of false statements made in advertising and marketing material; and
      3. they will create new requirements for a list of safety critical products (where the failure of such products would result in death or serious injury).

Background

1197. The purpose of this power is to provide that construction products placed on the UK market are safe and, in the case of products subject to designated standards, technical assessments or are on the safety critical list, that they will perform to certain technical standards. For these products, where they are placed on the UK market, this will ensure reliable information is available to anybody who wishes to buy or use these products.

      Example The provisions of Schedule 11 set out the detail of how this power is intended to be used and includes examples of how the regulations are intended to work in practice.

Section 147: Liability relating to constructions products: general definitions

Effect

1198. This section sets out definitions that are relevant to the four subsequent sections, 148 to 151: Liability relating to construction products, Liability for past defaults relating to cladding products, Liability relating to construction products: limitation in England and Wales and Liability relating to construction products: limitation in Scotland.
1199. This section defines the construction product regulations that are relevant to sections 146 to 148. These are the Construction Products Regulations 1991 ("the 1991 Regulations"), Regulation (EU) No. 305/2011 ("the 2011 Regulation"), the Construction Products (Amendment etc.) (EU Exit) Regulations 2019 ("the 2019 Regulations") and the regulations made under schedule 11 of this Act ("the construction products regulations").
1200. This section defines a "relevant building" as a building which consists of a dwelling, or a building which contains two or more dwellings.
1201. A "relevant interest" in relation to a building is defined for England and Wales, and separately for Scotland. In England and Wales, a "relevant interest" is a legal or equitable interest in a building, or any dwelling contained in the building. In Scotland, a "relevant interest" is any right or interest in or over the building where it contains a dwelling or the building contains one or more dwellings, the building, or any dwelling contained within the building.
1202. This section applies equally in England and Wales and Scotland. Section 169(7) provides a power for sections 147 to 149 to be extended, by regulations, to Northern Ireland.

Background

1203. This is a new provision.
1204. Sections 147 and 148 each create a new cause of action which allows for manufacturers and sellers of construction products to be held accountable where the use of a construction product in construction works causes or contributes to a dwelling being unfit for habitation on completion of those works. This applies retrospectively (section 149) in relation to construction products which are cladding products only, and where the relevant products are in breach of regulations, inherently defective, or have been mis-sold. Prospectively (section 148) it applies to all construction products, where the relevant product is in breach of regulations, inherently defective, or has been mis-sold. Sections 149 and 150 make provisions for limitation periods associated with the new causes of action. This section provides general definitions relevant to the new causes of action.

Section 148: Liability relating to construction products

Effect

1205. Section 148 makes provision for a new cause of action where a construction product used in construction works causes, or is a factor in causing, a dwelling to be unfit for habitation on completion of those works.
1206. Subsection (1) sets out that section 148 applies when Conditions A to D are met.
1207. Subsection (2) sets out Condition A. Condition A is that a person fails to comply with a construction product requirement (which is defined in section 147), or a person makes a misleading statement in relation to a construction product, or a person manufactures a construction product that is inherently defective. A "construction product requirement" is defined in section 147 as a requirement under either of the 2011 or 2019 regulations, or construction product regulations made under schedule 11 of this Act (defined in section 147).
1208. Subsection (3) sets out Condition B. Condition B is that the construction product referred to in subsection (2) is installed in, or applied, or attached to, a relevant building (as defined in section 147).
1209. Subsection (4) sets out Condition C. Condition C is that, when the works to the relevant building are completed, the relevant building, or a dwelling contained within the building, is unfit for habitation.
1210. Subsection (5) sets out Condition D. Condition D is that the facts referred to in subsection (2) were the cause, or one of the causes of the building or dwelling being unfit for habitation.
1211. If Conditions A to D are met, a claim for compensation can be brought through the civil courts. A claim can be brought by those who have a relevant interest in relation to the relevant building and have suffered a loss due to a dwelling being unfit for habitation.
1212. Subsection (6) sets out that loss can be claimed for personal injury, damage to property or economic loss.
1213. Subsection (7) provides that any attempt to contract out of any liability arising under this section is void.
1214. Subsection (8) sets out when the limitation period commences, and refers to the statutory provisions which apply separately for England and Wales, and Scotland. In relation to a building’s initial construction, the limitation period commences when the building is completed. In relation to other works not connected with the initial construction of the building, the limitation period commences when those works are completed.
1215. Subsection (9) and (10) define "construction product" for the purposes of this section.
1216. Section 148 applies equally in England and Wales and Scotland. Section 169(7) provides a power for this section to be extended, by regulations, to Northern Ireland.

Background

1217. This is a new provision.
1218. There is evidence that the mis-selling of construction products and the supply of defective construction products have contributed to safety defects in buildings, particularly in multi-occupied residential buildings. When these defects come to light, their remediation can be costly.
1219. Currently, there is limited recourse against manufacturers of defective or inappropriately marketed construction products, or those in breach of construction product regulations. Often, the possibility of redress to recover costs from manufacturers is limited to a claim for breach of contract, where a contractual relationship exists. However, it will often be the case that there is no relevant contractual relationship in place; for example, the owner of a flat which has been affected by the installation of a defective construction product will not usually have a contractual relationship with the product manufacturer or seller, and so would be unable to use such a route to recover damages for remediation work that is needed.
1220. In England and Wales, the Defective Premises Act 1972 creates a right to claim compensation in the civil courts for defective work connected with the provision of a dwelling, where the work renders the dwelling not "fit for habitation". Section 134 of this Act expands the scope of the Defective Premises Act to work done to a dwelling beyond its initial completion. However, the duty under the Defective Premises Act only extends to persons taking on work in relation to the dwelling. The duty does not extend to the role that manufacturers or sellers of construction products might play in a building or dwelling being unfit for habitation on completion of the relevant works.
1221. The new cause of action created by this section will enable claims to be brought against construction product manufacturers and sellers for their role in dwellings being unfit for habitation on completion of the relevant works: if a construction product contributes to or causes a dwelling to be "unfit for habitation" on completion of the relevant works and an individual with a relevant interest incurs a loss as a consequence, then a civil claim can be brought through the courts to recover damages for that loss.
1222. Damages that can be recovered under this section can include personal injury, damage to property, for example caused by a fire; or economic loss, which could include the costs of remediation.
1223. This section will apply prospectively, meaning that it will apply to work completed after the commencement of this section, which is two months after Royal Assent (section 170(3)(e)). The limitation period for claims brought under this section is 15 years from when the cause of action accrues.
1224. The "fit for habitation" test is intended to be equivalent to the test used in the Defective Premises Act 1972 which applies to England and Wales. The Defective Premises Act does not extend to Scotland, but the phrase has a generally understood meaning, which could be used by the Courts in Scotland, together with using the principles in caselaw under the Defective Premises Act as guidance. The same principles could apply should the provisions be extended to Northern Ireland using the power at section 169(7).

      Example A construction product manufacturer makes a statement in marketing materials that a particular product is suitable for use in the construction of high-rise residential buildings. The statement is not true, and the performance of this product meant it was not suitable for such use. The manufacturer sells this product directly to a contractor who is constructing a high-rise residential building. The contractor relies on the information in the marketing material that the product is suitable for the specific construction project and uses it in that construction project. On completion of the works, the dwellings in the building are not fit for habitation and to make them fit for habitation costly remediation works would be required. The leaseholders, who would have to pay for the remediation works, would be able to bring a claim for damages against the manufacturer under this cause of action.

Section 149: Liability for past defaults relating to cladding products

Effect

1225. Section 149 makes provision for a new cause of action where a cladding product used in construction works cause, or is a factor in causing, a dwelling being unfit for habitation, following completion of certain works.
1226. Subsection (1) sets out that this section applies when Conditions A to D are met.
1227. Subsection (2) sets out Condition A. Condition A is that a person fails to comply with a cladding product requirement (which is defined in subsection (12)), or a person makes a misleading statement in relation to a cladding product, or a person manufactures a cladding product that is inherently defective. A "cladding product" is defined in subsection (11) of this section.
1228. Subsection (3) sets out Condition B. Condition B is that the cladding product is attached to, or included in, the external wall of a relevant building (as defined in section 147) in the course of works to that building.
1229. Subsection (4) sets out Condition C. Condition C is that, when the works to install the cladding product in the relevant building are completed the relevant building, or a dwelling contained within the building, is unfit for habitation.
1230. Subsection (5) sets out Condition D. Condition D is that the facts referred to in subsection (2) were the cause, or one of the causes, of a dwelling, or dwellings, being unfit for habitation.
1231. If Conditions A to D are met, a claim for compensation can be brought through the civil courts. A claim can be brought by those who have a relevant interest in relation to the relevant building and have suffered a loss due to a dwelling being unfit for habitation.
1232. Subsection (6) sets out that loss can be claimed for personal injury, damage to property or economic loss.
1233. Subsection (7) provides that any attempt to contract out of liability under this section is void.
1234. Subsection (8) sets out when the limitation period commences and refers to the statutory provisions which apply separately for England and Wales, and Scotland. In relation to a building’s initial construction, the limitation period commences when the building is completed. In relation to other works not connected with the initial construction of the building, the limitation period commences when the works are completed.
1235. Subsections (9) and (10) set out a safeguard to ensure fairness in proceedings. They provide that where a claim is brought and the continuation of the claim would breach a defendant’s Convention rights, the court must dismiss the claim. The "Convention rights" are defined in subsection (12) as having the same meaning as in the Human Rights Act 1998.
1236. Subsection (11) provides a definition for "cladding product requirement" in relation to the relevant regulations in force at the time. Subsection (12) defines a "cladding product" and makes clear that the term "external wall" includes parts of the roof in certain cases.
1237. Section 149 applies equally in England and Wales and Scotland. Section 169(7) provides a power for the provisions to be extended, by regulations, to Northern Ireland.

Background

1238. This is a new provision.
1239. Current issues with historical fire safety defects in multi-occupied residential buildings are an unprecedented situation affecting large numbers of leaseholders.
1240. There are particular problems with the past use of unsafe cladding products on these buildings, and the resultant fire safety risks. Often, to mitigate against the fire safety risks, the cladding needs to be remediated. The costs associated with remediation are often significant.
1241. There is evidence that the past actions of manufacturers and sellers of cladding products have contributed to the creation of these defects and the resultant fire safety risks.
1242. Where the actions of cladding product manufacturers and sellers have caused or contributed to a building being unsafe, there are limited existing routes to secure redress from those at fault.
1243. The cause of action created by this section provides a new route for recourse against cladding product manufacturers, where their actions have caused or contributed to a dwelling becoming unfit for habitation.
1244. The cause of action has retrospective effect. This means that it is available in respect of defaults (to which see subsection (2)) which occurred before the commencement of this section (which is two months after Royal Assent of this Act; to which see section 170(3)). The limitation period commences on the date on which the right of action begins to accrue, which is the completion of the relevant works. In practice, this means that claims will be able to be brought in respect of works which were completed from mid-1992 onwards. The limitation period for work completed before commencement will be 30 years; the limitation period for work completed after commencement will be 15 years.
1245. The cause of action created by section 148 has prospective effect. It applies to a wider range of construction products and will apply in respect of defaults which occur after the commencement of sections 148 and 149.

      Example In 2001, the manufacturer of a cladding product misrepresented the properties of the product to the lead contractor for the construction of a high-rise residential building. The manufacturer stated in marketing materials that the cladding product was more resistant to the spread of fire than it was. The cladding product was installed by the contractor on the high-rise residential building and the relevant works were completed in 2002. Following fire safety checks it is determined that the cladding product installed on the building creates a serious fire safety risk and should not have been used in the construction of a high-rise building. The use of the product in the building has resulted in dwellings in the building being unfit for habitation at the time of completion of the works due to fire safety risks. The cladding product now needs to be replaced with a safe alternative. The building owner will bear the costs of this remediation. To replace the dangerous cladding, the building owner incurs significant costs. Under this section, (and before the limitation period expires) the building owner brings a claim for compensation against the cladding product manufacturer for the costs associated with remediating the unsafe cladding. The court finds that the reason the dwellings in the building were unfit for habitation on completion of the relevant works is the use of the unsuitable product. This was used as a result of the manufacturer’s misleading marketing material and the Court orders the manufacturer to pay damages to the building owner.

Section 150: Liability relating to construction products: limitation in England and Wales

Effect

1246. Section 150 provides for the limitation periods in England and Wales for the causes of action created by sections 148 and 149.
1247. Section 150 inserts new section 10B into the Limitation Act 1980, creating limitation periods for actions under sections 148 and 149 of this Act.
1248. Subsection (1) of new section 10B sets out that the limitation period under section 148 is 15 years from the date on which the right of action accrued. Subsections (3) and (8) of section 148 sets out when the right of action begins to accrue. Section 148 applies prospectively only, meaning that it only applies to work completed after commencement of this section, which is two months after Royal Assent of this Act (section 170(3)(e) of this Act).
1249. Subsection (2) of new section 10B sets out the limitation periods under section 149. Section 149 applies to past defaults relating to cladding products (to which see section 149(2)). Where the work was completed before the commencement of this section, the limitation period is 30 years from the date of completion of the work. Where the work is completed after commencement of this section, the limitation period is 15 years.
1250. Subsection (3) of new section 10B provides that in respect of an historical claim under section 149, if the limitation period would expire within the year starting with the commencement date, it will be extended until the expiry of that year, in order to give potential claimants the necessary time to take advice and lodge a claim.
1251. Subsection (4) of new section 10B defines "the commencement date" for the purposes of this section.
1252. Subsections (5) and (6) of new section 10B disapply other limitation periods prescribed by the Limitation Act 1980 in relation to the new causes of action, and lists some exceptions.
1253. Section 150 extends and applies to England and Wales.

Background

1254. Section 150 is a new provision.
1255. This section amends the Limitation Act 1980 to include the specific limitation periods for the new causes of action created by sections 148 and 149 in England and Wales. Section 151 sets out the equivalent provision for Scotland, which has a separate legislative regime. Section 169(7) provides a power to extend, by regulations, equivalent limitation periods to Northern Ireland.
1256. The cause of action created by section 148 will be subject to a 15-year limitation period, which will apply prospectively only (from commencement of the relevant section). 
1257. The cause of action created by section 149 has retrospective effect, meaning that it applies to past defaults in relation to cladding products (to which see section 148(2)). The limitation period commences when the work involving the cladding product is completed. The limitation period will be 30 years for work completed prior to commencement, and 15 years for work completed after commencement.
1258. This means that for work completed prior to commencement of this section, a claim must be brought within 30 years of the completion of the work. For work completed after commencement of this section, a claim must be brought within 15 years of the completion of the work.  
1259. The limitation periods set out in this section mirror the changes this Act makes to the limitation period under section 1 of the Defective Premises Act 1972 (to which see section 135).

      Example 1 Construction work is completed on 10 January 2002 that involves the installation of a cladding product on the exterior of a high-rise residential building in England. In 2024, it is discovered that dwellings in the building were unfit for habitation on completion of the works. The cladding used in the construction was mis-sold as being suitable for use in the particular construction. The limitation period will expire on 10 January 2032. Example 2 Construction work is completed in on 10 January 2024 that involves the installation of construction product in a multi-occupied residential building in England. In 2028, it is discovered that dwellings in the building were unfit for habitation on completion of the works. The cladding used in the construction was mis-sold as being suitable for use in the particular construction. The limitation period will expire on 10 January 2039.

Section 151: Liability relating to construction products: limitation in Scotland

Effect

1260. Section 151 provides for the limitation periods in Scotland for the new causes of action relating to construction products.
1261. Subsections (1) and (2) insert new section 18ZD into the Prescription and Limitation (Scotland) Act 1973.
1262. Subsection (1) of new section 18ZD sets out that the limitation period for a civil claim under section 148 is 15 years from the completion of the work.
1263. Subsection (2) of new section 18ZD sets out the limitation periods under section 149, which relates to past defaults relating to cladding products. Where the work was completed before the commencement of this section, the limitation period is 30 years from the date of completion of the work. Where the work is completed after commencement of this section, the limitation period is 15 years.
1264. Subsection (3) of new section 18ZD provides that in respect of an historical claim under section 149, if the limitation period would expire within the year starting with the commencement date, it will not expire until the end of that year this will give potential claimants sufficient time to take advice and lodge a claim.
1265. Subsection (4) of new section 18ZD defines "commencement date" for the purposes of this new section in the Prescription and Limitation (Scotland) Act 1973.
1266. Subsection (5) of new section 18ZD clarifies the application of other limitation periods.
1267. Subsections (6) and (7) of new section 18ZD make provision for there to be a disregard for any time during which the claimant was under a legal disability or failed to bring the claim due to fraud or error on behalf of the defendant. In these circumstances, the limitation period can be extended beyond the prescribed 15 or 30 years. This reflects similar provision in the Limitation Act 1980.
1268. Section 151 extends and applies to Scotland only.

Background

1269. This is a new provision.
1270. This section sets out the limitation periods for the new causes of action created by sections 148 and 149 in Scotland.
1271. The cause of action created by section 148 will be subject to a 15-year limitation period, which will apply prospectively only. The cause of action created by section 149 will have a 30-year limitation period retrospectively, and a 15-year limitation period prospectively.
1272. This means that for work completed prior to commencement of the provision, a claim must be brought within 30 years of the completion of the work. For work completed after commencement, a claim must be brought within 15 years of the completion of the work.
1273. These limitation periods mirror equivalent provision for limitation in England and Wales in relation to the new causes of action. 

      Example 1 Construction work is completed on 10 January 2002 that involves the installation of cladding product on the exterior of a high-rise residential building in Scotland. In 2024, it is discovered that dwellings in the building were unfit for habitation on completion of the works. The cladding used in the construction was mis-sold as being suitable for use in the particular construction. A claim could be brought against the cladding product manufacturer until 10 January 2032. Example 2 Construction work is completed on 10 January 2024 that involves the installation of construction product in a multi-occupied residential building in Scotland. In 2028, it is discovered that dwellings in the building were unfit for habitation on completion of the works. The construction product used in the works was mis-sold as being suitable for the particular type of construction. A claim could be brought against the cladding product manufacturer until 10 January 2039.

Section 152: Cost contribution orders: general definitions

Effect

1274. This section sets out definitions for the purposes of section 153 (Costs contribution orders made by courts), section 154 (Costs contribution orders made by the Secretary of State) and section 155 (Costs contribution orders: assessments). 

Section 153: Cost contribution orders made by courts

Effect

1275. This section creates a power to make regulations to enable the Secretary of State to apply to a court for a costs contribution order to be made against a construction products manufacturer, their authorised representative, an importer or distributor ("economic operator") to require them to contribute to the cost of remediation works.  
1276.  The Secretary of State would be able to make such an application where an economic operator has been successfully prosecuted for non-compliance with construction products regulations, where the relevant product has caused or contributed to making dwellings unfit for habitation.  
1277. Regulations made under this power will be subject to the affirmative procedure.  
1278. This section should be read alongside section 155, which creates a power to make regulations relating to assessments undertaken as part of this process.  
1279. This power applies UK wide.  

Background

1280. This is a new provision. 
1281. The existing regulatory framework for construction products, which is derived from the EU Construction Products Regulation 2011, sets out the requirements that economic operators (construction products manufacturers, their authorised representatives, importers and distributors) must fulfil when making construction products available on the UK market. Schedule 11 of this Act takes powers to strengthen and extend this regulatory framework.  
1282. Sections 153 and 154 create a power to make regulations to enable the Secretary of State to require economic operators to pay for, or contribute towards, the cost of remediation works where they have been successfully prosecuted for breach of construction product regulations and use of the relevant products has caused or contributed to making dwellings unfit for habitation. Section 155 creates a power to make regulations relating to assessments undertaken as part of this process. 

Proposed use of power

1283. This power will be used to make regulations to enable the Secretary of State to apply to a court for a costs contribution order to be made against an economic operator where the relevant conditions have been met, to require them to pay an amount in relation to the cost of remediation works. Regulations will set out the matters that the court will need to consider when deciding whether to make a costs contribution order and, where applicable, the amount that an economic operator should be required to pay, and to whom. Regulations will also enable the court to order an economic operator to pay to the Secretary of State the cost of any assessments undertaken as part of this process and making the application to court.

      Example  A manufacturer is successfully prosecuted for non-compliance with construction products regulations, following an investigation by the regulator which found that the fire doors that they manufacture do not have the resistance to fire claimed in their marketing material. The Secretary of State appoints assessors to undertake an assessment of residential buildings where the product has been used. The assessment finds that dwellings have been made unfit for habitation as a result of these doors having been used, and that the doors would need to be replaced to make the dwellings fit for habitation. The assessment also sets out the costs which would be, or have been, reasonably incurred in replacing the fire doors. The Secretary of State then applies to the court for an order to be made against the manufacturer for the costs of remediation supported by the evidence from the assessor. The order can also include the costs incurred by the Secretary of State from carrying out the assessment and making the application to court.

Section 154 – Cost contribution orders made by the Secretary of State

Effect

1284. This section enables the Secretary of State to, by regulations, make provision for the Secretary of State to make costs contribution orders in relation to construction products. 
1285. The Secretary of State will be able to serve a costs contribution order on an economic operator that has been successfully prosecuted under construction products regulations, and where the use of the relevant product has caused, or contributed to, dwellings being unfit for habitation. 
1286. Regulations made under this power will be subject to the affirmative procedure.  
1287. This section should be read alongside section 155, which creates a power to make regulations relating to assessments undertaken as part of this process. 
1288. This power applies UK wide.  

Background 

1289. This is a new provision.
1290. The existing regulatory framework for construction products, which is derived from the EU Construction Products Regulation 2011, sets out the requirements that economic operators (construction products manufacturers, their authorised representatives, importers and distributors) must fulfil when making construction products available on the UK market. Schedule 11 of this Act takes powers to strengthen and extend this regulatory framework.  
1291. Sections 153 and 154 create a power to make regulations to enable the Secretary of State to require economic operators to pay for, or contribute towards, the cost of remediation works where they have been successfully prosecuted for breach of construction product regulations and use of the relevant products has caused or contributed to making dwellings unfit for habitation. Section 155 creates a power to make regulations relating to assessments undertaken as part of this process. 

Proposed use of power 

1292. This power will be used to make regulations to enable the Secretary of State to make a costs contribution order against an economic operator where the relevant conditions have been met, to require them to pay the relevant cost of remediation works. Regulations will set out the matters that the Secretary of State will need to consider when deciding whether to make a costs contribution order and, where applicable, the amount that an economic operator should be required to pay. Regulations will also enable the Secretary of State to require an economic operator to pay for cost of any assessments undertaken as part of this process.  Regulations will also allow for an economic operator to apply for the decision to be reviewed by the Secretary of State and will set out the circumstances under which appeals can be made to a court or tribunal. 

      Example A manufacturer is successfully prosecuted for non-compliance with construction products regulations, following an investigation by the regulator which found that the fire doors that they manufacture do not have the resistance to fire claimed in their marketing material. The Secretary of State appoints assessors to undertake an assessment of residential buildings where the product has been used. The assessment finds that dwellings have been made unfit for habitation as a result of these doors having been used, and that the doors would need to be replaced to make the dwellings fit for habitation, and the costs of carrying out such remediation. The Secretary of State then makes a costs contribution order against the manufacturer. This order also requires the manufacturer to pay the costs incurred by the Secretary of State in relation to the assessment process.

Section 155: Cost contribution orders: assessments

Effect

1293. This section creates a power to make regulations relating to assessments undertaken for the purposes of costs contribution orders.  
1294. Following a successful prosecution for non-compliance with construction products regulations, regulations will enable the Secretary of State to appoint persons to undertake an assessment to inform the decision as to whether the conditions have been met, and the terms on which a costs contribution order can be made, or the terms of an application to the court for an order to be made, and the terms of any order sought from the court. 
1295. Regulations made under this power will be subject to the affirmative procedure.  
1296. This section should be read alongside sections 153 and 154, which set out the conditions for making a costs contribution order. 
1297. This power applies UK wide.  

Background 

1298. This is a new provision. 
1299. The existing regulatory framework for construction products, which is derived from the EU Construction Products Regulation 2011, sets out the requirements that economic operators (construction products manufacturers, their authorised representatives, importers and distributors) must fulfil when making construction products available on the UK market. Schedule 11 of this Act takes powers to strengthen and extend this regulatory framework.  
1300. Sections 153 and 154 create a power to make regulations to enable the Secretary of State to require economic operators to pay for, or contribute towards, the cost of remediation works where they have been successfully prosecuted for breach of construction product regulations and use of the relevant products has caused or contributed to making dwellings unfit for habitation. This section creates a power to make regulations relating to assessments undertaken as part of this process. 

Proposed use of power 

1301. This power will be used to make regulations to enable the Secretary of State to appoint persons to undertake an assessment of buildings where the relevant product has been used. The assessment will consider whether the conditions for making a costs contribution order have been met, the remediation works required to make the building or dwelling fit for habitation, and cost of undertaking these works. Regulations will specify the criteria that a person must meet before being appointed as an assessor for this purpose. 

Fire safety

Section 156: Amendment of Regulatory Reform (Fire Safety) Order 2005

Effect

1302. This section makes the following amendments to the Regulatory Reform (Fire Safety) Order 2005, "the Fire Safety Order" as set out below. The Fire Safety Order applies to non-domestic premises in England and Wales. This section extends to Wales where applicable.
1303. In 2019 the Home Office published a call for evidence to better understand how well the Fire Safety Order (FSO) works in practice and whether any changes needed to be made to it. This was followed by a public consultation on fire safety that set out initial Government proposals to respond to the findings of the call for evidence, and finally by the Government’s response to the consultation, published in March 2021, which announced the Government’s proposals to legislate to amend the FSO as set out below. The FSO imposes a range of fire safety duties on Responsible Persons (which may include building owners or managers) and the changes below largely either add to or amend these duties.

Recording fire risk assessments

Effect

1304. This section in subsection (2) introduces a requirement for all Responsible Persons to record their fire risk assessment in full. It replaces the current requirement to only record significant findings of the assessment in specified circumstances.

Background

1305. At present all Responsible Persons are required to undertake a fire risk assessment, but they are required to record the significant findings of that assessment only when they are an employer of five or more employees or where there is a licence in place, or an alterations notice under the FSO requiring this. Concern was raised during the call for evidence that it is difficult for enforcing authorities to evidence a breach of the Responsible Person’s duties under the FSO or for the Responsible Person to demonstrate compliance if the full fire risk assessment is not recorded. We are therefore introducing a requirement for all Responsible Persons to do so for all regulated premises. The Responsible Person will be able to access guidance to assist with completing and recording their fire risk assessment.

      Example The Responsible Person owns an office and has only three employees. They must undertake a fire risk assessment and update it regularly for the purpose of ensuring the safety from fire of their employees and/or any visitors or customers but they do not need to record their risk assessment. Another responsible person also owns an office but has 50 employees. They must also undertake a fire risk assessment and update it regularly and, additionally, record the significant findings of the assessment, but they are not required to record the full assessment. Under this new provision all Responsible Persons, regardless of their individual circumstances, must record their fire risk assessment in particular the findings of the assessment including measures that have or will be taken to comply with the order and any group of persons identified as being especially at risk. The intention is to ensure enforcing authorities and other relevant persons (i.e. residents or employees) have access to the full risk assessment to aid authorities when enforcing the FSO and to provide assurance to relevant persons that fire safety risks in the building where they live or work are being safely and appropriately managed.

Competence of Fire Safety Professionals

Effect

1306. A new article 9A requires that a Responsible Person must not appoint a person to assist them in the undertaking or reviewing of a fire risk assessment unless that person is competent. A person is regarded as competent for this purpose where they have sufficient training, experience or knowledge and other qualities to enable them to undertake this role. This duty applies to the appointment of either an individual or a company. Where the person appointed is a company it is envisaged the Responsible Person would need to establish from the company that its staff were considered competent. Where there are two or more appointed persons, the Responsible Person must make arrangements to ensure adequate cooperation between them.

Background

1307. The intention of Article 9A is to address the recommendations made in the Independent Review, which recommended a review of competence within fire safety critical roles, including Fire Risk Assessors.
1308. Building on this report, in the Call for Evidence outlined above the Home Office sought views on the existing provisions in the FSO relating to competent persons and whether they remained sufficient. Respondents highlighted concern about the variable quality of fire risk assessments and the lack of a competence requirement on those engaged by a Responsible Person to complete them.
1309. Proposals to address this were included in the Fire Safety Consultation which set out a new requirement on the Responsible Person that any person appointed by them to undertake all, or any part, of the fire risk assessment must be competent. 96 per cent of respondents to the consultation agreed with this proposal.

      Example The provision is drafted to enable the Responsible Person to assess the level of competence required to undertake a fire risk assessment on the basis of the type of building and its complexity. The Responsible Person will be able to access guidance on how to complete or review a fire risk assessment and identify a competent person or entity to assist them.

Recording fire safety arrangements

Effect

1310. Article 11(2) is amended to require all Responsible Persons to record fire safety arrangements.

Background

1311. At present Responsible Persons are required to implement appropriate measures for their premises to enable effective planning, organisation, control, monitoring and review in order to comply with the requirements of the Order. At present recording is required only where they employ five or more employees or where there is a licence in place, or an alterations notice under the FSO requiring recording. We are introducing a requirement for all Responsible Persons to record fire safety arrangements to assist Responsible Persons to more easily demonstrate compliance and enforcing authorities to evidence a breach of the Order. This amendment will ensure consistency in approach with article 9A of the Order. The Responsible Person will be able to access guidance to assist their recording of their fire safety arrangements.

      Example The Responsible Person owns an office and has only three employees. They must make and give effect to fire safety arrangements as are appropriate, having regard to the size of their undertaking and the nature of its activities, for the effective planning, organisation, control, monitoring and review of the preventive and protective measures. Another responsible person also owns an office but has 50 employees. They must make and give effect to fire safety arrangements as described above and they must record the arrangements. Under this new provision all Responsible Persons, regardless of their individual circumstances, must record their fire safety arrangements in full. The intention is to ensure enforcing authorities and other relevant persons (i.e. residents or employees) are able to access the fire safety arrangements to aid authorities when enforcing the FSO and to provide assurance to relevant persons that fire safety issues in the building where they live or work are being safely and appropriately managed.

Provision of fire safety information to residents

Effect

1312. A new article 21A will require Responsible Persons to provide residents of buildings containing two or more sets of domestic premises with specific information about relevant fire safety matters. This includes information about any risks to residents of the premises identified within the risk assessment, preventative and protective measures, name and UK address of the Responsible Person, the identity of any person appointed by the Responsible Person to assist them with making or reviewing the risk assessment under article 9, the identity of any competent person nominated by the Responsible Person to implement fire-fighting and fire detection measures and any risks to relevant persons throughout the building identified by other Responsible Persons in the building. Article 21A(3)(g) also confers a power on the Secretary of State in England, and the Welsh Minister for Wales, to make regulations to extend the fire safety information that Responsible Persons must provide and to specify the format and frequency for which the information must be provided.

Proposed Use of Power

1313. The proposed delegated power will ensure that the list of information in relation to relevant fire safety matters may be extended in future if required. This power will also enable the Secretary of State in England, and the Welsh Minister in Wales, to specify the frequency and format in which the information should be provided.

Background

1314. Under Article 19 of the FSO a Responsible Person must provide employees with relevant information including on any risks identified in the fire risk assessment, the identity of competent persons nominated or appointed to assist them with preventative and protective measures taken in their workplace and details of risks to relevant persons throughout the building identified by other Responsible Persons sharing or having duties in the premises. Currently, the FSO does not require that a Responsible Person should provide fire safety information to residents, with the exception of article 15(2a) in relation to in the event of serious and imminent danger to relevant persons.
1315. The Government considered how to widen the provision of information requirements, under the FSO, by extending them to include residents of buildings containing two or more sets of domestic premises. Proposals were included in the Fire Safety Consultation which set out new requirements for Responsible Persons to share fire safety information with residents of multi-occupied residential buildings. Findings from the consultation showed that 90% of respondents were supportive of the proposals.

      Example Responsible Persons for of buildings containing more than two sets of domestic premises will be required to provide information about relevant fire safety matters to residents in their buildings. The intention of this provision is to ensure that residents have access to relevant fire safety information about the building where they live to help ensure they are safe and feel safe in their homes.

Co-operation and co-ordination between Responsible Persons

Effect

1316. Article 22 of the Fire Safety Order requires Responsible Persons, where there is more than one responsible for a premises, to co-operate with each other and co-ordinate their actions to ensure compliance with the order. In addition to their existing duties under this article, Responsible Persons will now be required to take reasonable steps to establish whether any other Responsible Person in the premises shares, or has, duties in respect of the premises. If they do they must also inform each other of their name, UK address and the parts of the premises for which they consider themselves to be Responsible Person and keep a record of that information.

Background

1317. Respondents to the call for evidence raised concern about Responsible Person’s compliance with the duty to cooperate and coordinate with other Responsible Persons in multi-occupied premises (as set out in Article 22 of the FSO). Respondents highlighted problems with Responsible Persons being unaware of their duties under the Order and challenges for enforcing authorities in identifying relevant Responsible Persons and establishing whether or not there has been co-operation. It is considered that requiring Responsible Persons to identify themselves to other Responsible Persons in the same premises by informing each other of their name and UK address as well as providing a view on the parts of the premises they consider themselves to be Responsible Person will encourage co-operation and assist enforcing authorities to identify the correct Responsible Persons and to establish whether the duty to co-operate has been complied with.
1318. The Fire Safety Consultation included a proposal to require all Responsible Persons to record and, as necessary, update who they are, the extent of their responsibility under the Fire Safety Order and their contact information. 92% of respondents to the Fire Safety Consultation agreed with this proposal.
1319. The consultation also included a proposal to require Responsible Persons to take reasonable steps to identify themselves to all other Responsible Persons. 95% of respondents agreed with this proposal.
1320. We are therefore amending Article 22 of the Fire Safety Order to require that all Responsible Persons for premises regulated under the Order must establish whether any other Responsible Person in the premises shares, or has, duties in respect of the premises and to inform each other of their name, address and parts of the premises they consider themselves to be Responsible Person for. To inform and support Responsible Persons in discharging this duty, best practice will be provided in guidance.

      Example This is a hypothetical example. In a block of residential flats which is ten storeys high and has a supermarket on the ground floor, there may be one Responsible Person for the supermarket, another for floors 1-5 and another for floors 6-10. While they each have a specific area within the building for which they are Responsible Person, they must work together to ensure any fire safety actions they take complement those of the other two and do not in any way hinder any fire safety actions taken by each other. For example, the Responsible Person in the supermarket must not block entry and exit to the floors above by storing stock in a stairwell. Each Responsible Person must take reasonable steps to identify the other Responsible Persons, provide them their name and address and an explanation of the parts of the premises they consider themselves to be Responsible Person to strengthen co-operation throughout the building.

Information sharing between successive Responsible Persons

Effect

1321. A new article 22A will require departing Responsible Persons to provide relevant fire safety information to incoming Responsible Persons. Relevant fire safety information means: (a) records kept under article 9(6) of fire risk assessments and reviews under article 9; (b) the identity of any person appointed by the Responsible Person to assist them with making or reviewing the fire risk assessment; (c) the identity of any other persons who are Responsible Persons in relation to the premises (where known); (d) where the premises consist of or include a higher-risk building under the Building Safety Act, the identity of any other Accountable Persons in the premises (where known); (e) any information provided to the Responsible Person under regulation 38 of the Building Regulations 2010 (S.I. 2010/2214) (this is information provided to the Responsible Person by the person carrying out building work following completion or occupation relating to the design, construction, services, fixtures and fittings to assist the Responsible Person to operate and maintain the building safely). This article also includes a regulation making power for the Secretary of State in England, and the Welsh Minister for Wales, to enable them to extend the relevant fire safety information that must be provided as well as to specify how frequently all of this information should be provided and in what format.

Proposed use of Power

1322. The Secretary of State in England, and the Welsh Minister in Wales, will have the power to make regulations to extend the fire safety information that departing Responsible Persons will be required to provide to incoming Responsible Persons, and to specify the format and frequency within which the information must be provided.

Background

1323. To maintain a clear thread of information central to ensuring fire safety across the entirety of a building’s lifetime, the Fire Safety Consultation included a proposal to amend the FSO to require Responsible Persons to take reasonable steps to share all relevant fire safety information with subsequent Responsible Persons. 95% of respondents to the consultation agreed with this proposal. We are therefore seeking to amend the FSO to deliver this.
1324. A new Article 22A will apply to all premises under the FSO. All departing Responsible Persons of these premises must provide the relevant fire safety information specified in a new Article 22A(3) to incoming Responsible Persons before they depart. It is intended that this requirement will facilitate the preservation of relevant fire safety information between successive Responsible Persons across the lifetime of a building. This compliments the "Golden Thread" provision for Accountable Persons in the Building Safety Act.

      Example The departing Responsible Person must obtain and provide information to the incoming Responsible Person, in an auditable way, before they are no longer the Responsible Person. If the departing Responsible Person is not able to identify the incoming Responsible Person it is envisaged, they should ascertain the identity with the building owner and/or manager of the building and then provide the relevant fire safety information to the incoming Responsible Person, or, failing that, they should provide the relevant fire safety information to the owner of the building. The owner of the building, as Responsible Person, should then make arrangements to provide this information to the incoming Responsible Person.

Co-operation and co-ordination between Responsible Persons and Accountable Persons

Effect

1325. A new article 22B will apply to premises consisting of or including a residential unit in a higher-risk building (a building in England that (a) is at least 18 metres in height or has at least 7 storeys, and (b) contains at least 2 dwellings or any units of living accommodation) and require Responsible Persons for such premises to co-operate with Accountable Persons in the premises to enable them to carry out their duties under this Act. There is a reciprocal duty of co-operation between Accountable Persons and Responsible Persons in section 109 of this Act.

Background

1326. This is a new provision. This requirement applies to all Responsible Persons for premises in a higher-risk building. For buildings subject to the Building Safety Act, the Responsible Person(s) must take reasonable steps to identify any Accountable Person(s) in the building and cooperate with them for the purpose of carrying out their respective duties to collectively manage building and fire safety for the entire building. The purpose of this requirement is to ensure that the duties of Responsible Persons and Accountable Persons will contribute towards a whole-building approach to building and fire safety.

      Example Where the Responsible Person is also the Accountable Person, they must ensure that they comply with the requirements of the FSO for the common parts while this should also contribute towards their management of safety for the whole building. For example, the fire risk assessment for the common parts of the building could contribute to the safety case report, and the provision of fire safety information to residents could complement or support the residents engagement strategy required under the building safety regime. The same will be expected where the Responsible Person and Accountable Person are not the same person and where there are multiple Responsible Persons and/or Accountable Persons, the Responsible Person must identify themselves to the other(s) in order to be able to discharge their cooperation duty and for the purpose of enabling the Accountable Person to carry out their duties. In practice, the Responsible Person should make the Accountable Person aware of fire safety risks identified and precautions taken in the common parts of the building.

Fines

Effect

1327. Article 32(4) and (7) of the FSO set out the financial penalties available for criminal offences of failing to comply with requirements relating to the installation of luminous tube signs, failing to comply with any requirements imposed by an inspector, under article 27(1)(c) or (d), and impersonating an inspector. At present these offences are subject to a maximum of level 3 fines but the amendment will increase this to unlimited fines.

Background

1328. This Section amends Article 32 (4) and (7) of the FSO. We are introducing these changes further to the information gathered in the Call for Evidence and following the public response to proposals set out in the Fire Safety Consultation. Furthermore, these changes will make the FSO consistent with similar offences in other legislation such as the Building Safety Act and the Health and Safety at Work Act. Financial penalties for criminal offences in the FSO have historically been lower than similar offences in the Building Act. Increasing the level of fines for these three offences in the FSO to the same level as for other similar offences will encourage compliance.
1329. This amendment to the level of financial penalty that may be imposed for these offences enables the Magistrates Court, when prosecuting for these offences under the FSO to apply a higher level of fine for the most serious offences. Accordingly, this ensures these offences carry a suitable deterrent to discourage non-compliance with the Order.

      Example As an enforcing authority for the FSO, Fire and Rescue Authorities undertake routine building inspections to ensure compliance with the Order. The Inspector can take enforcement action when non-compliance has been identified, and prosecution action may be taken against the Responsible Person or dutyholder. If that person is found guilty, the Magistrates’ Court may decide to impose a fine. By increasing these fines from a level 3 (£1,000) to unlimited, the Court is provided with a greater range of penalty to impose to reflect the severity of the offence. Through this change a court, after considering the evidence presented, will have the ability to impose unlimited fines for the most serious offences.

Article 50 Guidance

Effect

1330. Article 50 of the FSO requires the Secretary of State to ensure that such guidance as he considers appropriate to assist Responsible Persons to discharge their duties under the FSO is made available to them. Article 50 was previously amended in the Fire Safety Act 2021 to provide that in proceedings for breach of the FSO (for buildings in England containing two or more sets of domestic premises) proof of failure to comply or compliance with applicable risk based guidance may be relied upon as supporting whether or not there was a breach of the Order. Further amendment in article 50(1A)will apply this provision to all guidance issued in accordance with article 50.

Background

1331. Currently under Article 50, the Secretary of State is required to make sure that such guidance as he considers is made available to assist Responsible Persons with discharging their duties under the FSO. Responses to the 2019 call for evidence and the Fire Safety Consultation have indicated that guidance should be strengthened to encourage compliance and to make clear what is statutory guidance. Article 50 guidance is made available to assist responsible persons to discharge their duties under the Order. It also reflects a similar approach to guidance under the Building Safety Act.

      Example Responsible Persons can follow guidance issued under Article 50 to assist with discharging their duties under the FSO. Even if they do not have particular experience in an element of their duties, if they follow the relevant guidance related to that duty they will have comfort that in the event of any breach of the FSO the Court may consider their compliance with the guidance as tending to support compliance with the relevant duty under the FSO.

Architects

Section 157: Architects: discipline and continuing professional development

Effect

Discipline

1332. This section allows the disciplinary orders made against architects by the Professional Conduct Committee (PCC) of the Architect Registration Board (the Board), the statutory regulator of architects in the UK, to be listed alongside an architect’s entry in the Register of architects. This is to provide greater transparency to members of the public procuring architectural services as the Register entry, accessible through the Board’s website, will show whether an architect has been disciplined recently. The Board will determine rules for the length of time that a disciplinary order will be listed on the Register, depending on the severity of the order.

Continuing professional development

1333. This section in subsections (3)(a) and (3)(b) allow the Board to monitor the competence of architects throughout their Registration. This power will allow the Board to determine which practical experience or training should be assessed and how the assessment should take place. The Board must consult professional bodies and other stakeholders before introducing a competence regime.
1334. If an architect does not meet the requirements set out by the Board, or the Board is not satisfied that the person has met the requirements to a sufficient standard, the individual may be removed from the Register.
1335. This section in subsection (3)(c) allows the Board to determine a period of extension for an individual architect to complete their recent training. This section also sets out the conditions for when the Board can remove an architect from the Register, including if the individual has not requested an extension or if the Board remains unsatisfied with the standard of competence demonstrated.

Background

Discipline

1336. This is a new provision to increase transparency for those procuring architectural services, in line with wider reform for greater assurance of competence of built environment professionals.
1337. Disciplinary orders are published on the Board’s website under "Previous PCC decisions", with separate lists for "current" and "spent" orders. These lists show all cases heard by the PCC since 1997 and include the date, architect, nature of offence and penalty imposed. This website is not easy to navigate and does not display the information to the public in a transparent way.

Continuing professional development

1338. Sections 4(1) and 4(2) of the Architects Act 1997 provide broad powers for the Board to determine the criteria and process for registering as an architect in the UK. The Architects Act does not provide powers for the Board to scrutinise competence after the initial registration and throughout an architect’s career unless an allegation of unacceptable professional conduct is brought before the Board. This means that an architect may be practicing for a prolonged period without any further proactive regulatory oversight.
1339. This provision will apply to all architects on the Register, not only those working on higher-risk buildings, due to the public safety aspect of all construction. Most other regulated professions require their registrants to demonstrate competence throughout their career and most professional membership bodies have mandatory Continuous Professional Development requirements. This proposal brings the architects profession in line with best practice and gives greater assurance to those procuring and inhabiting buildings.

      Example 1: Discipline An architect is found guilty of unacceptable professional conduct by the PCC and is reprimanded but able to continue practicing. When a member of the public searches for this architect on the Register, there will be a note on the architect’s entry stating that they have been reprimanded. This will be listed for a period of time determined by the Board depending on the severity of the order. Once this time period has lapsed, the note on the architect’s Register entry will be removed. If an architect is issued with an erasure order then their name is removed from the Register. They may reapply for re-entry no less than two years from the date of erasure (or longer if so specified by the PCC). The Board will decide as part of the prescribed Rules whether the original disciplinary order will be marked on the Register if the sanctioned individual should obtain restored registration. Example 2: Continuing professional development The exact requirements for the assessment of practical experience or training will be determined by the Board following a full review and consultation. This review was commenced in March 2020.

Section 158: Architects: Appeals Committee

Effect

1340. This section establishes an Appeals Committee of the Board that will hear appeals against a decision to refuse a person’s application for registration, or to remove or not re-enter a person’s name on the Register, where the Board is not satisfied of the person’s competence. This is to give persons the opportunity to challenge registration decisions made by the Board or the Registrant. The Board will determine rules for the procedure of an appeal and the composition of the Appeals Committee. The Board must consult the Secretary of State on the composition of the Appeals Committee to ensure adequate representation. Upon the determination of the appeal, the Appeals Committee will make the final decision on the case appealed. The Appeals Committee’s decision can only be overturned by the High Court.

Background

1341. Section 22 of the Architects Act 1997 provides a judicial route of appeal for aggrieved persons. This section provides a non-judicial route of appeal to aggrieved persons, which will make the appeals process more accessible for architects. This section will ensure that architects removed from the Register under the new competence regime established by section 157 have adequate recourse to challenge the Board’s decision.

      Example The Board is not satisfied with an architect’s demonstration of recent practical experience or training and therefore does not re-enter the architect’s name on the Register. The architect will be able to appeal this decision to the Appeals Committee, who will determine whether or not the architect has demonstrated recent practical experience or training. If the Appeals Committee is satisfied that the architect has indeed demonstrated recent practical experience or training then the architect’s name shall be re-entered on the Register. If the Appeals Committee find that the architect has not demonstrated recent practical experience or training then the Board’s decision shall stand and the architect shall be removed from the Register.

Section 159: Architects Registration Board: fees and discharge of functions by a committee

Effect

1342. This section allows the Secretary of State by regulations (subject to the negative procedure) to make provision for the services for which the Board may charge a fee. Regulations will set out the services, or types of services, in respect of which the Board may charge a fee. Regulations will also make provisions about the persons who are liable to pay a fee, and how fees charged by the Board are to be calculated and how they are to be paid.

Background

1343. Currently, the Architects Act 1997 prescribes a small amount of services for which the Board may charge. The costs of all of the Board’s functions are currently met by the annual fee for retention on the Register of Architects under section 8 of the 1997 Act, which is charged by the Board to all architects. Following the end of the EU Exit Transition Period, there will be an expansion in the services the Board provides to implement Mutual Recognition Agreements or Memoranda of Understanding relating to the regulation of architects. This section will allow the Secretary of State to lay regulations to make additional provision for separate fees for additional chargeable services, in order to keep the retention fee down for the architects that do not utilise additional services. This will be after a full impact assessment and consultation.

      Example This will be determined in secondary legislation, The services that will be considered for charging fees are the Board’s role in considering and recognising international qualifications, and the Board’s function in providing evidence for UK architects registering abroad.

Housing complaints

Section 160: Housing complaints made to a housing ombudsman

Effect

1344. This section enables social housing complainants to escalate a complaint to the Housing Ombudsman service directly, by removing the existing requirement ("the democratic filter") to make their complaint via a "designated person". A "designated person" may be an MP, Councillor or recognised tenant panel.
1345. The requirement for the landlord’s complaints process to have been exhausted is preserved by amendments to para (1)of the Housing Act1996which require a complaint to be made in accordance with the scheme. This being that a resident who wishes to escalate a complaint to the Housing Ombudsman Service first needs to have completed their landlord’s own complaints process.
1346. The new paragraph inserted into the Housing Act 1996 (1A) retains the existing procedures that a resident who wishes to escalate a complaint to the Housing Ombudsman Service first needs to have completed their landlord’s own complaints process.
1347. Removing the democratic filter seeks to improve and expedite access to the Housing Ombudsman Service (HOS) for social housing complainants who have exhausted their landlord’s internal complaints procedure and still have unresolved complaints. The objective is to promote equity of provision for those seeking redress in the social housing sector with those in other tenures which are not subject to a democratic filter process.
1348. This should speed up redress for social housing complainants as well as creating equity of provision.

Background

1349. This provision applies to England only.
1350. The requirement to refer a complaint through a designated person/tenant panel, introduced in the Localism Act 2011, was intended to strengthen the accountability of landlords, enable housing complaints to be resolved using local knowledge and help to reduce the number of formal investigations by the Housing Ombudsman Service.
1351. Through amendments made by The Localism Act 2011 (section 180), a role was given to "designated persons" in dealing with disputes between members of the Housing Ombudsman Scheme and their tenants/leaseholders. This was in circumstances where complaints had not been resolved in the landlord’s procedures and before they could be referred to the Housing Ombudsman. It meant that a complaint against a social landlord cannot be "duly made" (formally submitted for investigation) to the Housing Ombudsman unless it is made in writing to the Ombudsman by a designated person by way of referral of a complaint made to the designated person.
1352. A designated person can be an MP, a Councillor or a recognised tenant panel. It means that currently, if, after a landlord’s internal complaints process has been exhausted, the complaint is still not resolved, a complainant (whose landlord is a member of the Housing Ombudsman Scheme) has to refer any outstanding complaints to a designated person before a complaint can be formally referred to the Housing Ombudsman Service. Alternatively, a complainant must wait eight weeks after their complaint has exhausted the landlord’s complaints process before they can formally refer their complaint to the Housing Ombudsman Service.
1353. This is known as the democratic filter. It has been criticised for undermining consumer empowerment and is counter to the principles of the ombudsman institution. The Housing Ombudsman’s own consultation also uncovered concerns and found that while some local "designated person" arrangements work well, in many cases they do not, and that there were designated persons who did not fully understand their role.
1354. It also emerged that in some areas tenant panels either do not exist or are not used. Removing the democratic filter was supported by the majority of respondents when the Housing Ombudsman Service consulted on its Corporate Plan 2019-22 and Business Plan 2019-20, with low support being expressed for the designated person role.

      Example: New complaints process Current process A resident makes a complaint to their landlord and completes the landlords complaints/dispute process. The resident remains dissatisfied and decides to escalate the complaint to redress level and to the Housing Ombudsman Service. They contact a designated person for assistance (the Democratic Filter). If the designated person is unable to help, after 8 weeks from the landlord’s decision they then refer the complaint to the Housing Ombudsman Service. Following removal of the democratic filter Again, a resident makes a complaint to their landlord and completes the landlords complaints/dispute process. The resident remains dissatisfied and decides to escalate to redress level and contacts the Housing Ombudsman Service directly, asking them to investigate their complaint.