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New Homes Warranties and The Building Safety Act
The Building Safety Act 2022 has already brought in substantial regulatory reform with regard to building and fire safety, and continues to alter the property development landscape as sections of the Act are progressively brought into force – frequently with little or no warning.
This article focuses on provisions of the Act relating to New Home Warranties which have yet to actually come into force. These will apply to all newly constructed dwellings, and will make build warranties on these mandatory, and extend these to a minimum of 15 years. These changes will have a substantial impact on developers, housebuilders and insurers alike.
What Buildings Are Affected?
Whilst common in practice and generally a prerequisite to obtaining mortgage finance, new home warranties have not previously been mandated by law. Where provided, these are typically provided for a 10 year period – of which 2 years will be covered by the developer or housebuilder, and the remaining 8 by the policy provider.
Under section 144 of the BSA, any person carrying out a development in England which results in the creation of one or more dwellings will now be obligated to provide a new build warranty to anyone acquiring an interest in the dwelling, for a minimum term of 15 years from the date on which the relevant interest is granted. The extended term reflects the 15-year limitation period envisaged elsewhere in the BSA.
This applies in connection with any building work done that creates a new home, and not just the construction of a new building. So for instance, the conversion of commercial space to residential space would be caught under the regulations.
Once in force, the provisions will apply to any new dwelling sold or transferred from that point onwards. They will not apply retrospectively, meaning that warranties granted before that date will not need to be extended.
What Will The New Warranties Need To Cover?
A new build warranty is defined under section 144 as an arrangement by which:
- the developer agrees, in specified circumstances, to remedy either specified defects or any defect in the dwelling that occurs within a specified period following completion of the build, and
- a prescribed person obtains the benefit of a policy covering either specified defects or any defects in the build.
The Act also grants the Secretary of State powers to impose minimum requirements for such warranties by regulation. These are likely to include requirements as to the solvency of any insurer or underwriter, the assignability of the warranty, what defects must be specified, what levels of cover must be provided and even maximum amounts for any excess – but these details have yet to be confirmed. Whether the developer’s specified period of liability will be extended also remains to be seen.
What Are The Penalties For Failing To Comply?
Once in force, it will be unlawful for developers of a new build home to sell it without providing a 15 year warranty, failing which penalties will apply. The Secretary of State will set out the exact level of financial penalties that could be levied.
At present, section 145 provides that the maximum level of any penalty set will not exceed £10,000 or 10% of the sale price (whichever is the greater). The legislation also states that developers who have a “reasonable excuse” for failing to take out the warranty may not have to pay a fine. What constitutes a “reasonable excuse” has not yet been defined.
Interestingly, the standard of proof to which developers will be held in evidencing that they have a “reasonable excuse” will be the criminal standard – they will have to demonstrate this beyond reasonable doubt.
When Are The Provisions Likely To Come Into Force?
The government has stated that it intends to consult widely on the proposed minimum standards, and that it intends to delay commencement of section 144 to allow industry the opportunity to consider the outcome of that consultation. The relevant consultation has yet to be published, and no clear announcement has been made as to when such legislation will be triggered. Whilst Government originally published guidance on new build warranties, this was withdrawn in July 2022, and no further guidance has been published since.
That being said, these changes are inevitably on the horizon, and developers and housebuilders must start to prepare.
How Can Developers Prepare?
Property developers should begin engaging with their warranty providers now, particularly if any agreements with them are being renewed, and they should also budget any consequent increase in insurance premiums into their development costs. Given the length of time the policy must cover, an A-rated insurer will be required to back any such warranties.
To discuss any of the points raised in this article, please contact Stephanie Houston or fill in the form below.
Building Safety Act 2022: New Regulations For Higher-Risk Buildings
As most of you will know, in August 2023 the Government laid before Parliament several regulations designed to extensively update and change various sections of the Building Safety Act (BSA) 2022 as well as other building regulations.
These changes came into force over the weekend. We have all heard plenty about the intentions behind the new regulations in wake of the Grenfell tragedy and Dame Hackitt’s subsequent report, but what does this mean for you and your business in practice? This article provides a brief overview of the changes.
What Are The New Building Safety Regulations?
The new regulations are:
- Building (Approved Inspectors etc and Review of Decisions) (England) Regulations 2023 – amend the Building (Approved Inspectors etc) Regulations 2010. The amendments mean that the Building Safety Regulator will be the only building control authority for all higher-risk buildings (HRB).
- Building (Higher-Risk Buildings Procedures) (England) Regulations 2023 – provide the detail of the building control regime for HRBs during design and construction or when building work is being done to an existing HRB.
- Building Regulations etc (Amendment) (England) Regulations 2023 – amend the Building Regulations 2010 to support the new HRBs control regime. Extensive changes include Regulation 6, which inserts a new Part 2A “Dutyholders and competence” into the BR 2010.
- The Building Safety Act 2022 (Consequential Amendments etc) Regulations – make consequential amendments to various miscellaneous statutes and orders.
Alongside the tabling of the new regulations, the Government also published its response to the consultation on changes to the building control regime under the Building Safety Act 2022 (BSA 2022) and relevant regulations.
These changes focused on HRBs and with the Government emphasising that it intended to place additional requirements on all those working on such buildings.
What Are The Changes That Came Into Force On 1 October 2023?
Part 2A of the Building Regulations etc. (Amendment) (England) Regulations 2023 introduces new dutyholder and competence requirements for practitioners and clients. These apply to all works that are subject to the Building Regulations 2010. Clients are required to plan, manage, and monitor the project to ensure full compliance with the Building Regulations 2010. Designers and contractors should only be appointed once the client is fully satisfied that they meet the competency requirements.
For their part, designers and contractors , having considered the project, must be sure that they can satisfy the competency requirements before they accept the job. Principal designers and principal contractors who have an active co-ordinating role must meet additional requirements before being appointed or accepting an appointment.
To meet the competency requirements, an individual contractor or designer must have the skills, knowledge, experience, and behaviours necessary to fulfil their duties. Entities must have the organisational capability to undertake the project.
Although most of these requirements will have already been fulfilled by the parties, the amendments require the steps be documented so a detailed audit trail exists.
The Building Regulations etc. (Amendment) (England) Regulations 2023 Also Provide For:
- Amendments concerning the process for building control approval in respect of non-Higher-Risk Building works. This replaces the current “deposit of plans”;
- A more robust definition of “commencement” (which was previously only dealt with in guidance) and provision for the automatic lapse of building control approval after three years if works have not begun; and
- For building works where the Fire Safety Order applies, the provisions concerning fire safety information have been strengthened.
The changes around HRBs set out in the Building (Higher-Risk Buildings Procedures) (England) Regulations 2023 are in line with those featured in the consultation on which the Government has recently published its responses. They include:
- At Gateway 2 (building control application stage) and Gateway 3 (completion certificate stage), full details of the compliance documentation to be submitted must be provided.
- Certain changes to approved documents must be notified to the Building Safety Regulator (BSR). Major changes to the documents will require BSR approval.
- A mandatory safety reporting procedure for major incidents.
- A requirement to maintain a golden thread of information in an electronic facility incorporating all approved documents from Gateways 1 and 2, the change control log, any mandatory occurrence reports, any notified changes in the principal designer or principal contractor and a draft Gateway 3. An additional requirement is that this data must be capable of being transferred in a format which is uncorrupted, readable, and intelligible to intended recipients.
Timescales For Implementation?
Broadly speaking, the amendments to the Building Regulations 2010 and the Approved Inspectors Regulations 2010 will not apply to building work started or where an initial notice has been given to a local authority and was accepted or treated as accepted before 1 October 2023.
There are complex transitional provisions in relation to the Higher-Risk Buildings Procedures Regulations 2023 which are beyond the scope of this article. If you have any questions, please feel free to contact me.
Wrapping Up
Many of the questions relating to the changes to the building safety regime will only become apparent as the new provisions bed in.
However, we do expect Regulators and the Courts to take a hard line on any breaches, so it is vital that your business fully grasps the changes and implements policies and procedures to ensure compliance.
To discuss any of the points raised in this article, please contact Stephanie Houston or fill in the form below.
The Intersection of Construction Law and UK Immigration
In an increasingly globalised world, the construction industry in the United Kingdom has witnessed a surge in international talent contributing to its growth and development.
However, this influx of skilled workers has also led to complex legal issues at the intersection of construction law and UK immigration.
This article delves into the challenges and opportunities that arise when construction law and immigration law converge, providing insights for both construction companies and foreign workers seeking opportunities in the UK construction sector.
The Role Of Immigration Law In The Construction Industry
The UK construction industry heavily relies on a diverse workforce, often requiring skilled and unskilled labour from overseas to meet its demands.
To manage this flow of skilled workers, the UK government has established a set of immigration laws and policies that construction companies must navigate.
These laws determine who is eligible to work in the UK, the duration of their stay, and the conditions under which they can work. It is crucial for construction companies to stay informed about these changes to ensure compliance and avoid legal complications.
A Recent Construction Industry Training Board Report States:
‘The commitment of the CLC (Construction leadership council) to work with the Home Office to support government engagement with industry on the system will therefore be important.
Among employers that had either considered the PBS (Points Based System) or had used it, the view was that it was too time-consuming, slow-moving and expensive. Of the half of employers that claimed awareness, 48% suggested that they had poor knowledge of it and only 28% reported a good understanding’.
Tier 2 (General) Visa (Skilled Worker Visa): A Key Pathway For Construction Workers
One of the primary routes for overseas construction workers to enter the UK legally is through the Tier 2 (General) Visa (skilled worker visa). This visa category is designed for skilled workers who have received a job offer from a UK-based employer. Construction companies must obtain a sponsorship licence to hire foreign workers under this scheme. It is imperative for both employers and workers to understand the specific requirements, including the minimum salary threshold and English language proficiency, to secure and maintain this visa.
The following roles have been added to the Shortage Occupation List:
- Bricklayers
- Carpenters and joiners
- Masons
- Plasterers
- Roofers
- Roof tilers and slaters
Compliance With Right To Work Checks
Construction companies in the UK have a legal obligation to conduct right to work checks for all their employees, regardless of their nationality.
Failure to do so can result in severe penalties, including fines and imprisonment. These checks require employers to verify the identity and immigration status of their workers by examining relevant documents. To ensure compliance with immigration laws, construction companies must establish robust processes for conducting these checks and maintaining proper records.
Brexit And Its Impact On The Construction Industry
The United Kingdom’s exit from the European Union, commonly referred to as Brexit, has had a profound impact on immigration laws and the construction industry.
Free movement of labour within the EU ceased, affecting the ease with which European construction workers could work in the UK. As a result, construction companies now face additional administrative burdens when hiring EU nationals. Understanding the new immigration rules and ensuring compliance is essential to avoid disruptions in project timelines and maintain a skilled workforce.
Opportunities For International Contractors
While navigating the complexities of UK immigration laws can be challenging, international contractors can also benefit from the opportunities the UK construction sector offers.
The demand for construction services remains high, and skilled workers from overseas continue to play a crucial role in meeting this demand. With proper planning and adherence to immigration regulations, foreign contractors can establish a foothold in the UK market and contribute to its growth.
Conclusion
PBS plays an integral role in meeting construction’s fluctuating skills needs and the effective use of a sponsorship licence is now integral to its success.
The intersection of construction law and UK immigration presents both challenges and opportunities for construction companies and skilled workers alike. Staying informed about immigration laws, complying with right to work checks, and adapting to post-Brexit regulations are essential for success in the UK construction industry.
By understanding and navigating the legal landscape, construction companies and skilled workers can continue to contribute to the growth and development of the sector while ensuring compliance with UK immigration laws.
Our team at Quastels continue to act for construction companies and work closely with our construction team to provide employment and immigration support at a time when the shortage of labour is one of the key delay factors in construction projects. Our mobility solutions are designed to allow seamless integration with an entity’s need to complete a project on time.
To discuss any of the points raised in this article, please contact Jayesh Jethwa or fill in the form below.