Real Estate Blog: Building Safety Act – Draft Responsible Actors Scheme Published

The developer remediation contract requires signatory developers to take responsibility for work required to address ‘life-critical fire-safety’ defects in buildings of 11 metres and over, that they developed or refurbished over the last 30 years in England (unless they acted solely as a contractor).

Eligible developers who do not sign the developer remediation contract, or fail to comply with it, face ‘significant consequences’.As part of these ‘significant consequences’, the government promised to create a Responsible Actors Scheme (RAS). The government laid draft affirmative regulations for the RAS on 23 April 2023. These are intended to be brought into law in Summer 2023.

What are ‘Relevant Buildings’ under the RAS?

Members of the RAS will be required to identify and remediate (or pay for remediation of) life-critical fire safety defects in:

• residential buildings (which can also include mixed-use buildings);
• over 11m in height;
• located in England; and
• developed or refurbished between 5 April 1992 and 4 April 2022.

Who is eligible to join the RAS?

Those eligible to join are:

• major housebuilders who have developed residential buildings of 11m and over; and
• other large developers who have developed or refurbished two or more residential buildings known to have fire safety defects (by virtue of having been assessed as eligible for a relevant government cladding remediation scheme).

Those eligible to join must have had average adjusted operating profits of £10m or more per year over three years from 2017-2019 (inclusive).

There is also a route for other developers who developed a defective building to volunteer to join the scheme.

To join the RAS, members must enter into the developer remediation contract and comply with it.

The government will publish a list of members of the RAS and those that are on the ‘prohibitions list’.

Prohibitions

The draft regulations set out prohibitions, which will be used in relation to developers (and persons they control):

• who are eligible but do not to join; or
• who join but do not comply with the RAS’s conditions.

A planning prohibition will prevent a prohibited person carrying out major development and a building control prohibition will prevent a prohibited person receiving building control approvals.

Planning Prohibition

A developer who is on the prohibitions list will be prohibited from carrying out ‘major development’ of land in England. ‘Major development’ will catch any developments of 10 dwellings or more, among other things.

The developer must tell the local planning authority if they are on the prohibitions list at the time of making a planning application (or applying to discharge pre-commencement planning conditions), or if they acquire an interest in land (or contractual right to develop land) which has the benefit of planning permission.

The RAS won’t apply to planning permissions granted before the date that the regulations come into force, unless a subsequent application is required for all or part of the development (including an application to discharge pre-commencement conditions).

Building Control Prohibition

A person on the prohibitions list will not be able to give various notices under the Building Regulations (including an initial notice) and no person can give any notice of passing of plans or certificates under the Building Regulations to a person on the prohibitions list – any that are given will be void. The scope for potential errors is therefore quite high and the onus will be on parties seeking or providing Building Regulations sign-off (or purchasers of those buildings) to check the prohibitions list.

There are exceptions for emergency repair work, works to occupied buildings, to protect purchasers of dwellings, and for critical national infrastructure.

‘Significant consequences’

The government plans to issue further guidance on the operation of the RAS in Summer 2023.

Those that do not sign the developer remediation contract will be barred from joining the RAS. Non-signatories will therefore be prohibited from carrying out major development and gaining building control sign-off in England. This will effectively result in an exclusion from the English market.

Whilst there are clearly reputational reasons for developers signing up to the developer remediation contract and the RAS, the consequences of failing to do so are so severe that developers may feel that they are left with little choice. This is despite the high cost of the remediation works, which are estimated by the industry to be worth a total of over £2 billion.

This is an ever-evolving area of law which will undoubtedly have a large impact on housebuilders and developers moving forward. If you have any queries about whether the scheme applies to your company, or the implications of the obligations in the Building Safety Act, we have a multi-disciplinary team of specialists at Freeths who can advise.

Please speak to Dominic Bent or Emma Medina-Wallace in our Housebuilding & Strategic Land team if you would like to discuss anything covered in this blog.