Amidst a flurry of recent activity within the building safety sphere, the UK Government has now published a draft version of the Building Safety (Responsible Actors Scheme and Prohibitions) Regulations 2023 (the Regulations). The Regulations will establish the Responsible Actors Scheme (the Scheme), that was originally outlined within the Building Safety Act 2022 (the Act), and represent another element of the Government's wider overhaul of the building safety regime in England.
The Regulations and the Scheme are intended to complement the Department for Levelling Up, Housing and Communities (DLUHC) ongoing initiative to compel residential developers in England to enter into developer remediation contracts (DRC) which place legally binding commitments on the developers to remedy fire safety defects in residential buildings that they developed.
The Scheme provides the stick with which the DLUHC can make good on its statement that developers who either fail to sign, or otherwise comply with their obligations under, a DRC “should expect to face significant consequences given the significance and urgency of this problem”. The Regulations make clear that a failure to comply with the Scheme will have significant repercussions, with eligible developers who fail to enter into a DRC facing the prospect of:
- a prohibition on carrying out 'major developments' (as defined by the Town and Country Planning (Development Management Procedure) (England) Order 2015); and/or
- refusal of building control sign-off on developments that are under way.
Application of the Scheme
The Scheme will apply to developers who satisfy one or more of the following requirements:
- more than 50% of their business relates to residential property development and they have been responsible for the development or refurbishment of residential building in England over 11 meters in height between 5 April 1992 and 4 April 2022 and whose average operating profit between 2017 and 2019 equals or exceeds £10 million per year;
- they have developed or or refurbished of two or more buildings which have been subject to a Government cladding remediation scheme and whose average operating profit between 2017 and 2019 equals or exceeds £10 million per year; and/or
- they have developed or refurbished at least one residential building over 11 meters in height that qualifies for remediation under the terms set out in the DRC and they volunteer to sign a DRC and join the Scheme.
The DLUHC will contact eligible development companies to invite them to join the Scheme, which involves entering into a DRC and notifying DLUHC of the same within 60 days of receipt of the invitation. Failure to do so within this timeframe will result in the developer being added to the list of ‘prohibited’ developers to which restrictions will apply.
The Regulations may be expanded to include a wider pool of developers and/or impose further stipulations on members of the Scheme, for instance a ‘fit and proper person test’ for directors and senior managers of developer companies.
Obligations Under the Scheme
Members of the Scheme will be obliged to:
- rectify or pay for the remediation of any life-critical fire safety defects in eligible buildings;
- reimburse the Government for any taxpayer-funded remediation work previously carried out in said buildings; and
- adhere to requests for information issued by the Secretary of State (which will evidence compliance with the Regulations) as permitted under the Scheme and the DRC.
In addition, a 'prohibited' developer is obliged to notify the relevant local authority of their prohibited status when making a planning application.
Enforcement / Non-Compliance
Members of the Scheme will also need to actively and continuously demonstrate that they are complying with the conditions of the Scheme. If a developer fails to adhere to the membership conditions and/or does not join the Scheme and/or provides incorrect or misleading information, they will be given a warning to rectify the breach within 28 days. If the breach continues for a further 28 days, the developer’s membership of the Scheme will be revoked (although membership may subsequently be reinstated if a developer demonstrates renewed compliance with the relevant conditions).
In the event of the revocation of a developer's membership of the Scheme, or if an eligible developer fails to join the Scheme, the developer will be subject to the planning and building control prohibitions outlined above. These prohibitions will effectively bar those developers from carrying out any major developments in England.
Burges Salmon Comment
The Government argues that the severe consequences of non-compliance with the Scheme should motivate developers to actively engage in the process of remediating life-critical fire safety defects in the buildings which they were responsible for developing and should improve building safety in future developments.
We consider that the implementation of the Scheme may assist in the cultivation of improved safety standards for residential developments within the construction industry, and across the wider built environment sector. Further, membership of the Scheme is likely to have positive reputation benefits for its members and this may be important to developers who are keen to minimise the risks to their business operations stemming from the turbulent economy and current supply chain and labour resource challenges facing the wider construction industry.
However, concern about the legality of the Regulations have already been raised by developers in the market, which may encourage challenges to the Scheme further down the line.
We will continue to monitor the passage of the Regulations through Parliament and the operation of the Scheme in practice. For further information and advice on the impact of the Scheme or wider buildings safety issues, please contact Tom Weld.
This article was written by Tom Weld, Kayla Urbanski and Clare Livingston