• Login
    • Advanced search
    • Title
    • Channel
    • Module
  • Home
  • Industry
    •  

      • Aerospace, Defense, and Government Services
      • Automotive and Mobility
      • Consumer
      • Manufacturing and Industrials
      • Education
      • Energy and Natural Resources
      • Financial Institutions
    •  

      • Insurance
      • Life Sciences and Health Care
      • Private Capital
      • Real Estate
      • Sports, Media and Entertainment
      • Technology and Telecoms
      • Transportation and Logistics
  • Practice
    • Corporate & Finance

      • Banking and Loan Finance
      • Business Restructuring and Insolvency
      • Capital Markets
      • Corporate Governance and Public Company Representation
      • Digital Assets and Blockchain
      • Infrastructure, Energy, Resources, and Projects
      • Leveraged and Acquisition Finance
      • Mergers and Acquisitions
      • Pensions
      • Private Equity, Venture Capital and Investment Funds
      • Real Estate
      • Real Estate Investment Trusts (REITs)
      • Tax
      • Transfer Pricing
    • Global Regulatory

      • Administrative and Public Law
      • Antitrust and Competition
      • Communications, Internet, and Media
      • Education
      • Energy Regulatory
      • Environment and Natural Resources
      • Financial Services
      • Food Law
      • Gaming Law
      • Government Contracts and Public Procurement
      • Government Relations and Public Affairs
      • Health
      • Immigration
      • International Trade and Investment
      • Medical Device and Technology Regulatory
      • New Nuclear
      • Pharmaceuticals and Biotechnology Regulatory
      • Privacy and Cybersecurity
      • Space and Satellite
      • Strategic Operations, Agreements and Regulation
      • Transportation Regulatory
    • Intellectual Property

      • Copyright
      • Designs
      • Domain Names
      • IP and Technology Transactions
      • IP Enforcement
      • Patents
      • Trade Secrets and Confidential Know-how
      • Trademarks and Brands
      • Unfair Competition
    • Litigation, Arbitration, and Employment

      • Business and Human Rights
      • Construction and Engineering
      • Corporate and Securities Litigation
      • Employment
      • International Arbitration
      • Investigations, White Collar, and Fraud
      • Products Law
      • Risks, Disputes, and Litigation
  • Comparative guides
  • Engage Premium
  • Login
  • Register
Hogan Lovells Engage 5.7.22
      • Title
      • Channel
      • Module
    • Hit ENTER to search in content
    • Advanced search
    • Login
  • Home
  • Industry
    •  

      • Aerospace, Defense, and Government Services
      • Automotive and Mobility
      • Consumer
      • Manufacturing and Industrials
      • Education
      • Energy and Natural Resources
      • Financial Institutions
    •  

      • Insurance
      • Life Sciences and Health Care
      • Private Capital
      • Real Estate
      • Sports, Media and Entertainment
      • Technology and Telecoms
      • Transportation and Logistics
  • Practice
    • Corporate & Finance

      • Banking and Loan Finance
      • Business Restructuring and Insolvency
      • Capital Markets
      • Corporate Governance and Public Company Representation
      • Digital Assets and Blockchain
      • Infrastructure, Energy, Resources, and Projects
      • Leveraged and Acquisition Finance
      • Mergers and Acquisitions
      • Pensions
      • Private Equity, Venture Capital and Investment Funds
      • Real Estate
      • Real Estate Investment Trusts (REITs)
      • Tax
      • Transfer Pricing
    • Global Regulatory

      • Administrative and Public Law
      • Antitrust and Competition
      • Communications, Internet, and Media
      • Education
      • Energy Regulatory
      • Environment and Natural Resources
      • Financial Services
      • Food Law
      • Gaming Law
      • Government Contracts and Public Procurement
      • Government Relations and Public Affairs
      • Health
      • Immigration
      • International Trade and Investment
      • Medical Device and Technology Regulatory
      • New Nuclear
      • Pharmaceuticals and Biotechnology Regulatory
      • Privacy and Cybersecurity
      • Space and Satellite
      • Strategic Operations, Agreements and Regulation
      • Transportation Regulatory
    • Intellectual Property

      • Copyright
      • Designs
      • Domain Names
      • IP and Technology Transactions
      • IP Enforcement
      • Patents
      • Trade Secrets and Confidential Know-how
      • Trademarks and Brands
      • Unfair Competition
    • Litigation, Arbitration, and Employment

      • Business and Human Rights
      • Construction and Engineering
      • Corporate and Securities Litigation
      • Employment
      • International Arbitration
      • Investigations, White Collar, and Fraud
      • Products Law
      • Risks, Disputes, and Litigation
  • Comparative guides
  • Engage Premium
  • Login
  • Register
  1. News
  2. UK Building Safety update: Where are we now?

UK Building Safety update: Where are we now?

13 July 2022
    • Share by email
    • Share on
    • Twitter
    • LinkedIn
    • Get link
    • Get QR Code
    • Download
    • Print

The Building Safety Act 2022 received Royal Assent on 28 April 2022.  This marked the end of a long journey through Parliament for a Bill that was published in response to the Grenfell Tower fire and the 2018 report of Dame Judith Hackitt relating to building safety.  

Index
  1. Leaseholder liability
    1. Developer liability
    2. Building Liability Orders
    3. Liability under the Defective Premises Act 1972 (“DPA”)
    4. Liability for building safety risks
    5. Liability for breach of Building Regulations
    6. What is an associated company?
    7. What about overseas companies?
    8. What next?

Leaseholder liability

From 28 June 2022, the costs associated with the remediation of unsafe cladding on buildings over 11m or with over five storeys will no longer be recoverable from residential leaseholders. Freeholders will not  be able to pass on the cost of historical building repair work or the removal of cladding to their tenants if the freeholder is or is linked to the building developer.  Further protection is given to leaseholders for non cladding related issues in the form of a cap on how much they have to pay for these costs.  This applies where a developer is not liable and where the building owner is not required to meet the costs in full.  The cap applies where property is valued at more than £325,000 in London and £175,000 outside London.  Owners of property below this ceiling will pay nothing.  Any costs which are not recoverable from leaseholders will be the responsibility of property owners or landlords. 

Developer liability

In a further development under the Act, property developers have been caught by new measures which look beyond the asset holding company.  By way of background, property developers may use a subsidiary company, a shell company or special purpose vehicle  to own and develop a site before selling the completed development to a third party.  In some cases, the assets of that subsidiary company are limited to the freehold or leasehold interest in the land being developed.  Following completion and sale of the development, the subsidiary might be wound down.  These transaction structures can be used to secure finance or investment in a project.   One consequence of collapsing the subsidiary is that the developer group is then left with no long-term civil liability for the development.

This has given rise to some concern in the residential sector that homeowners are left without the protection that they would have had under the Defective Premises Act 1972.

Through the Building Safety Act the government has introduced Building Liability Orders to assist those affected by building safety issues.

Building Liability Orders

The Building Safety Act enables the High Court to make an order extending specific liabilities from one company to associated companies and make them jointly and severally liable, where this is just and equitable. These orders are known as Building Liability Orders.  Their purpose is to ensure that the original developer group can be required to fund any remediation work where the actual developer entity is unable to meet particular liabilities.  Building Liability Orders can be made in the following circumstances:

Liability under the Defective Premises Act 1972 (“DPA”)

A Building Liability Order can  be made in respect of liability under the DPA.  The DPA gives recourse against those carrying out works for the provision of  a dwelling that is not fit for habitation when completed.  The scope of the DPA  has now been extended to works to existing dwellings.  The limitation period during which a claim may be made under the DPA in relation to provision of a dwelling has been increased to 30 years for dwellings that were already complete as at 28 June 2022 and 15 years for dwellings completed after that date.  For claims relating to works to dwellings,  this will only apply to works completed after 28 June 2022 but will also have a limitation period of 15 years.

Liability for building safety risks

Orders may be made in respect of liability for risks to the safety of people in or about a building arising from spread of fire or structural failure.  

Liability for breach of Building Regulations

While the relevant statutory provision has not, as at 13 July 2022,  been brought into effect, once in effect Building Liability Orders will also be available where Building Regulations have been breached, under section 38 of the Building Act 1984.  Again, the limitation period for making a claim under this section will be 15 years but will be prospective only.

It is important to note that while liability under the Defective Premises Act 1972 will only be relevant to residential premises, liability under Section 38 of the Building Act 1984 and the liability for claims incurred as a result of the risk from fire spread or structural failure will apply to all buildings including commercial buildings.

What is an associated company?

The Building Safety Act includes its own definition of where a company is associated with another.  This includes not only the usual group company arrangements but also looks at relevant voting rights and economic control of one entity by another. Other provisions are included to capture Limited Liability Partnerships, nominees and trust structures.

The High Court can make orders for the provision of information and documents, known as Information Orders, relating to persons who are, or have at any time in a specified period been, associated with a body corporate.

What about overseas companies?

The Court may choose to apply a Building Liability Order to a company based overseas if it is an associated company which would be enforced in the normal way.

What next?

A significant number of provisions under the Act are not expected to come into force until late 2023.  Watch out for further updates but if you are interested in the Building Safety Act we will be hosting a webinar this Autumn on the practical implications for the real estate industry.  Feel free to contact any one of the contacts to register interest.  

 

 

Authored by Gillian Thomas and Stella Bliss.

Contacts
Gillian Thomas
Partner
London
Stella Bliss
Counsel Knowledge Lawyer
London
Paul Tonkin
Partner
London
Ingrid Stables
Senior Knowledge Lawyer
London
Index
  1. Leaseholder liability
    1. Developer liability
    2. Building Liability Orders
    3. Liability under the Defective Premises Act 1972 (“DPA”)
    4. Liability for building safety risks
    5. Liability for breach of Building Regulations
    6. What is an associated company?
    7. What about overseas companies?
    8. What next?
Related Materials
Apartment building

UK Building Safety Act 2022: What's in store for real estate?

CG PCA_1422146387

UK Fire Safety: Who's picking up the bill on cladding?

Building picture 1

The limits of limitation - Is the 11th hour too late for UK cladding claims?

Tax_October21_Business_office_building

The costs of cladding - UK Treasury comes down hard on developers with new residential property tax

fca-building

UK Residential Property Developer Tax: draft legislation has developers bearing cost of cladding crisis

Private Capital January 2021 Wall street 509120228

Taxes for towers - righting the wrongs of the past?

Sanctions Navigator

Sanctions Navigator: Russia Sanctions

Keywords Building Safety Act 2022, Building Liability Orders, Defective Premises Act, developer liability, leaseholder liability
Languages English
Topics UK2030, Development and Construction, Hotels and Leisure, Occupiers, Planning, Zoning and Public Building Law, Real Estate Disputes, Real Estate Finance, Real Estate Letting and Management, Real Estate Purchases and Sales (Direct and Indirect), Real Estate Investment Vehicles and Funds, Real Estate Tax, Residential
Countries United Kingdom
Delete Comment ?

Are you sure want to delete comment ?

Get link
Embed
Share by email
Get QR Code

Scan this QR Code to share this content

  • Contact us
  • Disclaimer
  • Privacy
  • Cookies
  • Legal Notices
  • Terms of Use

 

This website is operated by Hogan Lovells International LLP, whose registered office is at Atlantic House, Holborn Viaduct, London, EC1A 2FG. For further details of Hogan Lovells International LLP and the international legal practice that comprises Hogan Lovells International LLP, Hogan Lovells US LLP and their affiliated businesses ("Hogan Lovells"), please see our Legal Notices page. © 2022 Hogan Lovells.

Attorney advertising. Prior results do not guarantee a similar outcome.

Thomson Reuters HighQ Logo
© 2023 Hogan Lovells | Privacy Policy | Terms of Service