The Government has now revealed how it intends to use the proposed amendments to the Building Safety Bill (described here) to force the hands of those who have “played a role” in the development of buildings over 11 metres tall with “life-critical” fire safety defects that require remediation. The Government has threatened to prohibit planning permission and Building Control sign-off for developers who do not voluntarily comply with commitments to fund and carry out or fund the necessary remedial works.
On 15 March 2022, the Department for Levelling Up, Housing and Communities (DLHUC) wrote to the Home Builders Federation and a number (yet unknown) of residential property developers providing a draft Pledge Letter and draft Agreed Principles document, with a request that developers sign the Pledge, publish the letter on their websites by the end of March 2022 and write to all building owners within one month confirming their commitment to remediate buildings or pay the cost of doing so.
The Agreed Principles do not define the category of “developer” intended to be caught by the commitments. The main commitment proposed is that the developers commit to pay for and undertake all necessary remediation work to address fire-safety issues on all buildings over 11m tall which they “played a role (whether on their own behalf of on behalf of others)” in developing or refurbishing.
At first blush the pledge apparently proposes to make developers the principal funders and undertakers of remediation work, apparently regardless of whether they are charitable or profit-making, and regardless of whether they have any ongoing involvement with the buildings concerned. It also incorporates a pledge to reimburse BSF and ACM Funds allocated for work completed, in progress or approved, and states that developers who do not pledge to adhere to the Agreed Principles by 5 April 2022 will be “liable to reimburse the costs that leaseholders will have to pay (in respect of fire safety issues that are not covered by the BSF and ACM Funds) as a result of that developer’s failure to pledge to adhere to these Agreed Principles”.
The DLHUC’s covering letter explains that they expect responsible developers to agree to self-remediation commitments and, by implication, the Pledge Letter and Agreed Principles. Those who do not so commit are implied to be “industry actors [failing] to act responsibly”. The letter goes on to refer to amendments to the Building Safety Bill proposed by the Government on 14 February 2022 permitting regulations providing that planning permission and Building Control may be withheld from any person.
Since the Labour government nationalised landowners’ right to develop land without permission by the Town and Country Planning Act 1947, this is arguably the most significant direct wielding of, and interference with, those rights. It is unquestionably the largest single intervention by the Government into the construction industry. It seeks to quickly bypass the pre-existing and developing laws of contract, tort and statutory liability under the Defective Premises Act 1972 under which the buildings concerned were build, with a passing reference to dispute resolution, presumably through specialist tribunals.
The letter appears to make good on Michael Gove’s statement to the House of Commons on 10 January 2022 that “nothing will be off the table”. The form chosen is for “Participant Developers” to voluntarily sign up to currently unquantifiable and undoubtedly significant liability, at the threat of being forced out of the market – and presumably out of business entirely – by ministerial fiat.
Whilst the Government’s focus appears to be on private contractors represented by the Home Builders Federation, there is nothing evident in the draft Building Safety Bill or proposed amendments to distinguish charitable and non-charitable Registered Providers of Social Housing (RPs). RPs have made a significant contribution to the nation’s housing need since the decline of local authority house-building, usually employing reputable contractors whom retrospectively it appears fell foul of the same systemic problems in the building industry which are currently being investigated by the Grenfell Tower Inquiry. Without urgent ministerial clarification and assurance, RPs have reason to be concerned. We are seeking urgent clarification from DHLUC on the proposed reach and ambit of the pledge and commitments contained within it.
For more information, please contact William O’Brien or Mark London.