While the industry has cautiously welcomed legislation introduced by the Building Safety Act (BSA), the act has undoubtedly introduced significant risks for investors and developers. One of the most critical issues highlighted by the BSA is that of project timescales and how these can be realistically managed. For those successfully navigating the BSA, a new generation of safer, attractive, long-term assets should emerge. But how do you achieve this, particularly as part of the ongoing investment decision-making process?
Recap on the key requirements of BSA
The BSA relies on the ‘Gateway’ approvals process for new properties which are at least 18 metres or seven storeys in height and contain at least two residential units, defined as ‘Higher Risk Buildings’ (HRBs). A pipeline of up to 500HRBs are expected to be constructed in the UK each year, in addition to the existing stock of around 12,500 such buildings. Consent – from the newly created Building Safety Regulator (BSR), operating within the existing Health and Safety Executive (HSE) – must be obtained for properties at each of three new Gateway stages: 1 (Planning), 2 (Pre-Construction) and 3 (Completion prior to occupation).
The BSA became law only in the middle of 2022, but this process is already creating uncertainty for investors. Some are questioning whether pipeline developments will get sign-off at Gateway 3 within the timescales promised by the act; whether key lease commencement dates will be met; or if extensive delays will result in the loss of projected income streams. All these are valid concerns and can only be reasonably addressed if investors are fully aware of – and have planned for – the various risks associated with each Gateway stage before they threaten to impact upon the project’s viability.
Through firsthand experience of the process we have developed a thorough understanding of the new regime including timescales, inputs, outputs and level of detail required at each stage, competency requirements of those involved and risk mitigation measures.
Planning early for the future: BSA needs to be a consideration from feasibility stages.
Buildings cannot legally be occupied until a Building Completion Certificate is issued making new build developments unusable until this is obtained. However, certification cannot be issued by the BSR until eight weeks after registration of the property and only after the application is made. The quality of the application submission must also be as accurate and comprehensive as possible to be deliverable. The new BSR regime requires an assessment of competence of key parties to a development that must be evidenced. Since this forms part of the submission, getting early advice on the BSA at feasibility stages can be the best way to mitigate this risk, allowing clients to develop a good understanding of the assessment process to help ensure they can navigate the challenges well in the future.
During Gateways 1 & 2, realistic programming and procurement strategies are required to deliver the level of detail needed within the available timescales to ensure BSR consent is achieved and the expectations of interested parties are managed and properly built into investment strategies from the outset.
The BSR seeks to achieve full compliance of all parts of the building regulations, not just fire and structural safety elements. As with planning applications, the BSR has a 12-week statutory period to review applications and respond, although our current experience has seen a 16 to 20-week period for this review. It cannot be consulted throughout the design process and will only provide feedback once a full review is concluded. To date, just around 50% of BSR submissions have achieved consent at first application, a significant risk to project timescales. The additional time involved in re-submission can add weeks to the final practical completion (PC) date and the associated costs.
Clients and their project teams can take advice from approved inspectors to review designs and their likely compliance prior to making a BSR submission. However, there are no guarantees that compliance will be achieved. We always recommend that clients seek strategy advice as early in the process as possible allowing risk mitigations to be considered and built into project plans at the earliest opportunity.
Enabling practical and successful completion
As a project moves forward in Gateway 3, the focus shifts to obtaining PC and the Building Completion Certificate from the BSR. Managing and minimising timings between these two dates is another key risk. HRBs cannot be occupied until the Completion Certificate is obtained and the building registered with the regulator. This is to provide assurance that the building is safe for occupation. Where this process is not properly managed, completed projects could sit empty for many weeks waiting for approval before allowing new occupiers to move in.
Clients – assisted by the duty holders – must submit a Completion Certificate application at the correct time with the right information, together with signed declarations from both principal contractor and designer that the works and building comply with the Building Regulations. Confirmation that the ‘golden thread information’ and key building information has been handed over to the principal accountable person for the occupation phase is also required. The BSR is required to approve the application for a Completion Certificate in a 12-week period, also once again, there is no certainty in the process that this will be done.
All occupied existing HRBs had to be registered with the BSR by 1 October 2023 after which point it became a criminal offence for the principal accountable person to allow the building to continue to be occupied. A Building Safety Case Report is also required for these registered buildings, with April 2024 being the date set by the regulator to provide comprehensive building safety information, outlining risk management strategies and – critically – fire and structural safety measures. In reality, the regulator has started reviewing safety case reports from this date, although they are taking a pragmatic and proportionate approach.
There is no assurance that the submitted Safety Case will gain approval and may ultimately be rejected by the BSR. This means beginning the process now, developing a clear plan, and demonstrating best endeavours towards meeting the act’s requirements. The regulator aims to assess all buildings for the first time within five years with priority given to HRBs for assessment based on height and number of dwellings. Since the start of April 2024, the BSR has begun to call in buildings for assessment and issue Building Assessment Certificates, which is also when the requirements relating to registration for building inspectors and building control approvers became enforceable.
Our own, direct experience to date of the processes outlined is that these have already exposed many potentially serious issues with existing properties which fall short of the requirements expected by the BSR, particularly those relating to structural and fire safety. It is clear that bridging the knowledge gap between identified challenges and producing viable solutions is required. Having the right team able to demonstrate competency is essential. This is not just the key duty holders – including the client, all contractors and designers – but also fire, façade and structural engineers and the legal team. Stakeholders need to come together as early in the process as possible, to anticipate and properly manage any possible barriers and delays. Through better integration and involvement of all relevant members of the development team as early as possible, the effectiveness of this continually adjusting statutory process to deliver a project can be optimised and the risks reduced to building owners, investors and users.
Robin Holme is a director at TFT
