Awaab’s Law one year on: why developers need to be alert

On 27 October it will be a year since the first phase of Awaab’s Law came into force following the death of two-year-old Awaab Ishak in December 2020. The legislation is reshaping the obligations placed on registered providers of social housing in England by introducing mandatory timeframes within which hazards such as damp and mould must be investigated and remedied.

Although the legislation applies directly to registered providers, its impact is increasingly being felt throughout the supply chain. Our registered provider clients acquiring newly built homes are tightening development agreements and defects provisions to ensure that developers deal with post-completion defects, particularly those relating to damp and mould, quickly enough for them to comply with Awaab’s Law. This is creating a new category of contractual risk for developers, not just greater exposure for registered providers

Awaab’s Law requires registered providers to investigate reported hazards within 14 calendar days of being notified, begin to fix them within a further seven calendar days, and complete emergency repairs within 24 hours – timescales which may not always align with defects procedures in development agreements. For registered providers, getting the contractual provisions right is therefore critical.

Impact on development agreements

The practical effect of Awaab’s Law on the development sector is becoming clearer. With more demanding contractual terms placed upon them, developers face greater obligations during defects liability periods, which are typically 12 months following practical completion. Where tenants report damp or mould, registered providers need developers to investigate and remedy the issue on accelerated timescales, potentially within days rather than weeks, so that they can apply with their statutory duties.

For example, a damp and mould complaint received after handover may previously have been addressed through standard defects procedures. However, under Awaab’s Law, the same complaint may require an immediate investigation, placing pressure on developers and subcontractors to mobilise quickly.

Influence on contract negotiation

We are seeing a number of practical changes being negotiated into development agreements, including:

•       Shortened response times for defect notifications, particularly for hazards such as damp, mould, and condensation.

•       Enhanced inspection and handover protocols, including requirements for post-occupation monitoring.

•       Express obligations on developers to co-operate with the registered provider’s statutory investigation and repair timescales, with liquidated damages or step-in rights where the developer fails to respond.

For developers there is a balance to be struck between meeting the expectations of registered providers and avoiding open-ended exposure to claims that may arise from occupant behaviour, inadequate maintenance, or other factors outside their control.

Developers also need to consider their subcontracts and whether escalated defects response times can be achieved. For some developers, this has been a concern and we have agreed alternative provisions allowing the registered provider to remedy the defect and recover the costs from the developer. This is, of course, not a one size fits all approach. Whether this is acceptable to a registered provider will depend on several factors, financial and practical, and often will not be acceptable for smaller providers.

Key message for developers

Awaab’s Law is not just a registered provider issue. It is becoming a development risk that needs to be understood and managed from the point contracts are agreed. The key is collaboration between registered providers and developers to agree provisions which keep the registered provider compliant with Awaab’s Law while ensuring the developer doesn’t overpromise resources they may not have.  

The delivery of affordable housing already faces several challenges which the sector is working hard to unblock. Lengthy negotiations over enhanced defects procedures do not need to be added to that list. Early discussions and genuine collaboration can progress contracts without delay.

Developers should review their development agreements, subcontract arrangements and defect response procedures now to make sure they understand what is deliverable in practice to meet the emerging accelerated expectations. A year into Awaab’s Law, defects liability can no longer be treated as a relatively low-risk, administrative phase of a project.

Rachael Watts is a senior associate solicitor in the social housing development team at HCR Law