Five years on from the Grenfell Tower fire, the Building Safety Act 2022 is set to make major changes to the law and practice of the construction industry when it starts to come into force at the end of this month.
The Building Safety Act represents the most ambitious reform to building safety law in the UK for several decades. Not every provision of the 230-page Act will apply in Scotland, but it will have a significant impact north of the border.
From a Scottish perspective, the most important changes made by the Act are:
- New rights of action for homeowners and others.
- Extended time limits for certain claims.
New rights of action
The Act creates new rights of action against persons who:
- Fail to comply with construction or cladding product requirements.
- Make a misleading statement about a construction or cladding product in the course of marketing or supplying it.
- Manufacture an inherently defective construction or cladding product.
To be caught by the new law, the product must have been used in the construction of a residential building and must have caused the building to become ‘unfit for habitation’ (a term borrowed from the Defective Premises Act 1972, but new to Scotland).
In Rendlesham Estates v Barr Ltd , the High Court held that ‘fit for habitation’ under the 1972 Act, means capable of occupation “without risk to the health or safety of the occupants” or “without undue inconvenience or discomfort to the occupants” at the date of completion. It is likely that the same interpretation will be adopted in Scotland.
These new provisions extend the potential liability of anyone involved in manufacturing, marketing, supplying or installing construct products.
Anyone with a right or interest in a residential building, including its owners or tenants, can make a claim based on these new provisions, whether or not they have any direct connection to the party in breach.
Liability will extend to personal injury, damage to property, and economic loss and cannot be excluded or restricted by agreement.
Extended time limits
The Act also amends the Prescription and Limitation (Scotland) Act 1973, the Scottish equivalent of the Limitation Act 1980.
The Act extends the limitation period for liability for construction or cladding products to 15 years, except where the products have been used in buildings completed before the Act comes into force, where a 30-year time limit will apply.
These extended deadlines mark a major departure from the existing law in Scotland, where the standard prescriptive period is five years.
The Act is also notable for having retrospective effect, meaning some claims that have already been time-barred before the Act comes into force will be resurrected by the new law (an outcome which the Scottish Government was at pains to avoid with the Prescription (Scotland) Act 2018).
Other changes to the law
Other innovations of the Act include:
- New powers for the Scottish Parliament to pass regulations governing the supply and marketing of construction products (to tie-in with the new rights of action).
- A New Homes Ombudsman scheme, to adjudicate disputes between the purchasers of new homes and property developers.
- Amendments to the Architects Act 1997, including the introduction of a new Appeals Committee for the Architects Registration Board and changes to the competence to practice requirements for architects.
The major reforms above come into force on 28 June 2022 and, with them, the rights of potential claimants and the risks faced by construction professionals and their insurers will expand significantly.
What this means in practice remains to be seen but we can expect:
- Increased scrutiny on everyone involved in the supply and installation of construction products (including but not limited to cladding products).
- An up-tick in construction disputes and an entirely new category of claim, brought by homeowners and tenants against construction professionals of various kinds.
Insurers and policyholders should consider how these developments will affect the risks their businesses carry. Thought should be given to how businesses vulnerable to the new category of claim can protect themselves moving forward.
Consideration should also be given to whether the new rights of action and extended time limits will expose professionals to historic claims that might otherwise be incompetent, or time barred.
For example, it could be that past notifications need to be revisited or new notifications need to be made in circumstances where there was thought to be no real risk of a valid claim. Particular attention should be given to buildings completed between 1992 and 2017, which would now fall outside the standard five-year prescriptive period but could be caught by the 30-year time limit created by the Act.
Where potential vulnerabilities are identified, insurers and policyholders should discuss their implications and the extent of any extant evidence bearing on the risk, so that it can be preserved as far as possible and the risk can be effectively managed.
- Limitation and the UK Building Safety Act: new claims and what insurers may have missed
- Prescription: the only constant is change
Read other items in Construction Brief – July 2022
Read other items in Professions and Financial Lines Brief - July 2022