This amendment addresses a current ‘gap’ in protection for homeowners. This would broaden the application of the DPA to expand the right to claim compensation for works undertaken on a dwelling to now include refurbishment or rectification works; provided that work is done in the course of business. The amendment made by Section 2A would apply in relation to work completed after the Bill comes into force.
Extension of limitation periods
Clause 126 (1) of the Bill inserts a new Section 4B into the Limitation Act 1980 (Limitation Act) extending the time for a person to bring an action in respect of a relevant provision concerning damage or defects in relation to buildings from six years to 15 years from the date on which the right of action accrued.
These amendments do not enable an action to be brought where that action was settled or final determined (whether on the basis of the then current limitation periods or otherwise) before these amendments came into force.
The Explanatory Notes to the Bill provide the following helpful examples of how these changes could impact future claims:
Example 1: Extended limitation period
Work on a new build block of flats is completed in 2024 and, seven years later, the leaseholders of a flat in that block find that, during the building work, there was a breach of a requirement imposed by the building regulations. Under Section 38 of the Building Act 1984 the leaseholders can lodge proceedings to have their claim heard by the court within 15 years of the completion of the work.
Example 2: ‘Revived’ limitation period
Work on a new build block of flats was completed in 2010 and in 2019 leaseholders discovered that there were defects in the original work to the extent that the flat is unfit for habitation, potentially giving rise to a cause of action against the housebuilder under the Defective Premises Act 1972. However, the limitation period had already expired in 2016, so no claim was brought. Due to the extension of the limitation period to 15 years, the leaseholders could now bring proceedings up until 2025.
The introduction of Section 2A addresses a current ‘gap’ in protection for homeowners by broadening the application of the DPA to expand the right to claim compensation for works undertaken on a dwelling to now include refurbishment or rectification works; provided that work is done in the course of business. The proposed introduction of Section 2A in the DPA however does not have retroactive application and would only apply in relation to work completed once the Bill has come into force and is unlikely to spark an immediate increase in claims.
The proposed amendments to the Limitation Act would operate to more than double the time for a person to bring an action in respect of damage or defects in relation to buildings from six years to 15 years. With retroactive application, claims which had previously been out of time may now have an additional 9 years in which to be brought. In the event these amendments are put in force we expect a rise in both notifications and claims.
The Bill includes a number of additional proposals which have not been considered in this article.
Read other items in Construction and Engineering Brief - July 2021
Read other items in Professions and Financial Lines Brief - September 2021
Related item: Non-compliance with building regulations: claims against approved inspectors