Changes for Developers following the Building Safety Act 2022

As part of its introduction to the Building Safety Act 2022 the government stated that the new law would "create lasting generational change and set out a clear pathway for the future on how residential buildings should be constructed and maintained".

Clearly the intention for the Act is far ranging and there are several obligations that have come into force straightaway, such as extending the liability period for suppling defective cladding products to 30 rather than 15 years. However, there are some parts not yet in force and a few powers that the government has up its sleeve that may or may not be fully enacted, but that the prepared property Developer should be aware of.

New Homes Build Warranty

A new build home warranty is a form of insurance covering against construction defects. Such warranties have been available to owners of newly built residential properties for many years and are often required by mortgage lenders as a condition of their lending. However, the provision of a new build home warranty has never been a statutory requirement and there are instances of developers - particularly those hoping to sell to cash buyers and not wishing to pay the extra costs - not obtaining them. Section 144 of the Act, if and when enacted, will legally require a developer to put in force a 15 Year warranty as a legal requirement - the current market norm is 10 years. The obligation and the extension of time will be an additional cost to developers.

New Homes Ombudsman

The Act sets out the framework of a New Homes Ombudsman scheme, aimed at providing a forum for owners of newly built homes to seek redress against developers and builders (sections 136 and 143). The Act sets certain minimum standards for how the scheme must operate when the government introduces it, including a requirement for government funding. Some progress has already been made in December 2021 where the New Homes Quality Board (NHQB) launched its New Homes Quality Code of Practice, and this may operate independently for a period before being placed on a statutory footing. This is likely to be a large focus for developers, with disgruntled buyers previously being dealt with "in house", the potential external reviews will be a new focus for their time.

Additionally, from 1st October 2022 the Act enables Social Housing occupants to escalate a complaint to the Housing Ombudsman service directly.

New Building Industry Scheme

The government has the power to set up "Building Industry Schemes" which will allow certain sign-up parties to develop land, and bar others. The government's expressed intention when introducing these provisions was to use them as a means of threatening the industry into paying for remedial works to unsafe high-rise residential buildings in England, which it is currently still in the throes of negotiating. If the government uses these powers, it could have far reaching consequences for the larger development companies