Remediation contracts to fix unsafe buildings - Boodle Hatfield

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01 Feb 2023

Remediation contracts to fix unsafe buildings

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Sarah Rock View profile
Kate Symons View profile
2 min read

The government has published a final form of the remediation contract negotiated with the 49 developers that signed up to last year's Building Safety Pledge to commit to take steps to remediate unsafe buildings. The remediation contracts will apply to residential buildings of 11 meters and above, developed or refurbished by the relevant developer in the last 30 years.

The developers who signed up to the pledge now have a 6 week period, expiring 13 March 2023, within which to sign the remediation contract. Once signed, it is intended that leaseholders of relevant buildings will benefit from a common framework of rights and responsibilities that will see developers undertaking (the undefined) life critical fire-safety remediation work arising out of the design, construction or refurbishment of the building with the cost of such works being paid by the developer. However, the contract only places a reasonable endeavours obligation on the developer to enter into a works contract with the responsible entity (being the owner of the superior leasehold or freehold). An absolute obligation to do so along with a template form of works contract would have provided more comfort for affected leaseholders.

Developers that do not sign up the remediation contract are likely to be excluded from the Responsible Actors Scheme (RAS) to be introduced by the government this Spring, under the Building Safety Act 2022. This is significant in that developers that are not part of the RAS are at risk of being prevented from starting developments or obtaining building regulation approval in effect preventing them from operating in the housing market.

The introduction of the remediation contracts will see the developers committing an estimated £2 billion or more to repairs which, together with the anticipated introduction of the Building Safety Levy which is intended to cover all new residential developments, will see the industry paying an estimated £5 billion to making buildings safe. Whilst this will be of some comfort to those leaseholders occupying buildings where the developer enters into a remediation contract, there will be leaseholders precluded from benefiting from the developers' pledge where, for example, a developer does not participate or is no longer operating in the market. In addition, leaseholders whose building are covered by the contract may still find they are waiting some time for developers to carry out tests and remediation works due to the recently widened meaning of what is reasonable.

In a recent press release Housing Secretary Mr Gove said: “Today marks another significant step towards righting the wrongs of the past and protecting innocent leaseholders, who are trapped in their homes and facing unfair and crippling costs." "Too many developers, along with product manufacturers and freeholders, have profited from these unsafe buildings and have a moral duty to do the right thing and pay for their repair." “In signing this contract, developers will be taking a big step towards restoring confidence in the sector and providing much needed certainty to all concerned."

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