Property Insights: Developer Remediation Contract - Boodle Hatfield

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17 Jul 2023

Property Insights: Developer Remediation Contract

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Sarah Rock View profile
2 min read

The Developer Remediation Contract (DRC) was produced by the government last Summer and reflects the pledge made by 49 developers to commit to remediate life-critical fire safety works in buildings over 11 metres high on which they had played a role in developing or refurbishing in the last 30 years. The DRC has now been heavily negotiated and, as of May this year, 47 developers have signed up to the DRC committing themselves to the government scheme. Developers that refuse to sign the contract will face significant consequences.

The DRC sets out an agreement on the part of each developer to take responsibility for work to address life-critical fire-safety defects (including but not limited to external cladding) arising from the design and construction of buildings 11 metres and over in height that they developed or refurbished in England over the 30 years prior to April 2022, keep residents in those buildings informed as to progress towards meeting this commitment and reimburse taxpayers for funding spent on remediating the unsafe buildings.

Some buildings that were initially assessed under the criteria set out in the now withdrawn Consolidated Advice Note and issued with unsatisfactory EWS1 forms, have now been reassessed under the more proportionate PAS9980 system. In some cases, this has produced differing results. As a result, many managing agents and landlords are understandably confused by which fire risk assessment result applies, and whether in fact their building requires remediation at all.

The DRC does little to alleviate this confusion and may in fact open the door for the developers to reassess the buildings once again. As a result many leaseholders now face a further wait as developers carry out further tests.

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"Whilst the intention was that leaseholders would benefit from a common framework, the DRC only places a “reasonable endeavours” obligation on the developer to enter into a works contract with the responsible entity (the owner of the superior leasehold or freehold) rather than an absolute obligation. In practice this means that leaseholders and responsible entities are at the mercy of the developers with no legal recourse unless and until a works contract is entered into."

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