Following the full implementation of the Building Safety Act last year, the timeframes to claim against faults to buildings and refurbishments have been significantly extended, potentially opening up developers and contractors to more risk and liability (as well as their insurers).
Thrings’ Head of Construction Natalia Sokolov takes a look at what you need to know:
What is the Building Safety Act?
The Building Safety Act 2022 (BSA) was initially created to reflect the recommendations of the Hackitt Report “Building a Safer Future” following the tragic Grenfell Tower fire in 2017. The final iteration of the BSA goes beyond this, bringing significant changes to the way the construction industry operates.
Claims under the Defective Premises Act (DPA)
Section 1 of the DPA allows homeowners and residents to bring claims against any person or corporate body who carried out defective refurbishment or other works which are not fit for habitation upon completion.
Prior to the BSA, the limitation for bringing such claims was six years from the date of completion of the dwelling. This applies to all defects, not just those relating to cladding or fire safety, and it not limited to high rise buildings.
Following the introduction of the BSA, the DPA limitation period has been changed:
- Extended from six to 30 years retrospectively for claims relating to new dwellings under section 1 of the DPA arising prior to 28 June 2022; and
- Extended from six to 15 years prospectively for claims relating to new dwellings under section 1 of the DPA on or after 28 June 2022.
- 15 years for claims relating to existing dwellings under section 2 DPA on or after 28 June 2022.
Claims under the Building Act 1984 (BA)
Section 135 of the BSA extends the limitation period for claiming compensation for anyone suffering physical damage to property as a result of a breach of the Building Regulations to 15 years for buildings completed on or after 28 June 2022.
Claims under the Construction Product Regulations
The BSA (sections 148-149) has also introduced the right for claims to be pursued against construction product manufacturers and suppliers in certain situations for mis-sold products using a misleading statement, or where a product is found to be inherently defective, or it breaches the Construction Product Regulations.
For cladding products, this is subject to a 30-year retrospective limitation period (section 150(2)) and if the action occurs after 28 June 2022, the limitation period expires after 15 years (section 150(2)(b)).
Remediation Orders, Remediation Contribution Orders and Building Liability Orders:
The applicable limitation periods for these new actions are:
- Six years from the date of action accruing for Remediation Orders and Remediation Contribution Orders;
- Six years from the date of action accruing for Building Liability Orders. We recommend seeking professional advice regarding the date that the cause of action accrued as this is sometimes not straightforward.
These changes have a significant impact on the real estate market and construction sector. Extending of the limitation period and the retrospective nature of the updates have proven to be controversial impacting the availability and cost of professional indemnity insurance in the market.
Cases in this area remain limited and untested, the most recent notable case being URS Corporation Limited v BDW Trading Limited [2023] EWCA Civ 772 relating to the retrospective effect of the 30-year limitation under the DPA.
It is recommended that current and future contracts (particularly sub-contracts) are reviewed to ensure longer term liabilities can be flowed down appropriately, preserve records and project documents for at least 15 years, and keep a watchful eye on insurance policy changes which may bring in exclusions relating to these extended limitation periods.
Thrings’ Construction and Engineering lawyers are well versed in advising those in the construction and real estate industry in navigating ever-changing regulation, with expertise in supporting clients with property portfolios, investment and transactions. For more information, get in contact today.
