A Closer Examination of the Remediation Bill’s Key Measures

Further to our first article looking at Remediation Bill’s key measures and impacts, in this follow up, we analyse and comment each of the main measures.

On the proposed statutory duty to assess and remediate…

Which Buildings are Within Scope?

The new duty is intended to apply in England to a self-contained residential building, or a self-contained residential part of a building, where there are at least two dwellings and the building is either at least 11 metres high or contains at least five storeys. Both privately owned and social-sector stock are included.

Buildings whose external walls have been, or must be, remediated under a Developer Remediation Contract are excluded from this particular duty because equivalent contractual obligations will already apply.

Identifying the responsible entity

Responsibility is allocated to the person who, under a lease or an enactment, must repair or maintain the external walls or the relevant part of them. Depending on the ownership and management structure, this may be the freeholder, an intermediate landlord, a right-to-manage company or a resident management company.

The allocation of repairing obligations will therefore be central. Complex lease structures may require a building-by-building analysis rather than an assumption that the freeholder will always be the statutory duty-holder.

Assessment obligations and FRAEWs

The responsible entity must assess the building for fire-safety risks within the statutory assessment period. The relevant window begins on 16 May 2022 and ends 12 months after Royal Assent. If the fire risk assessment recommends it, the responsible entity must obtain a Fire Risk Assessment of External Walls (FRAEW).

An assessment that already satisfies the statutory test, including one prepared for a Government remediation scheme, will not have to be repeated. Every FRAEW recommending mitigation or remediation must be sent to Homes England for audit by the assessment deadline. Homes England will also have power to audit a proportion of assessments concluding that no works are needed. In London, those audit functions are expected to be undertaken directly by Homes England under an arrangement with the Mayor of London.

Remediation Compliance Plans

Where the FRAEW identifies the need for remedial work, a Remediation Compliance Plan must be published no later than 15 months after Royal Assent. The plan is expected to set out:

• any interim risk-reduction measures;
• the remedial steps required;
• the proposed programme for delivery;
• where the responsible entity is incorporated, the individual accountable for compliance; and
• beneficial-ownership information and relevant details of the wider corporate group’s portfolio.

The plan must be provided proactively to residents and leaseholders. The costs of preparing it may not be transferred to qualifying leaseholders.

Carrying out Mitigation and Remediation

The responsible entity must implement interim measures and complete the recommendations contained in the FRAEW as soon as reasonably practicable. Regulations and statutory guidance are expected to define both the required remediation steps and the application of that timing standard.

On the Remediation Backstop…

The Bill creates a last-resort mechanism for cases in which the party responsible for remediation has not complied with its legal obligations. A local authority or Homes England, described collectively as Remediation Authorities, may apply to the First-tier Tribunal for a Remediation Management Order.The backstop may be engaged by failures involving a range of existing and proposed obligations, including:

• a notice under section 36 of the Building Act 1984;
• an improvement notice under the Housing Act 2004;
• an enforcement notice under the Regulatory Reform (Fire Safety) Order 2005;
• a compliance notice under the Building Safety Act 2022;
• a Remediation Order made by the First-tier Tribunal; or
• the new statutory remediation duty.

Before making an application, the Remediation Authority must serve a remediation notice. The notice gives the duty-holder three months to explain what action has been taken, provide information and make representations.

If the matter remains unresolved, the authority may seek an order giving it the powers necessary to manage and complete the external-wall works. Those powers may include obtaining access, dealing with third parties and, where the order so provides, suspending the duty-holder’s ability to exercise relevant functions.

Local authorities already possess hazard-enforcement and works-in-default powers under Part 1 of the Housing Act 2004. In practice, the requirement to finance works at the outset may restrict their use. The proposed regime indicates that Government remediation funding may be available where a Remediation Management Order is pursued, followed by recovery from the duty-holder where recovery is possible.

On Offences, Penalties and Personal Exposure…

Failure to mitigate or remediate

A failure, without reasonable excuse, to discharge the mitigation or remediation duties will constitute a criminal offence. For an in-scope building of at least 11 metres, failure to mitigate risk or make progress with remediation may result in a maximum custodial sentence of two years.

Instead of prosecuting, the regulator may impose a civil penalty of up to £500,000. A reasonable-excuse defence will be available. The source material suggests that genuine delays outside the responsible entity’s control, such as contractor or supply-chain shortages, may be relevant, particularly where the entity has otherwise acted diligently and in good faith.

Where the responsible entity is the freeholder, the financial cost of a penalty cannot be passed to leaseholders. If an offence committed by a corporate responsible entity is attributable to a director’s consent, connivance or neglect, the director may also face prosecution.

Enforcement of Remediation Orders

The Bill provides for regulations allowing the First-tier Tribunal to impose civil penalties of up to £500,000 for breach of a Remediation Order. Further penalties may be imposed while the breach continues. A separate penalty of up to £40,000 may apply where required compliance information is not provided. The regime is intended to cover both future orders and existing orders where non-compliance is continuing.

On a Prescribed Approach to External-Wall Assessment…

The Bill allows regulations to specify the requirements of a compliant FRAEW by referring to a British Standards Institution standard or a comparable document. The Government guide states that this power is intended to make the methodology in PAS 9980 mandatory.

Organisations should therefore review existing external-wall assessments against PAS 9980 and retain a clear record of the standard and evidence used.

On the National Register for Medium-Rise Buildings…

A national register already applies to higher-risk buildings at or above 18 metres. The Bill enables the Secretary of State to establish a separate register for occupied medium-rise residential buildings in England. The proposed category covers buildings with at least two dwellings that are either between 11 and 18 metres in height or contain at least five but fewer than seven storeys.

The duty to register will rest with the building owner or the person legally responsible for repairing the common parts. If responsibility is divided, the default position places the obligation on the party responsible for the structure and exterior.

Failure to register or keep information current may attract a civil penalty of up to £7,000. Prolonged non-compliance may lead to a penalty of up to £40,000 or prosecution. A person who knowingly supplies false or misleading information may face an unlimited fine, a custodial sentence up to the general magistrates’ court limit, or both.

The source material anticipates the register becoming operational roughly eight to ten months after Royal Assent, following secondary legislation. The fee is expected to be comparable to, or below, the current £251 fee for registering a higher-risk building.

On Preventing the Obstruction of Remediation…

The legislation introduces an offence aimed at deliberate interference with the assessment or remediation of a building affected by serious external fire-safety risk. Examples identified in the source material include delaying or refusing access, withholding consents required from third parties and pursuing unreasonable disputes about the scope of works.

An individual may be fined up to £40,000. In the case of a corporate offender, the penalty may be calculated by reference to worldwide revenue. A reasonable-excuse defence is intended to preserve legitimate, good-faith disputes concerning safety, access or the proper scope of the proposed works.

This measure is particularly relevant to developers operating under the Developer Remediation Contract. Some have reportedly encountered difficulties obtaining access for intrusive investigations and for the works themselves, including problems linked to securing appropriate insurance. The offence is intended to reduce deliberate delay while preserving the ability to raise genuine objections.

On the Confirmation that Statutory Orders are Not Time-Barred…

The Bill states that the Limitation Act 1980 does not impose a limitation period on applications for Remediation Orders, Remediation Contribution Orders or Building Liability Orders. This is intended to remove uncertainty over whether such statutory remedies could become unavailable merely through the passage of time.

Looking at Reforms Connected to the Existing Regime…

Protecting Remediation Contribution Order funds

Money paid pursuant to a Remediation Contribution Order must be held on trust for the remediation purposes identified in the order. The objective is to prevent the money becoming part of the landlord’s general assets and being distributed to ordinary creditors if the landlord later becomes insolvent. Further guidance for trustees is expected.

Insolvency and liquidation notifications

The notification obligation in section 125A of the Building Safety Act 2022 is extended to voluntary arrangements and moratoriums. A Responsible Person for a building of at least 11 metres entering one of those procedures must notify the relevant local regulator within 14 calendar days.

A liquidator appointed over the owner of a residential building must issue a Notice of Disclaimer to the local regulator within seven business days. If the building is a higher-risk building, the Building Safety Regulator must also be notified.

Section 24 managers and accountable-person status

Amendments to the Landlord and Tenant Act 1987 and the Building Safety Act 2022 will allow a manager appointed under section 24 of the 1987 Act to be treated as an Accountable Person for a higher-risk building where the statutory criteria are met.

The change applies to existing and future section 24 orders and is intended to address the mismatch that can arise where day-to-day management has transferred but statutory building-safety responsibility remains elsewhere.

Escheat and bona vacantia

Where a freehold has passed by escheat or bona vacantia following dissolution or liquidation, the Bill confirms that qualifying leaseholders may still pursue the right to manage and that the Tribunal may appoint a section 24 manager. This provides a route through which management, maintenance and remediation funding can be organised despite the absence of an active freeholder.

Claims involving construction products

Section 149 of the Building Safety Act 2022 was designed to facilitate claims involving cladding-product manufacturers, but the source material notes that few claims have been brought. Reported obstacles include evidential difficulties, manufacturers’ reliance on technical-compliance arguments and uncertainty over whether developers or other remediation funders can claim directly.

The Bill seeks to widen and strengthen the route by:

• allowing direct claims by developers and other persons who have financed remediation, not only those holding a legal interest in the building;
• confirming that a Building Liability Order may be made in connection with a section 149 claim, enabling liability to be extended to associated companies where the just-and-equitable test is met; and
• giving the court power to compel a company to disclose relevant information about construction products.

In short summary, Landlords will need to commission PAS 9980-compliant assessments within 12 months of Royal Assent and publish a Remediation Compliance Plan within 15 months. The plan must disclose beneficial ownership and portfolio details, and the cost of preparing it cannot be passed to qualifying leaseholders. Failure to act without reasonable excuse risks prosecution (up to two years’ imprisonment) or civil penalties of up to £500,000, which cannot be recovered from leaseholders.

Directors can be personally liable, and the new obstruction offence and the Remediation Management Order backstop add further exposure, including loss of control of the works and recovery of costs from the landlord. Landlords of medium-rise buildings should also expect to register them, with penalties for non-compliance. Much of the detail will come through secondary legislation, so landlords should now identify who the responsible entity is for each building and review existing assessments.

As highlighted on the first part of this article there are a number of actions that can be taken now, and should you wish to discuss the Bill, it’s impacts - and how we can assist, please contact us: buildingsafety@jbleitch.co.uk