The Building Safety Bill: Expanding Rights of Action?

The long-awaited Building Safety Bill (the ‘Bill’) is expected to receive Royal Assent later this year, between April and July 2022.  It comes as a result of increasing concerns raised around fire safety following the Grenfell Tower fire and much confusion around the roles and responsibilities of those involved in the construction process. The Bill aims to make people safer in their homes; give residents and homeowners more rights, powers and protections and establish a more comprehensive building safety regime.

Whilst the Bill is expected to introduce a whole raft of changes, this blog will only focus on those provisions which increase the ‘rights of action’ available to those suffering from construction defects.

The Defective Premises Act 1972

Under section 1 of the Defective Premises Act 1972 (‘DPA’), homeowners (including leaseholders and landlords) may bring a claim in respect of defective work where that work renders the dwelling ‘unfit for habitation’. Currently, this only applies to construction (i.e. new builds), conversion of buildings (e.g. the conversion of offices into flats) or enlargements of a building, but does not extend to work undertaken on existing dwellings. Claimants are usually entitled to reinstatement costs (i.e cost of putting the defects right) and may also be entitled to damages for loss of enjoyment whilst the dwelling is uninhabitable.

Key amendments for building safety

The Building Safety Bill proposes two key amendments which should in theory expand existing rights under the DPA.

Firstly, the Bill proposes to extend the limitation period for a person to bring an action under section 1 of the DPA. Currently, a person has 6 years from the date of completion of the dwelling within which to bring an action. This is set to be extended to 15 years and will apply to claims brought after the Bill comes into force. This will more than double the period within which homeowners can bring a claim in court and is designed to afford them more protection.

The Bill also proposes to extend the limitation period retrospectively under section 1 of the DPA to 30 years. This means that claims which are currently deemed ‘out of time’ may now potentially be ‘revived’. Therefore, if the Act comes into force in April 2022, as is currently expected, the ‘cut-off date’ would be April 1992. For those claims only just falling within the time frame, the Bill is also going to provide for 1 year of grace to allow proceedings to be brought.

It is important to note that this retrospective application remains limited in two ways:

1. Any already determined claims cannot be re-opened. This means claims that have been settled or already struck out on limitation grounds will not be reviewed; and
2. The retroactive application will only apply to the extent that it does not infringe on the defendant’s (i.e the developer) human rights under the Human Rights Act 1998. Exactly how and when this defence will be raised remains to be seen.

Secondly, the Bill also widens the scope of the DPA by introducing a new Section 2A which expands the right to claim compensation for works undertaken on existing buildings that contain one or more dwellings to include refurbishment or rectification works. The limitation period for this would also be 30 years. Whilst this change would seemingly ‘plug the gap’ in protection for homeowners, it would only apply to work completed after the Bill comes into force (i.e it will not have retrospective application) and is therefore unlikely to spark any immediate increase in claims.

Section 38 The Building Act 1984

The Building Safety Bill intends to also bring the currently ‘dormant’ Section 38 of the Building Act 1984 into force. This will provide a right of action, independent of any claim under the DPA or for breach of contract, to anyone who suffers damage as a result of the breach of the Building Regulations. This applies to all buildings, not just dwellings, and will also be subject to a 15-year limitation period (with prospective application only).

The Bill is also set to amend the Building Act 1984 to enable claims for purely financial loss (e.g. the cost of rectification work or resulting loss in capital value) to be covered under section 38.

Potential gains for homeowners

At a glance, the changes proposed by the Bill give a significant boost to homeowners’ rights, in particular, the extension of the limitation period which would allow homeowners to challenge sub-standard construction work that may have only become apparent after the existing six-year limitation period had ended. Additional rights and protection are also afforded with the new Section 2A of the DPA and Section 38 of the Building Act 1984.

Potential issues for claimants

However, whilst these changes may increase the number of potential compensation claims which can be brought, claimants will still need to substantiate their claims. This may prove more difficult in terms of obtaining evidence, particularly concerning claims which were previously considered out of time, as documentation may now no longer be retained by developers. Claimants may also find obstacles in identifying potentially liable defendants who are still solvent or insured. If the developer has insufficient funds to compensate the claimant, claimants could be left having to bear their loss and homeowners may still have to meet the ultimate costs of repair via service charge provisions. The uncertain nature of litigation also remains, along with the cost and time involved in pursuing claims. Such obstacles may therefore continue to limit the number of claimants who can make use of these new rights.

Nina Brennan joined Anthony Gold as a trainee in September 2020. She is currently undertaking her second seat in the Housing Department.