UK & Europe
UK Real Estate Insights
Following the investigations and inquiry into building safety resulting from the Grenfell tragedy, the Government plans to introduce the Building Safety Bill (the BSB) in the 2022 Parliament so that it comes into force this year. Once enacted, the BSB, will effect some of the most significant changes to the construction industry in a generation.
The BSB has now reached Committee Stage in the House of Lords. Further to Michael Gove’s speech on 10 January 2022, a revised draft of the BSB was published incorporating significant changes to the Defective Premises Act 1972 (the DPA) limitation periods, beyond those set out in earlier drafts of the BSB.
Yet further announcements were made by Mr Gove on 14 February 2022, some of which relate to the DPA, as referred to below.
The duty under the Defective Premises Act 1972
Current limitation period for DPA claims
Who has the DPA duty and to whom is that duty owed?
When does the DPA apply - which works are covered?
The BSB proposes significant changes to the DPA to extend the s1 duty of care (where works are undertaken in the course of a business) to include buildings which are mixed use, containing one or more dwellings. Work to any part of such a building directly impacting upon “dwelling” must not render the dwelling unfit for habitation.
Notably, the new DPA provisions will be extended to cover refurbishment and extension works to existing dwellings in the course of a business – the current DPA provisions only cover new dwellings.
As currently drafted (following the changes in January), the BSB will extend the limitation period for claims under the DPA 1972:
Both the July 2020 and July 2021 iterations of the BSB proposed a 15 year retrospective limitation period for s1 claims, but the latest draft of the BSB has changed that to 30 years.
Where a s1 DPA claim is made retrospectively, the BSB includes two provisos:
Notably, the BSB provides that the limitation period for these retrospective claims will not expire until at least one year after the new limitation period comes into force (the BSB takes effect). This one-year buffer is known as the "initial period". This will protect the position of those potential claimants who are close to the end of the 30-year retrospective limitation period at the time that the BSB comes into effect.
These changes currently remain proposals only but their enactment is beginning to seem likely. On 10 January 2022, Michael Gove stated that the Government has “reset its approach to building safety with a bold new plan to protect leaseholders and make wealthy developers and companies pay to fix the cladding crisis”. The Secretary of State for Levelling Up went on to guarantee “that no leaseholder living in their own flat will have to pay a penny to fix unsafe cladding”.
With the announcement of a retrospective 30 year limitation period, far more buildings will potentially fall within the scope of the DPA (once the BSB takes effect) and it is significant that the parties cannot agree to exclude or restrict the DPA provisions. Contractors and design professionals will no doubt be reviewing their records to identify any projects potentially falling into this category.
A DPA claim may also be attractive to subsequent owners of residential properties who have no contractual rights against the developer and construction professionals and will be then in a position to look back 30 years for potential claims. Where a body corporate has a “relevant liability” (which includes liability under the DPA), the latest proposed amends to the BSB (of 14 February 2022) would additionally give the High Court a power to make a “building liability order” against landlords and associated companies, including a company that has been dissolved and associates of that original company.
There may be an initial flurry of DPA claims after the BSB takes effect to take advantage of the one-year buffer protecting potential claimants who are close to the end of the 30-year limitation period. However, with the Grenfell tragedy now 4 1/2 years ago, the majority of buildings affected and completed before the commencement of the BSB will already have been assessed. In those cases, limitation, if an issue at all, will have been one of a number of considerations when deciding whether or not to commence proceedings in respect of any defects identified.
One notable defence to newly resurrected DPA claims may be the breach of human rights claim mentioned above (in s119(5) of the BSB) - the first judgment of the Technology and Construction Court (the TCC) addressing this issue will be keenly awaited.
The other caveats to a DPA claim remain relevant – only defects that prevent a dwelling being fit for habitation are covered, which is intentionally restrictive. That said, in the context of building safety and the potential danger, understandably, the approach of the TCC to cladding claims generally has been framed within the context of the heightened awareness of the risks following on from the tragedy in 2017.