On 25 April 2023 the government introduced draft regulations to create a Responsible Actors Scheme ("RAS") for residential developers under sections 126 to 129 of the Building Safety Act 2022. The RAS, expected to be brought into law in England in Summer 2023, is part of the government's approach to tackling urgent building safety issues.
The purpose of the RAS is to improve the safety and standard of buildings. A member of the RAS must:
- Identify any residential buildings over 11m in height in England which they developed or refurbished between 1992 and 2022, and which are known to have life-critical fire safety defects; and
- Remediate (or pay for the remediation of) those life-critical fire safety defects; and
- Reimburse government schemes for taxpayer-funded work to remediate the defects in those buildings.
A developer who is eligible to join the RAS can do so if they meet its membership conditions. At a minimum, members of the RAS must enter into a developer remediation contract with the Department for Levelling Up, Housing and Committees ("DLUHC"). Developers will be eligible to sign that contract and join the RAS if they meet one of the following criteria:
- The developer's principal business is residential property development, and they were responsible (other than solely as a contractor) for the development or refurbishment of one or more building over 11m in height between 1992 and 2022;
- The developer meets the "profits condition" (broadly, having an average annual operating profit of £10m or higher in the financial years ending 2017, 2018 and 2019), and developed or refurbished multiple buildings assessed as eligible for a relevant government cladding remediation scheme; and
- At least one of the buildings over 11m in height that they developed or refurbished qualifies for remediation under the terms set out in the DLUHC's developer remediation contract.
If a developer appears eligible, they will be invited by the government to sign up to the RAS.
However, as we mentioned in an earlier article, the Government are using membership of the RAS as a tool to persuade developers to carry out the remedial works mentioned above. There are considerable commercial consequences for any eligible developer (and persons they control) who choose not to join the RAS when invited to do so. The consequences of failing to join the RAS will include the relevant companies being prevented from carrying out major development works and from receiving building control approvals for works that are already underway. The cumulative effect of these measures will effectively amount to a barrier to non-members accessing the market.
As we mentioned in our earlier article, these steps are controversial, with a leading KC calling their legality into question.
The Government's intention is that the RAS will support a level playing field for major developers in the construction industry so that large developers who make commitments to remediate fire-safety defects are not placed at a disadvantage. However, it remains to be seen how these provisions will work in practice and whether, if challenged, the provisions will stand up to the scrutiny of the Courts.
At the moment, the RAS is focused on major housebuilders and other large developers, but if the scheme is successful, it is expected it will be expanded to cover other developers who developed or refurbished buildings over 11m in height in due course.
For further information on matters relating to the Building Safety Act please see our Building & Fire Safety Hub.