15th July 2024 ❘ Legal News and Commentary
The Building Safety Act – Mandatory changes to be aware of in 2024
The Building Safety Act – Mandatory changes to be aware of in 2024
In April 2022, the Building Safety Act became law, bringing into effect a range of new laws and regulations for developers. What you might not have realised is, the Building Safety Act is not yet fully implemented and additional provisions may come into force in 2024 including:
- The requirement for longer, mandatory warranties
New home warranties are guarantees that are issued by a body such as NHBC or the LABC. The purchaser of a new home receives a guarantee or warranty that the home has been constructed in accordance with certain standards and specifications. If defects appear then the homeowner can turn to the provider of the guarantee/warranty and request that these be dealt with.
While new home warranties are commonplace, they have not previously been mandated by law and where they are provided, they are typically for a 10 year period.
Under Part 5 of the Building Safety Act, anyone who undertakes or commissions the construction of a new home must provide a building warranty in order to sell it, and this must provide cover for at least 15 years.
Where developers fail to provide a purchaser with a 15-year new home warranty, a financial penalty will be imposed. The penalty will either be £10,000 or 10% of the sale value, per home.
- The Levy
The Levy is one of the ways that the government is seeking to pay for the remediation of building safety defects. The Levy will apply to all new residential buildings in England that require building control approval (regardless of height).
Exclusions from the levy include affordable homes and community facilities such as NHS facilities, care homes and developments of fewer than 10 units.
The actual rate of the Levy will be set out in secondary legislation and will be charged per square metre of the development. It will be adjusted depending on the geographic location of the local authority and there will be a 50% reduction for brownfield sites.
If the Levy is not paid, the building control completion certificate will not be able to be issued by the local authority.
In light of the above, property developers should begin engaging with their warranty providers, particularly if any agreements with them are being renewed. It would also be wise to budget for any consequent increase in insurance premiums and the Levy into their development costs.
If you’d like help on further commercial property matters, our Commercial Property team can help. Find out more about it, and how to get in touch, here.