Guidance

Redress: factsheet

Updated 5 April 2022

This guidance was withdrawn on 25 July 2022

This guidance is withdrawn as it is no longer current. Please see the latest guidance on the Building Safety Act.

Overview

The government is clear that those responsible for shoddy workmanship or supply defective construction products bear the responsibility to make buildings safe.

While some parts of industry have done the right thing and funded the remediation of serious defects, too many are seeking to avoid their responsibilities.

That is why we are providing new rights to redress. We are introducing an ambitious toolkit of measures to enhance the ability of building owners, landlords, homeowners, and leaseholders to seek compensation for defective work carried out on their properties, and the use of defective products. These measures will ensure that those responsible for contributing to the building safety crisis are in line for costs to rectify their mistakes.

Under the new leaseholder protections amendments, building owners and landlords will now be the first port of call to pay for non-cladding historical safety defects in buildings above 11 metres or 5 storeys, not leaseholders. We want them to be able to pursue those responsible for defective work and building owners will be legally required to prove that they have taken reasonable steps to obtain other funding before passing non-cladding remediation costs to leaseholders.

The changes outlined below in this factsheet apply to all dwellings, not just flats:

• The first part of this factsheet addresses the changes we are making to the Defective Premises Act 1972.
• The second part of this factsheet is about section 38 of the Building Act 1984.
• The third part of this factsheet is about Building Liability Orders.
• The fourth part of this factsheet details the new construction product cause of action.

Defective Premises Act 1972

Background

Section 1 of the Defective Premises Act 1972 requires those involved in constructing a dwelling to ensure that the dwelling is ‘fit for habitation’ when the work is completed. The courts have held that dwellings need to remain fit for habitation for a reasonable period thereafter.

If following completion of the work a dwelling is not fit for habitation, a claim for compensation can be brought by the person who originally commissioned the dwelling, or any person subsequently acquiring a ‘legal or equitable interest’ in the dwelling, such as the freeholder of a block, a homeowner, or a leaseholder.

Currently, a claim for compensation can only be brought for unacceptable work related to the ‘provision’ of a dwelling: for example, building a new house or converting offices or a large house to flats. Refurbishment works (such as repairing a roof, installing new insulation, or fitting external cladding) are not currently within scope.

A claim for compensation for unacceptable work which has resulted in a dwelling being unfit for habitation must currently be brought within 6 years of the completion of the work.

What are we going to do?

We are substantially increasing the period in which building owners, homeowners and leaseholders can make a claim for compensation following the completion of defective work.

Through the Building Safety Bill, we are extending the limitation period for claims brought under section 1 of the Defective Premises Act 1972.

The limitation period will be extended retrospectively (i.e. for work already completed) from 6 to 30 years. This means that claims will be able to be brought for work that was completed up to 30 years prior to the relevant provision of the Bill coming into force (i.e. back to mid-1992 if the Bill completes its passage as expected in the middle of this year).

The limitation period will be extended prospectively (i.e. for work completed in the future) from 6 to 15 years.

For future work, we are also significantly expanding the type of work that is subject to the duty under the Defective Premises Act 1972.

We are expanding the Defective Premises Act to include refurbishment and other work to an existing dwelling. This means that contractors who undertake any work on any dwelling (or any building containing a dwelling, such as a block of flats, even if the work is done to a non-residential part of the building) will be required to ensure the relevant dwelling(s) are fit for habitation when that work is completed with respect to that work. If they do not do this, a claim for compensation can be brought.

This change will allow building owners, homeowners, and leaseholders to seek compensation through the civil courts for unacceptable work undertaken in relation to their properties. As this is a new provision, this change will only apply prospectively (i.e. only to work completed following commencement of the Bill).

Who can claim compensation?

Compensation can be claimed by the person who originally commissioned the work, or by any person with a ‘legal or equitable interest’ in the dwelling. This would include the freeholder of a block of flats, a person who subsequently buys a house, as well as leaseholders of flats.

Who can compensation be claimed from?

Compensation can be claimed from anyone responsible for the defective work, such as builders and other contractors, architects or designers.

Who is expected to take this legal action?

The leaseholder protection measures ensure that leaseholders in buildings above 11 metres or five storeys will be protected from costs related to past historical building safety defects because building owners and landlords will be the first expected to pay for them. However, the extension of the limitation period under the Defective Premises Act provides an additional route for building owners, homeowners and leaseholders to recover compensation, through the courts, for both historical and future defective building work.

What if a building owner does not explore whether the provisions of the Defective Premises Act are applicable?

The Building Safety Bill creates a legal requirement for building owners to prove they have tried all routes to cover the cost of essential safety works, along with evidence that this has been done. If this does not happen, leaseholders will be able to challenge these costs in the courts.

Does this just apply to flats in high-rise buildings?

The Defective Premises Act applies to all dwellings in England and Wales, not just to flats in high-rise buildings.

Who will decide if a house or flat is fit for habitation or not?

It is for a court to decide on the facts of the specific case whether a dwelling was fit for habitation at the time the work was completed.

In order for a dwelling to be fit for habitation, it must be capable of occupation for a reasonable time without risk to the health or safety of the occupants, and without undue inconvenience or discomfort to the occupants.

A dwelling can be unfit for habitation even if the defect which has made it so is not evident at the time of completion.

What about wear and tear?

Under the Defective Premises Act, fitness for habitation is judged at the time of the completion of the work.

However, a dwelling can still be unfit for habitation even if the defects which has made it so is not evident at the time of completion, e.g. where inadequate materials were used which means, for example, the building is unsafe to live in.

What if the developer claims that they were just following established practice at the time?

Liability under the Defective Premises Act is ‘strict’. This means that no fault or negligence has to be shown in a claim.

If a building is not fit for habitation due to defective work, then a claim can be brought - there is no space within the Act to consider whether the defendant was at fault, and there is no burden on the claimant to prove that.

It is also not a valid defence in a Defective Premises Act case for the defendant to claim to have followed established practice at the time. What needs to be shown to the court is that the dwelling was not fit for habitation as a result of the work that was done.

How long do I have to bring a claim?

The limitation period under section 1 of the Defective Premises Act will be extended retrospectively to 30 years, meaning that claims in relation to work completed prior to commencement of the provision must be brought within 30 years of the completion of the defective work^{[footnote 1]}.

The limitation period will be extended prospectively to 15 years, meaning that claims in relation to work completed after commencement must be brought within 15 years of the completion of the defective work.

Do the changes apply to work already completed?

The extension of the limitation period under section 1 of the Defective Premises Act as it currently applies will be retrospective. This means that where the defective work was completed in relation to the ‘provision’ of a dwelling, the extended limitation period applies to work already completed.

The inclusion of refurbishment works in the Defective Premises Act will only apply to work completed following the Building Safety Bill becoming law.

What if the 30 years runs out while legal proceedings are still ongoing?

As long as a claim is started, and pursued, within the 30-year time frame, legal action will be able to continue.

Do the refurbishment changes apply to work I do on my own home?

The changes to the Defective Premises Act to include refurbishments only apply to work done on a dwelling as part of a business. This means that an individual doing work on their own or friends’ homes (and not as part of a business) is not within scope of the changes.

When will the changes come into effect?

The changes will come into effect two months after Royal Assent, which is when the Bill has passed through all the Parliamentary stages.

Building Act 1984 (section 38)

Background

Section 38 of the Building Act 1984 has not been brought into force, meaning that, although it was approved by Parliament as part of the 1984 Act, it has never taken effect.

It allows a claim for compensation to be brought for physical damage (e.g. injury or damage to property) caused by a breach of building regulations. For example, if a fire is caused in a property, or if a child living in a flat develops a respiratory condition because a property is damp, due to building work not meeting building regulations at the time the work was done, section 38 will allow the homeowner to seek compensation from those responsible for the damage caused.

Purely financial loss is not covered by section 38, although it is in scope of a Defective Premises Act claim.

What are we going to do?

We will be commencing section 38 of the Building Act 1984 alongside the Defective Premises Act changes, meaning we will be bringing this part of the legislation into force.

We are also legislating to extend the limitation period for section 38 of the Building Act to 15 years. This means that homeowners will be able to bring a claim up to 15 years after the work was completed.

As this provision has not yet been commenced, the provision, including the extended limitation period, will apply prospectively, meaning that it will apply to work done after the section comes into force.

Who can claim compensation?

The person who has suffered damage (either injury or damage to property) as a result of the breach of building regulations can claim compensation.

Who can compensation be claimed from?

Compensation can be claimed from the person whose breach of building regulations caused the damage. This will vary depending on the facts of the case, but could include, for example, a builder whose work breached building regulations.

Which buildings does this apply to?

Section 38 of the Building Act applies to all buildings in England and Wales, not just dwellings.

Building Liability Orders

Background

Property developers commonly set up a subsidiary company with very few assets to own and manage an individual development, and then be wound down once the development is completed.

This practice can be used to secure investment in a project, but a consequence is that it leaves the developer group with no long-term civil liability.

Given the current situation, Government has decided to intervene to help those affected find fair redress for building safety issues.

What are we going to do?

The Building Safety Bill will grant a power to the High Courts which allows them to extend specific liabilities for one company to any other associated companies and make them jointly and severally liable, if the High Court considers it just and equitable to do so. This will be known as making a Building Liability Order, and will ensure that the original developer can be required to fund remediation work.

Which liabilities could a Building Liability Order be applied to?

A claimant can request a Building Liability Order when a claim is made under the Defective Premises Act 1972, section 38 of the Building Act 1984 or any other claim which is incurred as a result of a risk from fire spread or structural failure.

How is associated company being defined?

A company is associated with another company if one of them controls the other (parent companies) or if both are controlled by a third company (sister companies).

How does this policy work with companies based overseas?

The court may choose to apply a Building Liability Order to a company based overseas if it is an associated company, which would be enforced in the normal manner.

New Construction Product Cause of Action

Background

The government is clear that those who have been responsible and continue to be responsible for building safety defects have a responsibility to put them right. There are currently almost no routes which allow construction product manufacturers to be held accountable for their role in the creation of building safety risks that cause or contribute to a dwelling being unfit for habitation.

What are we going to do?

We are introducing a new cause of action that will enable claims to be brought against construction product manufacturers and sellers for their role in causing problems associated with building safety. It will apply if a product has been mis-sold, is found to be inherently defective or if there has been a breach of existing construction product regulations.

If this contributes to or causes a dwelling to become ‘unfit for habitation’, then a civil claim will be able to be brought through the courts under this cause of action. This amendment will be subject to a 30-year limitation period retrospectively and apply to cladding products only. This amendment will be subject to a 15-year prospective period and will apply to all construction products. This mirrors the changes we are making to the Defective Premises Act.

What damages can be recovered?

Persons will be able to recover damages for physical damage (including injury and damage to property) as well as economic losses.

Does the cause of action apply UK wide?

The causes of action will apply to building in England, Wales and Scotland. We are introducing a power to extend this legislation to include buildings in Northern Ireland.

Who can bring a claim under this cause of action?

Damages can be claimed by any person who has suffered a loss as a result of a dwelling being ‘unfit for habitation’. Developers can also recover a contribution under this cause of action from construction product manufacturers, for example if they were sued under the Defective Premises Act.

In cases where the building contains one or more dwellings, compensation can also be claimed from those who have suffered a loss as a result of one or more dwellings being unfit for habitation, for example a landlord who has had to pay to remediate the common parts of the building as a consequence.

Who can have claims brought against them?

Claims can be brought against manufacturers of construction products, and all other economic operators (e.g. distributors) in the supply and marketing of construction products. It will depend on which party is responsible for the product being mis-sold, inherently defective, or in breach of regulations.

1. Where work was done only slightly less than 30 years before the provision comes into force, potential claimants will have at least 1 year to take advice and lodge a claim. ↩