The Week That Was - 18 August 2023

Welcome to The Week That Was, a round-up of key events in the construction sector over the last seven days.

New draft Residential Retrofit Standard for surveyors

RICS have proposed new Retrofit Standard for residential properties. The new standard primarily focuses on ensuring homes are more energy efficient. 

The consultation on the draft is open until 12 September 2023. 

Read RPC's article on the standard here.
 
Housing Forum raises concerns over second staircases

The Housing Forum, a cross-sector body for the housing sector representing organisations ranging from architects and manufacturers to developers, housing associations and local authorities, has written to Michael Gove over concerns regarding the requirement for second staircases in buildings over 18m.

In its letter to Mr Gove, the Housing Forum expresses concerns over the core purpose for the second staircase, including whether one staircase is intended for residents and the other for fire-fighting, or if the second staircase is an alternative escape route for residents. 

The Housing Forum also calls for urgent and very clear clarification of transitional arrangements and raises concerns regarding the technical specifications for second staircases.  It says that the requirement is leaving housebuilders with the option of significantly reducing the number of new homes they provide or facing significant increased costs at a difficult time in the housebuilding sector.  It has therefore called for further discussions on the point. 

The letter is available here.  
 
Construction output increases in June

The latest update from the Office for National Statistics showed that, following three consecutive falls, monthly construction output increased 1.6% in June 2023, which represents an increase of £249 million in monetary terms compared with May 2023.

Infrastructure new work and non-housing repair were the largest contributors to the monthly increase, increasing 4.7% (£116 million) and 3.4% (£102 million) respectively. 

The quarterly construction output also increased by 0.3% (£137 million) in the second quarter of 2023.  This was solely due to the increase in output in June 2023 following decreases in April and May 2023.     

The annual rate of construction price growth was 4.6% in the 12 months to 2023, which had slowed from record annual price growth of 10.4% in May 2022. 

However, total construction new orders in the second quarter of 2023 decreased by 7.1% (£786 million) compared with the first quarter of 2023.

The statistical bulletin is available here.
 
Product manufacturers yet to comply with UK Government request for remediation contribution

In April 2023, Michael Gove wrote to investors in Kingspan, Arconic and Saint-Gobain, urging them to use their influence to encourage those firms to engage constructively to provide a contribution towards fixing unsafe buildings.  So far, all of the firms have been reluctant to engage and little progress appears to have been made; the companies have not paid a penny towards remediation costs.

However, in the recent House of Commons debate to mark six years since the Grenfell Tower tragedy, Mr Gove made clear his intention to continue pursuing these manufacturers and specifically appealed to their investors: "the sights of my Department are trained on these manufacturers… there will be legal and commercial consequences should they fail to make satisfactory arrangements.  I believe that responsible investors can join all of us in this House in bringing pressure to bear, because their wider obligations to society and their commercial interests are one and the same" (our emphasis).  It remains to be seen whether the Government will take any further steps (beyond publicised demands in writing) to compel the companies to make a contribution towards remediation costs.

To read more, please see the debate here.
 
Responsible Actors Scheme

On 24 July, the Responsible Actors Scheme (RAS) was launched in England using powers conferred by the Building Safety Act 2022. Developers asked to join will be required to pay for the remediation of life-critical fire safety defects in residential buildings of 11m and above that they either developed or refurbished in the past 30 years. 

Developers invited to join the RAS were previously required to demonstrate their commitment by signing a developer remediation contract. As of 14 August 2023, only two companies remain on the list of developers that have not signed the contract: Rydon Homes and Abbey Developments.

Recipients of a RAS invitation will have 60 days to either ‘accept’ and join the ‘members’ list or ‘decline’ and join the ‘prohibitions’ list.  Those not invited may also request or volunteer for membership. If a developer declines and is on the ‘prohibitions’ list, this will mean it is prohibited from securing building-control approval and from carrying out major development. 

The RAS is therefore intended to compel developers to take responsibility for remediation costs.  The alternative to accepting membership is effectively exclusion from the English market for developing residential buildings.  

You can read more here.

Crooked House demolition

The building in Himley, described as “Britain’s wonkiest pub”, was pulled down with an excavator on 7 August, two days after a fire which the police are treating as suspected arson.

The trade body for the demolition industry, the National Federation of Demolition Contractors (NFDC), has condemned the knocking down of the 18th century Crooked House pub in Staffordshire, with a spokesman saying: “To classify what has happened at The Crooked House pub as demolition does a disservice to an entire industry of skilled professionals."

The NFDC said a responsible contractor would have obtained local authority permission, carried out an asbestos survey and a structural survey and set up exclusion zones with warning signs for the public, in order to make the job safe, none of which appeared to have happened here. 

Read more on Construction News here.
 
New building safety regulations come into force

The Building Safety (Leaseholder Protections etc) (England) (Amendment) Regulations 2023 came into force on 5 August 2023.

These Regulations make amendments to the existing leaseholder protection regulations to address issues raised in: (a) the report of the Joint Committee on Statutory Instruments; and (b) two Judicial Review applications against the regulations.  In particular, they amend and clarify the regulations to ensure they have effect in the way originally intended. 

More details can be found in the explanatory memo here.

Two cases confirm you cannot commence true value adjudication while smash and grab adjudication on-going 

The Court of Appeal in S&T (UK) Ltd v Grove Developments Ltd [2018] EWCA Civ 2448 confirmed that: (a) section 111 of the Construction Act 1996 creates an immediate obligation to pay the notified sum; and (b) the right to adjudicate (under section 108) is subjugated to that right.  

In Bexheat Ltd v Essex Services Group Ltd [2022] EWHC 936 (TCC), O'Farrell J held that, unless and until a party has complied with its payment obligation under section 111, it cannot commence or rely on a true value adjudication.

Read the Bexheat judgment here.
 
Authors for this week's edition: Paul Smylie, Liz Johnson, Ciara Stewart, Alexandra Anderson and Aimee Talbot

Disclaimer: The information in this publication is for guidance purposes only and does not constitute legal advice.  We attempt to ensure that the content is current as at the date of publication, but we do not guarantee that it remains up to date.  You should seek legal or other professional advice before acting or relying on any of the content.