Building Safety Act compliance: Who owns the risk at gateway three?

After a challenging start, the Building Safety Regulator (BSR) has been finding its feet this year. Re-established as an arms-length body in January under new CEO, Charlie Pugsley, the BSR has focused on tackling a significant backlog of schemes through gateway two of the regime, while improving engagement with industry. The objective has been to unblock the stalling pipeline of higher-risk buildings that is fundamental to the government’s housebuilding drive.

The regulator is also getting better at its own PR, having made a concerted effort to talk up the work it is doing and issuing regular updates on the number of gateway two approvals.

However, the housebuilding industry remains alert to future challenges at the regime’s third – and final – gateway. Figures released by the BSR for the first time in early July show that, while some remedial works have been signed off, no new-build developments have yet reached that stage.

The regulator will be keen to avoid a repeat of the backlog at gateway two, where many applicants had their fingers burned, and as a result it now has a clear role to play in reassuring developers that reaching the final hurdle is achievable and projects remain viable. 

The onus is on developers – and their principal contractors – to show that the decisions taken during the design stage are robust, still in place and have been executed when at the final pre-occupation hurdle. 

The fundamental change for industry is that iterative design and build between the second and third gateway is not an option unless the developer wants to make very small changes or submit a further submission to the BSR.

The onus is on developers – and their principal contractors – to show that the decisions taken during the design stage are robust, still in place and have been executed when at the final pre-occupation hurdle. While building control sign-off remains evidence - though not definitive - of compliance, the more difficult question is who carries the risk of delay at gateway three. That makes early engagement on risk allocation essential, whether through Liquidated Asset Damage (LADs) holidays or early handover arrangements to avoid disputes at the end of the project.

The importance of the golden thread

The Building Safety Act did not materially change the nature of the evidence needed to prove that a building is safe, but it did change the volume of this material, its importance as a condition precedent to occupation and how it is coordinated and owned between parties.

Prior to the act, documentation risked being distributed across the supply chain and elements being uncollected. Now, the thread of information and decision-making must be detailed, available online and maintained and updated throughout a project’s lifecycle.

The golden thread has become important not only to demonstrate compliance, but because of its ability to act as legal evidence in determining liability for any delays and any defects detected down the line.

This relies on the principal designer and principal contractor being front and centre of the discussion, coordinating who owns which part of the design process and having a named person who oversees it, bringing all the information together. They should be able to demonstrate to the regulator how decisions were made, who was responsible for them and any updates that have been made, rather than assuming the regulator will be happy. Complacency could risk a journey back to gateway two to retrospectively approve new designs.

Equally, thinking of the gateways as solely being sequential would be a mistake, because this critical preparation for gateway three doesn’t start when you pass through the second gateway and start construction – it starts when you are drawing up contracts with the supply chain. Appointing a principal contractor who acknowledges the risk and delegates it effectively is crucial. This means that even if delays or defects are found, it’s clear who owns what and where the burden lies.

What can the regulator do?

There are some changes that the BSR should make now to keep things moving. An effective move would be to assign a case controller to each project, as has been done with larger developers and housing associations. The regulator’s Innovation Unit could be seen as tacit admission of the direction of travel with specialist teams and improved capacity. Of course, the challenge in rolling this out to all will be attracting the right people with the right qualifications to deal with the workload. 

Risk cannot be left in a neutral space, it needs to be acknowledged, agreed and delegated to the right parties 

However, there are also several easy wins to be had, particularly in building better industry relationships. For example, having the ability to pick up the phone to someone at the BSR to answer queries that are not obvious in the guidance rather than a restrictive question box.

It’s clear that the onus of getting homes through the final gateway is on both the regulator and industry partners. The former has work to do on collaborating more with industry – while recognising the work already underway. Getting this right will give developers the confidence to build.

Meanwhile, for industry partners, risk cannot be left in a neutral space, it needs to be acknowledged, agreed and delegated to the right parties. It will not just make for an easier build process, but save all those involved from a painful dispute process later down the line.

Charis Beverton is a partner in Winckworth Sherwood’s construction team