What constitutes a high-risk building? Investors and insurers are looking beyond the inconsistencies within the Building Safety Act to ensure greater fire safety protections, says Steven Rodd, partner at Workman LLP

Following the Building Safety Act’s registration deadline in October 2023, this year will see the finalisation of the new building safety framework as first envisaged by Dame Judith Hackitt in 2018 and then specified within the BSA in 2022.

New responsibilities will come into force in April. To meet these, we are working with a diverse group of residential developers, landlords and owners to ensure that building safety case reports are prepared on time and to create the necessary golden thread of information.

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Though the residential sector is rising to the task set by the BSA, the work needed is complex and requires dedicated resource and specialist advice. Beyond evaluating a myriad of existing data and reports to compile the necessary documentation, fire safety specialists are also conducting desktop research and arranging in-person surveys. At the same time, they are also liaising with occupiers on works being undertaken.

>> Also read: How the Building Safety Act is changing construction – and how to keep up

>> Also read: Building safety: it’s a team game

Despite these significant obligations, it is perhaps surprising that there is strong disagreement about which buildings should actually come under the act’s jurisdiction. So let’s start with some quick definitions.

Section 65 of the Building Safety Act specifies that many new reporting requirements and safety procedures apply principally to higher-risk buildings, loosely defined as those which are at least 18m, or seven storeys, high and contain at least two residential units. So far so good.

The act goes on to state that a residential unit is either “a dwelling” or “any other unit of living accommodation”, which expands its applicability to include both traditional PRS or privately sold apartments as well as newer models such as PBSA, co-living or BTR.

This expansive definition is however curtailed by provisions found within the Higher Risk Building (HRB) Regulations, enacted in 2023, which exclude buildings comprised “entirely of care homes, hospitals, barracks, secure residential institutions and hotels” from the definition of HRBs.

There remains deep scepticism from both investors and insurers regarding the exclusion of hotels from the definition of an HRB.

During the consultation process for these supplementary regulations, there was broad support for the exclusion of some of these asset types; namely barracks, prisons and secured institutions. Respondents acknowledged that it would be hard to design them within the parameters of the BSA. However, there remains deep scepticism from both investors and insurers regarding the exclusion of hotels from the definition of an HRB.

The government’s justification for such an exclusion is that hotels, unlike many traditional residential buildings, are “staffed 24/7, have multiple routes of escape, signage and emergency lighting to assist evacuation and have a higher level of detection and alarm systems”.

In 2021, then housing minister Chris Pincher stressed to the House of Commons that hotels were already covered by the 2005 Fire Safety Order. Indeed, the government has also argued that hotel occupiers are traditionally temporary residents, implying that the factor which separated residential assets from hotels was the length of stay of their residents.

However, current government guidance is inconsistent with this, since the  definition states that hotels are “buildings which provide overnight accommodation for customers for leisure or business”, but also that hotels are “excluded regardless of how long these buildings are occupied”.

So, is the nature of the building, rather than the length of occupancy, the defining factor? Why then does the government include “serviced apartments” within the HRB regime?

Though no distinguisher is given between “serviced apartments” and, say, larger hotel rooms, it is our understanding that the provision of some amenities (such as lounges, kitchens, or closets) may be what divides them.

My opening gambit about the challenge of definition now becomes evident. Critically, where does this leave our industry and the investor community at large?

There is growing awareness within the sector that this muddled division between lengths of stay, amenity provision and tenure type is not just confusing but also unnecessary. Indeed there are signs that the government has realised this and may be preparing to bridge this gap.

When the Welsh government consulted on its proposed regulations in late 2023, it found that more than half (55%) of respondents did not agree with the exclusion of hotels from the act. Many noted that hotels are often more densely occupied than traditional residential assets, with guests significantly less familiar with their surroundings than would ensure a safe evacuation.

Although they decided to mirror England in excluding hotels, the Welsh government did note that a “significant piece of research” was being undertaken this year by the UK government to reconsider including hotels.

Any retroactive expansion would also mirror the government’s previous approach to fire safety. In 2022, it expanded the 2018 external wall combustible materials ban to include the hotel sector. Michael Gove, the secretary of state, highlighted this measure as a demonstration of the Department for Levelling Up, Housing and Communities’ commitment to fire safety across the built environment.

This “above and beyond” mentality is a theme we have noted across the industry

While we welcome this research, our operational experience suggests that real estate owners are not likely to passively wait got clarity, if indeed it does materialise. Proactive investors and developers are increasingly incorporating hotels into their HRB frameworks regardless of the regulations – collecting the necessary data and setting up the required protections needed to comply with the act – while marketing their fire safety credentials and, arguably, doing the right thing by millions of hotel customers.

This “above and beyond” mentality is a theme we have noted across the industry, with investors taking precautionary steps in a bid to pre-empt and more cost-effectively comply with regulation that is still making its way over the legislative horizon.

My sustainability colleagues have observed a similar trend with ESG requirements, as investors elect to exceed minimum EPC regulations, progressively recognising the reputational and investment benefit of designing assets to meet a higher standard than is required – whether for environmental or safety ends.

It is more forward thinking, and easier than quibbling over definitions and waiting for the guidance to catch up. I suspect that it is a trend that will continue.

Steven Rodd is a partner at Workman LLP and leads on the firm’s fire safety team