Under Construction: Legal developments within the UK Construction Industry | March 2024

Landmark decision rules against building owner in first contested remediation contribution order 

The first contested application for a remediation contribution order (RCO) under the Building Safety Act has been handed down in Triathlon Homes v SVDP & Get Living, which clarified that RCOs can be made against a party that was not the original "wrongdoer". 

The decision provides guidance on when RCOs will be made and the types of losses that they cover, and will be of particular interest to developers and building owners. 

Read more about this decision in this Insight. 

A key focus of the tribunal was on whether it was "just and equitable" for an RCO to be made. It concluded that such orders were not concerned with the fault of any one party. They were an independent remedy which places the burden of remediation on developers and landlords deemed to have the broadest shoulders on which to bear the (often very substantial) costs. This is despite the fact that the costs were incurred due to the fault of others. The decision is being appealed by the building owner, who commented that the judgment was "fundamentally flawed". 

"What next for Building Safety Disputes?" was explored by Rebecca Francis and Emily Clements in a recent webinar as part of Osborne Clarke's Disputes Week. Watch on-demand now. 

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New Building Safety Levy consultation 

In January, the government issued a third consultation on its proposals for the Building Safety Levy which will be introduced under the Building Safety Act. The levy will be imposed upon developers of qualifying buildings in England as a means of recouping some of the funds distributed for the remediation of building and fire safety defects in the aftermath of the Grenfell disaster. 

While the government's initial intention was for the levy to apply to higher-risk buildings only, the scope envisaged in the consultation includes all residential buildings requiring building control. Though this is subject to some exceptions, the new scope of the proposed levy is broad and includes purpose-built student accommodation and build-to-rent properties. Under the current proposals payment of the levy will be a condition of receiving building control sign-off. 

The consultation closed on 20 February and the government's response is now awaited. No timeline for the implementation of the levy has been provided to date. 

In other building safety news, the Welsh government recently published regulations which amend the building control regime in Wales from 6 April 2024. The regulations primarily involve a shift from the previous system of building control professionals to the new regime of registered building control approvers and registered building control inspectors. They also make transitional provisions relating to building control and the function of building control professionals, creating a transitional regime that operates until 1 October 2024. 

Biodiversity net gain regime comes into force 

The new biodiversity net gain regime, which imposes mandatory requirements for developers to evidence a net gain in the biodiversity of a site it is developing, came into force last month. From 12 February 2024, a minimum biodiversity net gain of 10% will be a statutory requirement which applies to the majority of planning applications. 

Developers will now have to consider how best to deliver and maintain the gain and are facing additional costs as a result of the changes. This may result in landowners charging a premium on developments where achieving a 10% gain is more straightforward.

Read more in this Insight. 

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Building the Future Commission: the Long-term Plan for Construction 

Building magazine has published a major report titled "The Long-Term Plan for Construction" to mark its 180th anniversary. The wide-ranging report makes recommendations on 11 key challenges facing the UK construction industry, including structural changes to government, reforms to public sector procurement, planning system reform and introducing whole-life carbon regulation. 

The recommendations include changes to regulation, policy and industry practices. One of the principal issues the report considers is the decarbonisation of the construction industry and the need to improve the performance of existing built environment stock in line with the UK's net zero 2050 commitment. 

While investors generally perceive climate change as a financial risk and the majority of companies want to occupy net zero buildings to meet their corporate social responsibility obligations, other sectors of the industry continue to lag behind. Reasons for this range from the additional costs involved when utilising sustainable solutions to a lack of knowledge and skills. For example, the sustainability performance of new-build housing is almost entirely driven by building regulations. 

The report offers a number of potential solutions, including whole-life carbon regulation, for which it recommends the government should:

• Introduce Part Z of the Building Regulations to regulate embodied and whole life carbon as soon as possible, together with an industry-backed knowledge hub, to set and support the standard for net-zero targets for different building types currently being developed at industry level.
• Require mandatory reporting against industry-wide baselines, to force rapid change throughout the supply chain. Manufacturers should provide environmental product declarations, or equivalent, for all products so that carbon can be considered more easily and accurately reported in the procurement process. Transparency around contractors' contributions to embodied carbon and energy performance will help incentivise early design development by leveraging the advantages of design for manufacture and assembly, thus reducing contractor "risk pricing" at tender stage. Further incentivisation could be realised by embedding minimum requirements in contracts in respect of such baselines.
• Increase investment in research and innovation, beyond the scope of the Construction Innovation Hub and develop and promote further industry and sector-specific knowledge hubs such as the National Retrofit Hub (which was set up to identify housing retrofit best practice and fill in the gaps in knowledge areas). 

At the heart of the proposals sits the requirement for the government (as the industry's largest client) to lead by example and reform procurement. The report suggests that long-term frameworks should be established to promote greater efficiency through standardisation and that projects should be audited to ensure the above principles are adhered to. 

Ultimately it is clear that in order for the industry to be successful in achieving net zero targets in future, early engagement throughout the whole supply chain will be essential.