Government issues six-week deadline for developers to sign up to remediation contract01/02/23
Michael Gove has announced that property developers have six weeks to enter into a ‘remediation contract’ with the government or else face “significant consequences” such as being barred from obtaining planning permission and withholding building control sign off for their prospective schemes.
In this insight we discuss how this announcement came to be, what the remediation contract does and the potential issues for procurement.
Where has it come from?
On 10 January 2022, the Secretary of State set out three principles the government will use in its approach to safety in construction works: proportionality, protecting leaseholders, and holding industry to account. These principles focus heavily on defective cladding in high-rise buildings, following the tragedies at Grenfell in 2017 and subsequent inquiry into cladding safety.
The government’s view is that more needs to be done by developers to resolve existing cladding defects, and their new remediation contract is intended to be a tool for achieving this.
What does the remediation contract do?
The terms of the remediation contract require developers to identify, assess, and carry out remedial works to unsafe buildings built or refurbished over the past 30 years. It is estimated that the contract will cost developers roughly £2bn to perform these obligations.
The force behind the remediation contract however stems from The Building Safety Act 2022 (Act). Under the Act the government has the power to introduce Building Industry Schemes which developers must comply with.
Michel Gove has confirmed that using these powers the government will be creating a Responsible Actor Scheme (RAS), with details to be issued in the spring. Developers will be required to commit to the RAS or they will be prevented from commencing new development or blocked from obtaining building control sign-off.
Entering into the new remediation contract will be compulsory in order for developers to become responsible actors under the RAS. Failure to sign up or comply with it will therefore effectively blocking them from developing.
A knock-on effect for public procurement?
The government press release says this will “prevent developers from operating freely in the housing market if they fail to sign and comply with the remediation contract”.
The interrelationship with procurement rules is yet to be confirmed but we would envisage that moving forward confirmation of sign-up to the RAS will form part of the qualification requirements for contracts.
What developers and housing associations need to know
The bottom line is that the government are threatening serious consequences for those developers who decide not sign up to the remediation contract. Developers need to be aware that they may be prevented from progressing or bidding for new build schemes if they fail to sign up. Housing associations will need to consider their procurement requirements to ensure developers are meeting the new Building Safety requirements and incorporate suitable qualification requirements.
How Capsticks can help
Our Housing and Regeneration team offers extensive construction, development, and procurement knowledge, and regularly acts for contracting authorities, bidders, and G15 housing associations.
Please contact Chimi Shakohoxha or Katrina Day for further information.