Developers have been given six weeks to sign a contract to commit an estimated £2 billion to the repair of unsafe buildings.

The Department for Levelling Up, Housing and Communities (DLUHC) previously announced that over 49 developers had signed a pledge committing to remediate “life critical fire safety works” in buildings over 11m that they were involved in developing and refurbishing in the last 30 years in England. 

These developers had also agreed to reimburse any funding received from the government remediation programme in relation to these buildings. The government is now pushing for developers to turn the pledge into a legally binding commitment by agreeing to the Self Remediation Terms and Deed of Bilateral Contract (Remediation Contract). 

The DLUHC has written to developers stating that it “expects developers to sign the contract as soon as possible” and has given a final deadline of 13 March 2023. Developers have been requested to inform the DLUHC of their timeline for signing the Remediation Contract by 10 February 2023.

The government estimates that under the Remediation Contract developers will commit £2 billion to repair buildings they have developed or refurbished over the past 30 years. This will be in addition to the Building Safety Levy that will be payable by developers and will be chargeable on all new residential buildings in England requiring building control approval. The government estimates that the Remediation Contract and Building Safety Levy will raise £5 billion to make buildings safe. 

Responsible Actors Scheme

Failure to sign the Remediation Contract or to comply with its terms could result in potentially significant consequences for developers. 

The government has announced that secondary legislation will be brought forward in the spring to create a Responsible Actors Scheme (RAS) under s.126-129 of the Building Safety Act 2022. Those developers that do not sign the remediation contract will not be permitted to join the RAS. 

Secondary legislation will be required to set out the detail of how the RAS will work in practice and this has not yet been published. 

For developers that have not committed to the Remediation Contract or failed to comply with its terms, the Secretary of State will have powers to block them from carrying out developments and receiving building control approval. The DLUHC has stated that this will prevent developers “from operating as normal in the housing market for as long as they do not resolve the problems of the past”.

The DLUHC has also stated that failure to sign the Remediation Contract could result in the government:

• making public which developers have failed to sign by the deadline of 13 March 2023 (unless an extension has been agreed with the DLUHC).
• taking steps “to inform investors and customers of the risks arising from continuing their commercial relationships”.
• reviewing “its own commercial relationships, programmes, engagement, and procurement frameworks accordingly”.

The government has issued an ultimatum to developers and failure to sign the Remediation Contract will directly impact their ability to operate in the market – risking existing and future projects. 

For those developers impacted, the Remediation Contract represents a significant financial liability at a time when the industry is facing challenging economic conditions. With Gateways 2 and 3 set to be implemented this year for higher-risk buildings under Part 3 of the Building Safety Act 2022, the industry is set to make significant investment in building safety both for existing buildings and future projects.