BTR Development Will Be Hit By The New Building Control Bill

Build-to-rent landlords and developers should brace themselves for a ”significant impact” from the UK government’s Building Safety Bill, published this week.

The warning comes from Alistair Allison, managing partner at TFT, who said the draft legislation could impose new costs and liabilities on the still-nascent build-to-rent market.

The BTR sector is still digesting the proposals, which introduce new design procedures and more than double the amount of time, from six to 15 years, that residents can seek compensation for substandard construction work. The changes will apply retrospectively. This means that residents of a building completed in 2010 would be able to bring proceedings against the developer until 2025.

"The changes proposed by the Building Safety Bill will have a significant impact on BTR as many even relatively modest structures will be caught by the definition of a higher risk building — those equal to or more than 18 metres or more than six storeys,” Allison said.

“Ultimately, landlords who are keen to provide quality provision for the long term have a lot less to fear than ‘cheap and cheerful’ operators hoping for a quick return on their money.”

Allison said the proposals will put additional strain on a skilled workforce already in short supply. It will also raise further issues with public indemnity insurance.

“The PI insurance market is a huge issue at the moment — both fire consultants and contractors are either seeing their premiums rise considerably or they are not being offered cover at all,” he said.

The extended design process will also impose more costs.

“There will be immediate additional costs," he said. "Starting with fees associated with the extended pre-construction programme and more developed designs, procurement for longer-lasting materials or products with enhanced fire resistance, and sprinkler systems. More specialist personnel who will also be more in demand will include client site supervision, building safety manager, accountable person and those responsible for information gathering/storage.

“For those landlords looking to complete internal inspections to get ahead of that timeline, access difficulties could hold them back. With shorthold tenancies — typical for BTR — there is often limited legal right to inspect someone’s flat. The upshot is that landlords could struggle to understand the scope of any defects, or will have to wait longer to carry out those inspections.”