Written evidence submitted by RICS [BSB 368]
The Royal Institution of Chartered Surveyors (RICS) is pleased to respond to this Call for Evidence by the Housing, Communities and Local Government Committee (HCLG) covering the pre-legislative scrutiny of the Building Safety Bill (BSB).
Established in 1868, RICS is the largest professional body of its kind for professionals in property, construction, land and related environmental issues, setting and upholding professional standards for 125,000 qualified professionals and over 10,000 firms.
Under the terms of our Royal Charter, we maintain the profession for the public advantage by regulating both individual qualified professionals and firms that have registered for regulation by RICS.
We are not a trade body; we do not represent any sectional interest, and under the terms of our Royal Charter the advice and leadership we offer is always in the public interest.
The issues faced with combustible cladding are only one component amongst a complex industry wide building safety problem that was revealed following the Grenfell Tower fire. Since then, RICS has been heavily involved in the review of building safety across our built environment, both globally and in the United Kingdom. We therefore welcome an opportunity to share our views on the issues relating to this call for evidence.
- RICS considers that the Bill does go some way to improving building safety and ensuring public protection however, we believe it could be improved by reducing its length and complexity, ensuring a more cohesive regulatory framework, creating clarity for existing building owners, and combining the Building Safety and Fire Safety Bills.
It is also important to recognise that the Bill alone will not bring about the culture change needed to create a safer building lifecycle. Dame Judith Hackitt’s Independent Review of Building Regulations and Fire Safety exposed the extent of cultural issues across the sector and to achieve the systemic changes required to make an impactful shift from these cultural norms, new behaviours must be embraced at all levels in the construction lifecycle. This will require a comprehensive and coordinated improvement in competence standards throughout the industry. The work of the Competence Steering Group and Built Environment Competence Standards (BECS) Strategy Group are only the starting point in realising this transformation.
- RICS has four main areas of concern with the Bill as currently drafted.
The aim of this Bill should be to provide certainty and transparency. As it currently stands it does not deliver on this ambition, as it is unclear and too complex. A great deal of the detail, particularly in respect to the regulatory framework, should be left to secondary legislation or for the new Regulator to consider.
- Fragmented Regulatory Framework
The proposed regulatory system is only for high-risk buildings and will therefore immediately create a two-tier system of regulation for buildings. We are also concerned that there may be different regulatory requirements for what are currently Local Authority Building Controllers and Approved Inspectors.
- Existing Buildings
We believe there is a lack of clarity within the Bill about the treatment of existing buildings, especially in respect to accessing the building safety fund. There is also a lack of clarity regarding at what point the Accountable Person and Building Safety Manager become responsible for existing buildings and the costs associated with this.
RICS is responsible for the Secretary of State approved Service Charge Residential Management Code, which is used by local authorities, housing associations and managing agents across England in the setting of service charges in respect of the management of residential leasehold property. The Service Charge Residential Management Code is also used by legal professionals and the First Tier Tribunal when dealing with disputes. The Code, now in its third edition, is widely accepted as the benchmark for setting service charges.
Part 8 of the Code sets out the approach that managing agents should take to health and safety and covers areas such as water risk assessments, electrical safety, and gas safety. The introduction of a Building Safety Charge, without taking into account the existing provision for service charges and the existing costs that leaseholders pay with regards to building safety, is illogical. If the Building Safety Charge is set up, as proposed, monies collected currently through service charges relating to building safety will need to be moved to the new Building Safety Charge. Moving money from different accounts comes with the risk that mistakes will be made, whilst creating confusion for leaseholders and increasing their administration costs.
RICS, along with The Property Ombudsman and a Steering Group led by Baroness Dianne Hayter are currently working on an overarching code for property agents, based on the principles set out by Lord Best in the ‘Regulation of Property Agents Working Group, Final Report, July 2019’. The work will also include a series of sector codes that cover all aspect of the residential property agents, including block management. The work on the block management sector code is due to begin this month and we would welcome an early meeting with officials to discuss the Building Safety Charge in order to avoid divergence, confusion and potential legal problems.
- It is also important to highlight that having two separate bills (The Building Safety Bill and the Fire Safety Bill) being implemented separately by two different Government departments could lead to potential for gaps and inconsistencies.
Answers to Specific Questions
Question 1: How well does the Bill, as drafted, meet the Government’s own policy intentions?
- The policy priorities have been set out in the Government’s April 2020 Building a Safer Future, the Government response, and the MHCLG BSB Impact Assessment, as well as the the four points within the explanatory document. We have based our response to this question on the four points in the explanatory document that set out Government’s intention to:
- create a more effective regulatory and accountability framework to provide greater oversight of the building industry;
- introduce clearer standards and guidance;
- put residents at the heart of a new system of building safety, empowering them with more information, engaging them on how risks are managed in their building and ensuring effective routes for raising and escalating safety concerns; and,
- help to create a culture change and a more responsible building industry, from design, through to construction, management and refurbishment.
- We believe that the creation of the Building Safety Regulator will create a more effective regulatory system, with the enhanced levels of enforcement necessary to tackle the shortcomings in the current building safety regulatory procedures. The systemic change a new Regulator should bring is necessary to prevent the type of conditions that led to the Grenfell fire for in scope buildings, but we urge Government to go further with a transition to all buildings, over time.
- The Bill has helped address the absence of resident’s voices and participation in fire safety awareness and decision-making through the obligations of the Accountable Person and the Building Safety Manager (BSM), it has also provided a suitable escalation process with the Regulator.
- The draft Bill addresses the need for increased accountability, particularly in the operational phases of high-risk buildings through the introduction of the Accountable Person and Building Safety Manager roles.
- However, the Bill is a highly complex document, and as the intended legal framework for safety in buildings going forward, it is unclear how the document will help to introduce clarity as a result.
- The Bill was released with a substantial guidance note, which adds to this complexity and makes navigation difficult. Some sections would benefit from simplification. We would also note that there is a substantial amount of clauses for the Secretary of State to follow up with further regulations, meaning that long term clarity and timescales of implementation are difficult to forecast.
- The aim of this Bill should be to provide certainty and transparency. As it currently stands it does not deliver on this ambition, as it is unclear and too complex. We would also add that the Bill, in itself, will not bring about the culture change needed to create a safer building lifecycle.
- Industry should have to implement and adapt to the new competence requirements set out by the Competence Steering Group (CSG) for Building a Safer Future; however it is not clear how it should do this, beyond the three defined roles of Principal Designer, Principal Contractor and Building Safety Manager. We recommend that all the roles reviewed in detail by the CSG are brought into scope for all buildings.
Question 2: Does the draft Bill establish an appropriate scope for the new regulatory system?
- RICS has been calling for the creation of a Building Safety Regulator and we are pleased to see this set out in the draft Bill. That said, we want to highlight several points.
Fragmented Regulatory Regime
- The proposed regulatory system for buildings is only for high-risk buildings, which will immediately create a two-tier system of regulation. While it is appreciated that the Secretary of State will have the power to amend the definition of high-risk buildings, presumably to encompass more building types over time, it will create two significantly different processes of regulation for building types. A clear transition timeline for any further buildings coming into scope must be set out to create clarity.
- We understand the Regulator will be responsible for ‘fire and structural’ concerns only. We are concerned about how other aspects of building systems will be regulated to avoid potential confusion through two separate regulatory systems. To mitigate this aspect, there should be a clear transition plan for all buildings to be considered under the Regulator. We would strongly suggest the Government looks to extend the regulations within the Bill to all building types to prevent a two-tier system.
- We have also received evidence of concerns from existing Approved Inspectors over the likelihood of a two-tier approach between what are currently Local Authorities and Approved Inspectors. To achieve future registration as ‘Building Control Approvers’, Approved Inspectors will have to meet minimum criteria through oversight of the Building Safety Regulator, while Local Authorities will not.
- This two-tier approach for inspectors will be further compounded by under-resourcing that exists in some Local Authority Building Control departments. Resourcing the BSR may well take additional personnel from the existing Building Control bodies. We do not believe that the effect on existing Local Authority Building Control staff levels, and sustainability of the profession, has been considered.
- We are also concerned, in the current drafting, at the lack of audit function over Local Authority building control bodies, which we feel is essential and should be subject to the same audit regime as private sector building control. We draw attention to the Future of Building Control Working Group Report which deals with this in depth (https://www.rics.org/globalassets/rics-website/media/upholding-professional-standards/sector-standards/building-surveying/future-of-building-control.pdf).
- Further clarity is required in the definition of a building inspector and building control approver, it is currently unclear what the difference is between these two functions. We recommend that roles and functions are clearly defined and with clear reservation of activities set out.
Building Advisory Committee
- We welcome proposals for the Building Advisory Committee (BAC), to replace the Building Regulations Advisory Committee (BRAC). Criticism of BRAC has suggested that it is too static and fragmented, considering different parts of the Building Regulations with little integration. For example, following the Lakanal House fire there was little evidence of regulatory change, suggesting that BRAC had little power to make any real impact or act quickly. It is clear from the Grenfell tragedy that BRAC was not able to foresee this occurring.
- The BAC must be developed as an evidence-based panel of independent experts ready to organise regulatory changes quickly to provide a more agile and responsive oversight. To ensure a comprehensive approach that avoids duplication or omission, the BAC should advise on all aspects of building safety holistically, and not just building regulations alone. We would further suggest that membership of the BAC is periodically refreshed to avoid stagnation, repetition of membership, free from conflicts of interest, and ensure a best practice review is ingrained into the system. It must have teeth and the ability to publicly flag concerns which are not being implemented in the public interest.
Designated Professional Body
- As one of the leading organisations who collaborated and agreed on the 11 recommendations in the Future of Building Control Working Group Report, we would urge the Committee take note of the recommendations of that report, in particular on the appointment of an independent designated body.
- RICS already acts as a designated body for the Financial Conduct Authority, and we support the powers outlined within Clause 44 and Clause 58X of the amended Act which provide the Building Safety Regulator with the power to delegate regulatory functions for the regulation of the building control profession to and appropriate body.
- There are a number of benefits from designating regulatory functions to another body, these include:
- cost efficiency – delegating to an appropriate existing body with resources and systems in place is more efficient than creating something new.
- preventing duplication – delegation to an appropriate professional body already undertaking regulatory functions avoids overlap and duplication in regulation.
- regulatory relationship and understanding – the designated body will usually already have a relationship with the regulatory population, leading to better understanding of risk and regulatory outcomes.
- In order to achieve these benefits, it is important that the Regulator ensures the designated body has capacity to undertake the functions appropriately and demonstrates the ability to take independent regulatory decisions.
- While we support the direction of Bill, we are concerned that the delegation of functions will only cover individuals and not businesses. It is important to note building control professionals do not work in isolation, and are often working as part of a larger team or organisation (both in private sector building control bodies and in local authorities), with differing culture, systems and controls placed on them. It is therefore important that the delegated body should also undertake the regulation of the organisations in which building control professionals work.
- Lessons should be learnt from the regulation of other professions, where there has been a separation of organisation and individual professional regulation, which has affected the ability of professional regulators to improve professional standards among those on their register (in particular when there are cultural workplace practices affecting professionals), take appropriate regulatory action where required and govern the environment in which professionals operate.
- Choosing to not fully designate regulatory functions of professionals and the organisations in which they work will lead to inefficacies and the ineffectiveness of the regulatory body. In order to include greater oversight of the system in which professionals work, we suggest that Clause 44(58X(2)) is amended to include sections 58Y to 58Z5.
Professional Indemnity Insurance
- Adequate and appropriate professional indemnity insurance (PII) is a key regulatory requirement for the overseeing of organisations undertaking building control activities and integral for upholding consumer protection.
- Clause 51 provides the ability for the Secretary of State to approve a professional indemnity insurance scheme from another body. Should the Secretary of State delegate an approved scheme, the body should be either the regulator or the approved designated body undertaking the regulator’s functions (Clause 44(58X)). This would ensure consistency and avoid a fragmented regulatory and insurance landscape.
Question 3: Will the Bill provide for a robust – and realistic – system of accountability for those responsible for building safety? Are the sanctions on those who do not meet their responsibilities strong enough?
- Overall, we are supportive of the system of accountability that has been proposed. The sentencing guidelines will give the legislation the necessary authority to ensure people comply with their obligations. However, there are several points that will require further clarification and guidance.
Corporate Manslaughter and Corporate Homicide Act 2007
- There is a challenge in how the body corporate will be held responsible. In theory, the Corporate Manslaughter and Corporate Homicide Act 2007 (CMCHA) should be the legislation that is used to address failings by the Accountable Person.
- However, the CMCHA has issues associated with prosecution, which mean that in large organisations it can be difficult to identify where the blame lies and to prosecute successfully, it is worth noting that there have been only 30 prosecutions under the CMCHA since 2007. Under the CMCHA individuals cannot be prosecuted for the offence, whether as an accessory or otherwise.
- The Bill has been modelled on the Health and Safety at Work Act 1974 and the guidance note suggests that clause 114 will allow both the body corporate and/or an individual to be prosecuted, but needs to be made clearer or we will be in the same situation as we are with the CMCHA.
- Organisations acting as the Accountable Person need to be fully aware of their responsibilities and that they can also be held accountable – those organisations will be partly responsible for the ongoing continual professional development (CPD) of staff, for their supervision and for acting on their recommendations. This needs to be clearer in either the legislation or the supporting regulations – where does ultimate responsibility lie – for example a director may be prosecuted but what happens if the Executive/Board agreed with the decision? We also question the introduction of a new term when Responsible Person already exists in the Fire Safety Order.
- For the BSM it is very clear how they will be held accountable. However, they are still employed by the Accountable Person who will have some responsibility for their ongoing CPD, their supervision and for acting on their recommendations. There needs to be a clear line where the BSM has raised issues and the Accountable Person has not acted on these. In addition, there needs to be a pathway to the Regulator for the BSM to raise concerns if the Accountable Person is not acting on them. The Bill should provide further clarity on how to identify the Accountable Person, especially if they are based overseas or are a company, rather than an individual, in particular if that company is no longer in existence
- Placing such accountability on the BSM and named individuals runs the risk for potential issues with recruitment and in accessing insurance. Government should set clear intentions for working with the insurance sector at the outset to ensure that individuals will be able to access PII, and working with the new regulator to set out a clear competency framework for both the Accountable Person and the BSM.
- Government should also use any additional regulations to set out the levels of fines that they would expect to place on the Accountable Person or BSM. This would help with discussions with insurance providers, for example, the range under the CMCHA is specified as £180,000 to £20 million.
- There is also a lack of clarity around existing buildings in this respect, and it is unclear where accountability lies in these circumstances.
- If existing buildings are covered, legislation should be clearer and identify at what point the Accountable Person and BSM become responsible.
- Extension of the enforcement period for contravention of the building regulations to 10 years is welcomed. However, evidence suggests that fines for contraventions on ongoing projects may not have the full effect necessary to ensure compliance, and additional measures such as the Regulator being able to issue stop notices or being able to close a building would be recommended.
- Whilst not addressing the question, we would reiterate an earlier point that there is also need for change to focus and result in a cultural shift in attitude, rather than just having to put in place sanctions for failure.
Question 4: Will the Bill provide strong mechanisms to ensure residents are listened to when they have concerns about their building’s safety?
- No. While it is positive that Government has set out that residents will be listened to through obligations of the Accountable Person and BSM, the Bill does not provide much clarity on how this will be done and in what timeframes, using ambiguous terms such as reasonably practical.
- The Bill also does not ensure that information provided is accessible and easy to understand which will be key in ensuring that all residents can engage with the information that they are provided.
- If residents cannot engage with the information provided, then they will be unable to fully voice their concerns, nor will they understand building safety in a more holistic manner. The Regulations should provide more details on this. The resident engagement strategy should be developed so that it can be consulted on by residents at the point that they move in. Residents should not have to wait for an undefined period of time for the resident engagement strategy if they are to be empowered in the way that the Building Safety Bill intends. With regards to existing residents, regulations should set out an expectation of when a resident engagement strategy will be put in place or in cases where there is a strategy the length of time it will take to review in line with the appropriate Regulations.
- Evidence suggests that resident groups often have knowledge of fire safety issues, construction and cladding within their constituents and their having direct contact with the regulator is considered to be positive, with the potential to provide site-specific evidence and knowledge.
- With reference to our earlier comments that the Bill is complex, the rights and obligations of the residents should be made clearer to ensure they understand how best to apply their voices to the safety processes for their building. We would suggest that Government explores the concept of resident's panels under the BSR and does not limit resident engagement to just high-risk buildings but all residential buildings with more than one household.
Question 5: Is the Government right to propose a new Building Safety Charge? Does the bill introduce sufficient protections to ensure that leaseholders do not face excessive charges and that their funds are properly managed?
Building Safety Charge
Building Safety Charge
- We do not support a new building safety charge. The Building Safety Charge should sit within the current service charge framework set out in the Landlord and Tenant Act 1985 and supported by the secretary of state approved RICS Service Charge Residential Management Code and additional advice to landlords, leaseholders and agents.
- Rather than a separate Building Safety Charge, there should be additional mandatory lines within the service charge statement stating clearly the costs associated with building safety. This can be done in a way that ensures openness and transparency for leaseholders to achieve the stated outcome of the Bill.
- Due to the responsibility, costs of PII and ongoing assessment of the BSM, their appointment will not be inexpensive no matter over how many units the costs are apportioned to; and with extra safety measures and costs associated with the new Fire Safety Orders this could potentially make apartment living unaffordable for existing and new leaseholders. If the Bill goes ahead with a separate Building Safety Charge the costs administration of the charge, along with the costs associated with the BSM and additional measures, could have a long-term impact on the supply of affordable housing, especially shared ownership, which the Government has announced it is looking to increase through the Affordable Homes Programme.
- There is also a lack of clarity on existing buildings and access to the Building Safety Fund. It would appear that the implication is that from 2022 leaseholders will be responsible for all building safety costs, but as these will be set out in regulations, we don't know what they are and could potentially include remediation costs. If this applies to existing buildings this is concerning.
- Government needs to extend its up-front funding dramatically to support a major remediation programme. The remediation programme should be prioritised according to risk, which RICS, along with other appropriate bodies can advise on, and given the very high costs of this Government will need to create a fair and transparent model for recovering funding retrospectively over time.
- The funding of remediation for these buildings could also be a huge positive for the economy at this difficult time. Government funding for faster remediation, including training for more skilled people in this area, would create a wealth of employment opportunities in the supply chain.
- With regards to new buildings there should be a qualification setting out how a contractor or developer will be liable for any costs of a new building not built to standard, not the tenant or leaseholder. Tenants and leaseholders should be given a clear understanding that the Accountable Person will be responsible for recouping all costs associated with remediation works directly from the contractor or the developer and that costs will not be filtered through existing service charge provisions or if introduced the Building Safety Charge.
- Giving leaseholders 28 days to pay a Building Safety Charge from when the bill was issued is not reasonable and could result in hardship for many leaseholders. As stated above we would recommend that collection of the Building Safety Charge is done in line with current service charges and within the existing service charge statement.
- Further, there are likely to be challenges for Local Authorities in meeting the costs of the Building Safety Charge for Local Authority property. It is unclear if the impact of this aspect or the practical consequences of the Building Safety Charge has been considered in current proposals.
- To assess the potential impact of the proposed Building Safety Charge and to ensure that landlords and tenants have understanding on its application, more clarity and examples are required on the items that are expected to be included as part of the charge.
Question 6: Does the Bill improve the product testing regime in a way that will command the full confidence of the sector?
- The Bill as drafted goes some way to improving the current position but needs to go further. RICS supports the principle of better and clearer test results of construction products that are to be used on buildings which may affect building safety. It is essential that designers and contractors are able to ensure that products they specify are safe for use, and compliant with building regulations. Given the Grenfell Public Inquiry information available to date, this country must learn from this and ensure that in future product specifications are easily understood.
- The UK must also be very vigilant against untested imported products that would render a building unsafe - adopting a building safety approach rather than a product marketing approach. As such, further details on who is going to establish ‘safety critical products’ would be required to ensure impartiality and RICS would be in favour of the creation of a committee covering product safety, possibly linked to the BAC, to facilitate independent reviews of product certifications without financial interest. Product safety is another example of a potential silo that could develop in the proposals, and provision for the Regulator to have oversight of this would be welcomed.
Question 7: Is it right that the new Building Safety Regulator be established under the Health and Safety Executive, and how should it be funded?
- Yes. The Health and Safety Executive (HSE) is already a well-established regulator and we therefore agree that it is appropriate for the Regulator be established under the HSE. This reflects RICS’ recommendations on this matter within the working groups that led to the Hackitt report.
- There are numerous ways which a regulatory body can be funded, but the primary method should be through those it regulates. Additional fees paid at key stages by developers or building owners may also be appropriate, but these may be vulnerable to wider downturn in economic conditions and, given the importance of the Regulator’s role, it should have a level of protection from such circumstances. We are therefore of the opinion that the at least some of the funding should be from Government, and suitably ringfenced to protect the future funding in any Spending Review.
- Government should provide their intentions for ensuring the longevity and sustainability of the Regulator and the funding thereof in this Bill, to ensure that annual Spending Reviews will not limit the Regulators effectiveness. Building safety is not an issue which can be vulnerable to future government funding cuts.
- Cost and efficiency savings may be made by delegating regulatory functions to an existing body that already regulates part of the profession. This would be similar to how activities are regulated in other sectors.
Question 8: Does the Bill present an opportunity to address other building safety issues, such as requirements for sprinkler systems?
- In our opinion, technical matters like this are best left to the Building Regulations and guidance in the Approved Documents, as research and improvements in knowledge will make it easier to amend over time rather than amending prescriptive requirements in this primary legislation.
- We would also recommend that ways of upgrading the fire safety of existing buildings are considered in the Bill, for example by imposing upgrade requirements when carrying out refurbishments, in a similar fashion to how Part L captures energy efficiency upgrades.
- We recommend BAC have considerable oversight of this however if not within this Bill.