Gearing up for the Responsible Actors Scheme

Time is running out for developers that have not yet signed the Developer Remediation Contract.

The Secretary of State for Levelling Up, Housing and Communities, Michael Gove, delivered a clear message last week: “The Responsible Actors Scheme is coming. Only developers who behave responsibly will be trusted to build the homes of the future. Any eligible developers who fail to do the right thing will need to find a new line of work”. 

As covered in a previous update, developers were given six weeks to sign the Remediation Contract to commit an estimated £2 billion towards the repair of unsafe buildings.

The government has now published the key features of the Responsible Actors Scheme confirming that it will only be developers that have signed the Remediation Contract that will be eligible to join. It is proposed that any member of the Scheme must remediate or pay for the remediation of life-critical fire safety defects in residential buildings over 11m that they developed or refurbished in the past 30 years. Developers must also reimburse any funding received from the government remediation programmes in relation to these buildings. Members of the Scheme must also:

  • comply with the terms of the Developer Remediation Contract. This includes keeping residents and the DLUHC updated on the progress of work; and 
  • comply with information requests, to enable the Secretary of State to carry out monitoring and enforcement functions.

Developers that fail to comply with membership conditions may have their membership revoked. The guidance states that additional requirements may be imposed in the future including the application of a ‘fit and proper person test’ to directors and senior managers of members of the Scheme. 

Who can and should join?

The Scheme is initially aimed at major housebuilders and other large developers that have developed or refurbished multiple residential buildings that are known to have life-critical fire safety defects. The Scheme may be expanded in the future. The guidance states that developers will be eligible for the Scheme if they have an annual operating profit over a 3-year period of £10 million or higher and:

  • their principal business is residential property development and they developed or refurbished 11m+ residential buildings in England in the last thirty years; or
  • they developed or refurbished multiple buildings that have been assessed as eligible for a relevant government cladding remediation scheme.

The Secretary of State will contact eligible developers to join the Scheme and developers can choose to either join the Scheme or provide evidence to demonstrate that the eligibility criteria are not met.

Additionally, developers can volunteer to join the scheme if they have developed or refurbished at least one 11m+ residential building that qualifies for remediation. The guidance states that developers that have not been invited by the Secretary of State to join the Scheme can request to join if they provide evidence of eligibility. For group companies, the regulations will provide that the Secretary of State will nominate one entity to join the Scheme on behalf of others in the group.

Failure to join

The government proposes to make public any eligible developers, which fail to join the Scheme and these developers will be subject to planning and building control prohibitions. This will include being prohibited from carrying out major development in England. Developers will also be prevented from gaining building control approval in respect of any building work that requires such approval. 

Developers will be unable to gain building control approval to start work, including through initial notices, as well as completion or final certificates for completed work. In some cases, this may result in a notice to terminate or suspend the work. Therefore, developers that fail to comply with the government’s demands may face draconian consequences. 

What next?

The government intends to implement the Scheme in early Summer 2023 although no firm date has been set. The government first needs to finalise regulations to establish the Scheme under sections 126-129 of the Building Safety Act 2022 and these are due to be published in Spring 2023. These regulations will contain the detail of how the Scheme will operate. 

Disclaimer

This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2024.

 

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