Responsible Actors Scheme – what is it and which developers need to join?

The government is pushing ahead with the establishment of a Responsible Actors Scheme (RAS) provided for under s.126 and 129 of the Building Safety Act 2022.

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. Draft Regulations have been published setting out the detail of the RAS and subject to Parliamentary approval, the government plans for the Regulations to be brought into law in Summer 2023.  

Purpose 

The draft Regulations state that the purpose of the RAS is ‘to secure the safety of people in or about buildings and improve the standard of buildings by securing that persons in the building industry remedy defects in buildings relating to fire safety and contribute to costs associated with remedying such defects’. 

As analysed previously, it will only be developers that have signed the Self Remediation Terms that will be eligible to join. By signing the Self Remediation Terms, these developers have agreed to identify and remediate, or pay to remediate, life-critical fire safety defects in residential buildings over 11m that they have developed or refurbished. 

Eligibility

The draft Regulations provide that the Secretary of State will invite eligible developers to join the RAS.

A list of members of the RAS will be published and maintained. Developers will be eligible under one of the following grounds, subject to meeting a profits threshold:

  1. Principal business residential property development: Developers that have developed or refurbished residential buildings over 11m in England between 5 April 1992 and 4 April 2022 and whose principal business is residential property development.
  2. Buildings eligible for remediation funds: developers that have developed or refurbished two or more residential buildings, which have been assessed - before the date the Regulations come into force - as eligible for a relevant government cladding remediation scheme.

The profit threshold referred to above will be met if the developer has an annual operating profit over a three year period - financial years ending in 2017, 2018 and 2019 - of £10 million or higher.

A developer can also volunteer to join the scheme if they were responsible for developing or refurbishing one or more 11m+ residential buildings in England between 5 April 1992 and 4 April 2022 that would qualify for remediation under the Self Remediation Terms. 

When considering eligibility, a developer will be treated as responsible for the development or refurbishment of a building, if that building was a building for which a company in the same group was responsible for developing or refurbishing between 5 April 1992 and 4 April 2022, even if this was before the companies were in the same group. This may extend eligibility to group companies where a company within the group would be otherwise eligible but does not meet the profit condition. 

Conditions of RAS

Members of the RAS must enter into the Self Remediation Terms - published by the Department of Levelling Up Homes and Communities on 16 March 2023 - and comply with the terms, including:

  • Identifying those residential buildings over 11m in height in England for which they are responsible for developing or refurbishing in the last 30 years, which require remediation of life-critical fire safety defects;
  • Undertake at their own cost, or procure at their own cost, the works necessary to remediate or fully to mitigate any fire safety defects; and 
  • Reimburse any funding received from the government remediation programmes in relation to remediation works on their own buildings.

Eligible developers will be required to join the RAS and comply with the conditions of the RAS. 

Failure to do so will result in them being subject to planning and building control prohibitions. This includes being prohibited from carrying out major development and gaining building control sign-off in England - subject to certain exceptions including that the Secretary of State may disapply this in the case of proposed developments relating to critical national infrastructure. 

A list of prohibited developers will be published and maintained. The Secretary of State can revoke membership of the RAS where a member fails to comply with membership conditions. The government’s Explanatory Memorandum states that the RAS ‘will reduce the risk that developers will delay remediation or fail to remediate entirely’.

Tough measures

The draft Regulations set out the government’s clear intention to maintain pressure on developers to address life-critical fire-safety defects and provide further clarity on the consequences for developers who have yet to sign the Self Remediation Terms.  

To date (2 May 2023), 47 developers have signed the Self Remediation Contract with only a handful identified by the government as yet to sign. 

The Explanatory Memorandum states that ‘the RAS is intended to support a level playing field for major developers in the industry, so that those developers that do make commitments to remediate are not disadvantaged’. 

The Explanatory Memorandum also states that the RAS ‘is to be expanded over time to cover other developers who developed or refurbished defective 11m+ residential buildings and should pay to fix them’. The government plans to issue further guidance on the operation of the RAS by Summer 2023.

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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