The impact of delays at the Building Safety Regulator on high-rise developments

Recent delays at the Building Safety Regulator (BSR) are causing significant disruptions in high-rise residential development across England.

New regulations

The 2022 Building Safety Act introduced a new regime specifically targeting high-rise residential buildings, care homes or hospitals over 18 metres in height, or over seven storeys (HRBs). These buildings are now subject to stringent “gateway” checks at three critical stages: planning approval, prior to construction, and prior to occupation. The aim is to ensure that safety is prioritised throughout the development process. However, the BSR's current delays are undermining the effectiveness of these regulations, causing significant disruptions in the construction timeline.

How the Gateway 2 and 3 process differs from the existing building control process

The new BSR will serve as the building control body for all HRBs, meaning applicants will no longer have the option to choose their building control body. Building control approval must be obtained before starting any building work, before making significant changes during construction, and upon completion of the building work. Breaching these requirements will be considered an offence. Additionally, new documents will be required in building control applications to demonstrate compliance with building regulations, with a particular focus on building safety.

Potential financial strain

The delays at Gateway 2, which must be passed before construction can begin, can be particularly problematic for developers. These hold-ups are making projects more costly and harder to initiate, putting financial strain on developers and potentially jeopardising the viability of some projects.

Lender and developer takeaways

Given the current regulatory environment, it is crucial for lenders and developer-borrowers to carefully consider the implications of these delays in their finance documents. Particular attention should be paid to any development milestones or required completion dates that could trigger events of default under a loan agreement. Ensuring that these dates are realistic and account for potential regulatory delays can help mitigate financial risks and avoid unnecessary complications.