Real estate development has reached brave new heights. Through the Building Safety Act, introduced in 2022, secondary legislation has been introduced to create a programme of major change for the construction industry, including a new building control regime. Additionally, the forthcoming changes to Approved Document B will introduce an enhanced requirement for all new residential buildings of 18m or above to incorporate additional staircases from 30 September 2026.
Changes to the Building Regulations Regime
The transitional period for the incorporation of the new building regulations regime ended on 06 April 2024. Therefore, the changes will affect all future developments and construction projects starting beyond this date. These changes bring greater accountability to the key stakeholders involved in any project notifiable under the building regulations, with an overarching responsibility placed on the clients. Additionally, the changes bring an increased level of enforcement, with breaches of the building regulations now bearing the risk of a criminal liability punishable with unlimited fines and imprisonment.
The new regime creates a series of duty holders, one of which is the new duty holder, referred to as ‘client’, which has specific legal duties under the new amendments. The ‘client’ is the party for whom the works are being carried out. As such, it is the building owners, asset managers, developers and investors who may need to review their processes and procedures to determine how they will fulfil their new legal duties, such as making legal declarations regarding the compliance of completed works and appointing competent designers and contractors. The project risks associated with the regime change need to be considered early in the appraisal stage of a development. For instance, Higher Risk buildings (HRBs) will have enhanced requirements and will be subject to the Building Safety Regulator’s gateway process with mandatory legal stop points during design and construction.
This will inevitably increase project durations and the required risk allocations for prolongation due to unforeseen circumstances during construction. This will have a direct impact on the commercial appraisal of relevant developments. In the case of a prolonged project duration, debt funding may be required for a greater period, and the rate of return could diminish due to a much later return on capital. Essentially, property professionals involved in development and construction projects will need to do more in the early stages of a project to mitigate the risks that could occur further down the line – the mantra ‘do more and do it earlier’ is wholly relevant.
At Hollis, we’re making considerable effort to remain abreast of the changes and guide our clients through the process. As part of our client care processes, we have formulated a client guidance note which outlines the key points for consideration.
Amendments to Approved Document B
The government’s recently released changes to the building regulations guidance document for fire safety, Approved Document B, introduced the requirement for additional stairs in buildings over 18m and contained the requirements for evacuation shafts. These are essentially an additional sterile core formed of lobbies, stairs, and lifts that individuals can use as a safe evacuation route and rescue in the event of a fire.
These new requirements raise several pertinent points. Firstly, the requirements for multiple staircases and evacuation shafts will occupy a considerable portion of a development’s internal area, reducing the number of units achievable in comparison to the current requirements, thus decreasing the gross development value.
Double-edged sword
So how will developments stack up commercially when the loss of sellable area is factored into appraisals? Communal areas are increasing in size, and the areas that remain will cost disproportionally more due to these larger shared areas. Additionally, there may be an increased financial burden of service charges for the use and upkeep of these areas such as energy consumption, maintenance and repair. For instance, in the additional evacuation shaft’s lifts will need servicing regularly, in addition to lighting and cleaning, among other additional service charge items.
Could this create a two-tier market?
How the changes will affect valuation and investor sentiment on comparable existing stock is yet to be seen. While the government stressed that the changes do not mean single stair residential buildings are unsafe, we may be faced with a lack of consistency in buildings. Some building’s will inevitably have an increased safety standard in comparison to their single stair counterparts.
Noticeably, we may start to see the changes being implemented, or at the very least considered, prior to their formal introduction. The government has provided a sensible transitional timeframe in the sense that the changes to the official guidance won’t be formally brought into use until 30 September 2026. However, it may be likely that we see developers and investors deciding to incorporate the forthcoming changes before the end of the transitional period for the reasons discussed above. It may be that continuing to develop single stair residential buildings will be considered too high-risk now that we understand the changes that are just around the corner.
Home Builders Federation guidance
We work closely with the Home Builders Federation to ensure that we can support our clients in the best way possible. Rhodri Williams, Technical and Sustainability Director at Home Builders Federation has provided further comment and guidance in this area:
The real estate industry is keen to work with the government to provide and deliver safe new homes in line with the guidance and recommendations introduced. The latest update on Part B provided at the end of March still leaves some ambiguity around interpretation for clients, designers and approving bodies, making schemes difficult to approve and fully sign off.
This ambiguity will continue to cause delays and frustrate the delivery of much-needed new homes. We are keen to harness further clarity on design information, such as the updated BS9991, which is due for release later this autumn. Furthermore, approved document Part B has been further updated with modifications that were consulted on last year. These include the addition of sprinklers in assisted living facilities, the replacement of National Classification Standards BS476 with BS EN 13510, and the addition of proof that materials used on exterior walls have an A1 classification on HRBs.
The changes to the guidance come into effect on 30 September 2026. The 2019 edition incorporating 2020 and 2022 amendments will continue to apply where a building notice or an initial notice has been given to, or a building control approval application with full plans made to, the relevant authority before 30 September 2026. After that time and from 01 October 2026 all new applications will need to conform to the new guidance.
It is important to recognise that much work has been achieved in recent years on the safety improvements of HRBs with the introduction of non-combustible external wall materials, sprinkler systems, enhanced fire doors, improved firefighting provisions, and access and egress signage. In addition to enhanced early detection warning systems as compared with legacy buildings of the past.
The need for extensive change
Although we’re considering what these changes may mean for the future of real estate and the professionals involved, it’s important that we remain cognizant of the events that led us here. The tragic Grenfell Tower fire, where fire ferociously propagated across the building’s façade directly leading to the tragic loss of 72 lives, highlighted the need for extensive change in the construction industry.
Grenfell Tower identified a crucial need to make our building practices safer and that is the very sentiment of all the changes brought in through the Building Safety Act and one which all property professionals, owners and investors must advocate for.
Our team of highly experienced project managers, surveyors and engineers work together across Hollis’ service areas to give clients the best advice and maximum value. With our broad range of technical expertise, trusted specialist supply chain, and track record in assisting clients with health and safety and wider compliance matters, we are well placed to manage building and fire safety needs at every stage. To find out more, get in touch with Nathan Hooper, Senior Associate and Benjamin Ralph, Head of Building safety and fire.
