In our penultimate article on Manchester’s intention to become a zero carbon city by 2038, we consider this week the built environment, the measures available to help contribute to objectives, and the implications for those involved in the management and/ or transaction of real estate.

Manchester’s Climate Change Framework estimates that housing, and the built environment generally, may contribute up to 30% of the city’s total carbon emissions. Real estate is therefore considered to be a key driver in efforts to achieve carbon neutrality, with buildings being categorised as ‘net zero’ if they have no net carbon emissions during either their construction or operation.

However, the obstacles to overcome to achieve this objective are two-fold: not only is it necessary to remedy defects or environmentally prejudicial characteristics within existing stock, which includes those premises constructed before there was the current awareness of climate change; but in addition, net zero requires that those buildings yet to be designed or constructed also contribute to the target to be achieved.

What has Manchester done to date?

Despite the enormity of the task at hand, numerous retrofitting measures are commonly available, for example: installation and upgrade to energy-efficient lighting; high efficiency boilers; installation of double-glazing; and cavity wall insulation.

Although these measures may not be considered individually onerous or overly time-consuming, wholesale retrofitting of existing stock is not without cost. To meet its net zero aims, Manchester estimates that around 84,000 properties will require retrofitting, at an anticipated cost of between £25,000 to £30,000 per property. With only limited funding available for retrofitting, the question remains: where is the money going to come from?

In addition, current plans to retrofit real estate portfolios do not operate in a vacuum and take place against the continued introduction and implementation of the Building Safety Act. That Act, supported by secondary legislation, prescribes and mandates new regulatory obligations in respect of building safety and fire management provision. Building safety is paramount, but those involved in the design of new builds will need to consider how best to balance the achievement of net zero and carbon neutrality whilst also ensuring the total safety of a building throughout its lifetime.

What about future builds?

A significant proportion of the real estate infrastructure which is expected to exist in 2038, being Manchester’s deadline to achieve net zero status, is yet to be designed and constructed. Therefore, there also needs to be consideration as to how these future builds will help towards reaching that goal. This requires consideration not only of how those buildings will operate once in occupation, but also how embodied carbon (being the carbon contained within construction and civils materials) will be either managed or off-set. This will require a full review of all aspects of a supply chain to ensure that materials are genuinely carbon neutral in their production.

We have already touched upon some of the measures which can be introduced to an in-occupation building to help limit climate change, but in addition to domestic measures, designers may wish to consider the introduction of on-site renewable heat and electricity generation, such as photovoltaic sensors, as well as district heat networks.

The UK Green Building Council’s framework definition of net zero carbon buildings recommends that onsite renewable energy sources should be prioritised and should be pursued by building developers, owners and occupiers, where feasible. Not only is it anticipated that the presence of such measures may increase a building’s value, but it will also concurrently reduce pressure on the national grid.

What are the practical implications?

Implicit in all of the foregoing is that a building’s Energy Performance Certificate (‘EPC’) is going to become an increasingly important document over the coming years. Whilst they are already central to many transactions, we anticipate that their contents will be subject to additional review and transactional discussions. For example, going forwards, it is likely that EPCs will need to be carefully scrutinised during transactions, with the buyer working to achieve full understanding as to when the EPC will expire, whether any measures can be taken to improve the rating and if they have been appropriately registered.

In parallel, we anticipate that corporate due diligence, to the extent it involves real estate transfers, will also become more protracted. For example, there will need to be careful consideration as to whether retrofitting is necessary, who is to be responsible for this and whether any such revisions are permitted within the lease in place. In addition, where on-site energy generation is available, owners and occupiers will need to be mindful of the ownership of the generating plant, as well as apportionment of the additional regulatory burdens which accompany the generation of energy.

In respect of this specific example, where building designers and/ or owners wish to benefit from the cost-savings associated with on-site heat and electricity generation, they also need to consider whether such use is permitted in terms of relevant planning authorities, as well as the possible health and safety considerations which may arise from its operation.

Conclusion

Whilst the move towards net zero is a laudable aim, the consequences for real estate are significant: the scale, extent and cost of retrofitting existing properties is sizeable, but in addition there are also numerous opportunities for the sector to take the driving hand in bringing about real change.

Our final commentary piece next week will bring together recent articles, together with our predictions going forwards for what net zero will mean for both Manchester and the country as a whole.

The various provisions of the Building Safety Act 2022 continue to be implemented and come into force.  Whilst there has already been a significant volume of commentary and analysis regarding the genesis of the Act, and the various additional duties created, what impact will the Act actually have on a day-to-day basis for those who undertake work on, and are responsible for, the management and operation of the built environment?

Who is caught by the Act?

The Act is of relevance to all those involved in the entire lifespan of buildings, from design and planning through to construction and ongoing occupation, with a particular emphasis on those involved in the management of buildings which are deemed to be ‘higher risk’ (being over 18m in height and which contain at least two residential units).

One of the key criticisms flowing from the independent review which was undertaken following the Grenfell Tower tragedy was that there was generally no accountability or continuity of oversight relating to the built environment. The review’s impression was that the existing duties were seen as a ‘race to the bottom’, with those responsible for each stage of a building’s lifespan operating in a silo and without reference to those who may be involved at later stages of a building’s management.

The Building Safety Act seeks to do away with this attitude and creates what is referred to as a golden thread of information, which persists throughout a building’s lifetime, to ensure that crucial information is preserved and accessible to those who require it.  Contractors will need to be proactive in this regard, and will be expected to positively contribute to this core repository.

Central to the Act’s objectives is the creation of the new statutory role of ‘accountable person,’ which, in a nutshell, will attach to those who are in any way responsible for the management of building safety risks. In practical terms this means that those who are responsible for the repair and ongoing safety in higher risk properties will be fixed with additional duties.  Whilst many of the obligations are perhaps a matter of common sense and may duplicate existing best practice, the Act now places these on a statutory footing, with consequences for non-compliance.

What does this mean in practice?

The nature of regulatory compliance is that it only ever tends to increase in volume and the Building Safety Act is no exception in this regard.

Once fully embedded, the Act is likely to lead to:

1. Increased administrative burden

There will be an increase in the administrative burden by those involved with the management of higher risk buildings, especially those who are deemed to be an accountable person (‘AP’).

For example, an AP, or where there is more than one AP in respect of a building, the Principal AP, must:

• ensure that a building caught by the Act is appropriately registered with the Building Safety Regulator before it is occupied
• assess the safety risks and provision in respect of the parts of the building for which they are responsible, both on occupation and at regular intervals thereafter, as well as at any time when there is reason to suspect that the existing assessment is no longer valid.
• take reasonable steps to prevent a safety risk from materialising and reduce the severity of any incident resulting from such a risk
• apply for a Building Assessment Certificate for a registered building within 28 days of being asked to do so by the Building Safety Regulator
• prepare of a safety case report for their building
• report certain information about building safety risks in occupied high risk buildings to the Building Safety Regulator; and
• prepare a strategy for promoting the participation of residents in building safety decisions.

Whilst these duties are not in themselves novel, in that they mirror similar obligations under existing health and safety and fire safety legislation, their discharge is now compulsory in respect of building safety management.

An initial impact assessment undertaken prior to enactment of the Act estimated that costs associated with the additional management duties may be in the region of nearly £3 billion over the first decade, with estimated annual costs associated with maintenance of the Golden Thread being in the region of £600 million.

1. Emphasis on cooperation

Effective implementation of the Building Safety Act will require significant cooperation and coordination between those involved in building safety.

For example, one area where there is likely to be overlap is in respect of fire safety.  Definitions as to whom the relevant duties attach differ slightly between the Act and Fire Safety Order, and in practice the roles may be undertaken by the same or distinct persons. In any event there needs to be a clear delineation and understanding between all parties as to who is responsible for which aspects of a building’s occupation and how information will be shared between them.

The duties imposed by the Fire Safety Order have themselves been expanded, with external walls and fire doors to individual flats now being included within the definition of communal areas, and thereby falling within the responsibility of the Responsible Person to include in the building’s fire risk assessment.

• Contractual implications

Given all of the above, and the importance of the objectives to be achieved, it is crucial that the new prescriptive regime is adequately reflected within contractual documentation. For example, those who work on buildings but who may not be the AP, should revisit their contractual documentation to ensure that it is compliant with the new statutory apportionment of responsibilities. Parties need to be mindful that they do not inadvertently, by their contractual terms or actions generally, assume responsibility.

It may also be prudent for those involved in the maintenance of higher risk buildings to include express confirmation that any works undertaken will not affect building safety or emergency plans.

Pending the introduction of updated standard form contracts, all contractors should seek express and unambiguous clarification as to how the Act will impact their work, and clear understanding as to apportionment of relevant responsibility.

Such apportionment of roles is not novel in itself, and has been required for many years as a result of the Construction (Design and Management) Regulations, but clear delineation of roles will help all to understand the scope and extent of their responsibilities and how these contribute to the overall objectives to be achieved. Unlike those Regulations, however, the new golden thread requires much more information to be provided, with the emphasis on recording and sharing that information rather than simply maintaining a hard copy.

1. Delays

Whilst ensuring continuity of knowledge and safety, the Act is liable to result in delays to construction projects, whilst relevant approvals and registrations are awaited. In the event of any such delay, or rejection of approval, parties will need to make provision as to who is liable for any consequential costs, cash flow issues and supply chain issues.

1. Construction products

The Act intends that all construction products made available on the UK market should be regulated, and the Building Safety Regulator has extensive powers in this regard, including to require construction products to be safe and to create a statutory list of ‘safety critical’ construction products.

The Act also introduces new liabilities on materials producers for defective products, which will operate in addition to existing product safety regimes.

All those involved in the supply and use of construction products will need to be mindful of any relevant decisions or categorisations of products, and take steps to ensure that any products falling foul are not used on site.

Enforcement

All of the above obligations, duties and requirements are to be overseen by the Building Safety Regulator, which has been endowed with criminal investigatory and enforcement powers in the event of breach by a dutyholder.

It has been estimated that the costs of enforcement could be in excess of £12 million, with costs associated with reviews and appeals serving to increase that figure.

There has been significant criticism of the Building Safety Regulator to date and whether it becomes a Regulator with real teeth or not remains to be seen.

Conclusion

Whilst the maintenance and promotion of building safety is to be welcomed, all those who are involved in the design, construction, management or maintenance of the built environment must understand their specific role, and by extension what additional responsibilities they may have.

Although there has been criticism as to the length of time it has taken the Building Safety Act to come fully into force since the Grenfell Tower fire in 2017, and residual questions remain as to how the additional funding will be sourced, the direction of travel is clear and businesses need to be alive to how they will be impacted and the practical consequences for them.

Pannone Corporate has expanded its client base, after being appointed onto the legal framework for the Canal & River Trust. 

The North West law firm will provide construction and property litigation support, as part of a five-year agreement. Pannone is one of a number of law firms to be appointed by the Canal & River Trust.  

The Trust works with communities to transform their local canal or river, creating places and spaces for everyone. Together with volunteers and supporters, the Trust plays an important local role in addressing global issues, such as climate change and biodiversity decline. 

Paul Jonson, senior partner at Pannone Corporate, said: “We’re delighted to have been appointed onto the national legal framework for the Canal & River Trust, following a rigorous and competitive procurement process. 

“The charity plays a vital role in enhancing our waterways, transforming places and enriching lives. Our team will be working closely with the Trust to ensure that their purpose and vision is not compromised.”

Gemma Staples, associate partner in the property litigation team, added: “The Canal & River Trust is making a significant contribution to protect and nurture the natural environment that sits right on our doorstep. The events of the last two years have shown how important that environment is to our health and wellbeing andI, amongst thousands of others, have found solace in time spent in woodlands and by our local waterways. I’m thrilled to be able to work with such an organisation.”

The Canal & River Trust covers six English regions, including the North West, East and West Midlands, London and the South East, the South West, and Yorkshire and the North East, as well as Wales. Teams cover water management, sustainability, restoration, community engagement, design and planning, ecology andengineering. 

The Building Safety Bill was introduced to Parliament on 5 July by Housing Minister Robert Jenrick MP.

Although the headline proposals contained within the Bill have been known for some time, its formal introduction marks a significant – and crucial – moment in its development. The draft is not only voluminous (running to 218 pages), but also seeks to fundamentally revise the current system of building safety and regulation, with the Government confirming that it intends the Bill will “create lasting generational change”in terms of how buildings are designed, constructed and maintained.

The Bill is incredibly wide-ranging in its proposed scope and extent, but what are the key changes suggested?

A ‘Golden Thread’ of Information

A key objective of the Bill is to establish a ‘Golden Thread’ of information to identify at every stage of a residential building’s lifetime, from planning and design through to completion and occupation, who is responsible for ensuring safety standards, and for managing potential risks.

In general terms, the Bill proposes that the person or entity which creates a potential risk should, as far as possible, also be responsible for managing that risk.

To help the passage of information between duty holders, the current Building Act will be amended to introduce a new ‘Gateway’ regime. Each gateway is intended to act as a ‘hard stop’ with compliance and appropriate sign-off/regulatory approval being required before the next development stage is able to commence.

To assist in retaining the Golden Thread of information following completion, and to act as an identifiable point of liaison for residents, the Bill will establish an Accountable Person for all higher risk buildings, being those over 18m/ seven storeys in height and which contain at least two residential units. The Accountable Person may be an individual or corporate entity. Once appointed, the Accountable Person must apply to the Building Safety Regulator for a Building Assurance Certificate, as confirmation that they are complying with their statutory obligations and must manage the ‘golden thread’ of information.

In addition, the Accountable Person must also appoint a Building Safety Manager (before occupation in relation to higher-risk buildings) to assist them with the day-to-day management of safety within the building.

The Building Safety Regulator must be notified of the appointment of the Building Safety Manager and will have the power to veto their appointment if it is not satisfied that they have the relevant skills, knowledge, and experience to discharge their responsibilities.

Building Safety Regulator

The Bill proposes extensive and wide-ranging powers for the new Building Safety Regulator, including the ability to investigate and prosecute those who fail to meet the new standards and requirements. Where corporate offences are found to have been committed with the consent, connivance or neglect of directors or managers, then those individuals will also be liable to prosecution in addition to the corporate entity. The Regulator will comprise both resident representatives and industry experts.

In addition, the Bill permits the Building Safety Regulator to appoint a Special Measures Manager to replace the Accountable Person or Building Safety Manager, where serious failures endangering the life of residents are identified.

Mirroring existing powers of the Health and Safety Executive, the Building Safety Regulator will also be able to issue compliance notices, which will require duty holders to rectify non-compliance issues by a specified date. In addition, the Regulator will have the ability to issue stop notices during the design and construction phase, mandating the stoppage of work until non-compliances have been addressed. Failure to comply with either type of notice will be an offence, punishable by a custodial sentence of up to two years for individuals, and/ or an unlimited fine for corporate entities.

Peter Baker, Chief Inspector of Buildings within the Health and Safety Executive, has said of the Bill’s introduction that it, “will give HSE the tools to deliver its important role as the Building Safety Regulator and is an important step in setting out what will be expected of future duty holders”.

He continued: “Everyone involved in higher risk buildings from design, construction and day-to-day operations will manage and control building safety in a way that is proportionate to the risks. This will ensure these buildings are safer for those who live in them, and they have a stronger voice. I encourage duty holders to use the Bill’s introduction in preparation for the new, more rigorous regulatory regime.

“The Building Safety Regulator will continue to work with industry and others to deliver the new building safety regime to ensure that residents of higher risk buildings are safe, and feel safe, in their homes now and in the future.”

New Homes Ombudsman

The Bill also proposes the establishment of a New Homes Ombudsman scheme, to receive complaints from the owners of new build homes and to help hold developers to account. The Ombudsman will be able to impose sanctions on developers who breach requirements, although an appeals procedure will also be available.

However, unlike other Ombudsman services, the Bill mandates that developers become, and remain, members of the new scheme.

Regulation of Construction Products

The Bill proposes to regulate construction products placed for sale on the UK market, through the concept of ‘safety critical products’ and their inclusion on a statutory list. The Bill also contains provision for future regulations to be introduced to prohibit the supply or marketing of products which are unsafe.

Where products do not fall under an existing regulatory regime and are not included on the statutory list, the Bill enables regulations to be created which will require manufacturers to ensure that the products they supply are safe, with breach resulting in prosecution.

Conclusion

The draft Bill has a long way to go before it receives Royal Assent. Given that there is little time for further discussion before the start of the summer recess at the end of July, the majority of discussions will likely take place from the autumn. Thereafter, it is unlikely that the Bill will come fully into force much before summer 2022.

Whilst it is hoped that the Bill will be able to be enacted without significant amendments, to the benefit of all stakeholders and residents, it is not expected to have an entirely smooth transition through Parliament. For example, it is anticipated that substantial amendments will be proposed by the opposition and rebellious Conservative backbenchers, especially in relation to the redress available to leaseholders within unsafe buildings.

If you would like more information on the Building Safety Bill, contact regulatory director, Bill Dunkerley, on Bill.Dunkerley@pannonecorporate-com.stackstaging.com or call 07920 237681.

In our latest My Life in Law, we speak to paralegal Holly O’Farrell about her move from retail into law and her career so far as a legal apprentice. 

• When did you join Pannone Corporate?

I joined the firm in January 2020, so I only had a few months in the office before the first national lockdown was imposed in late March. So far, the majority of my Pannone Corporate career has been undertaken from home!  

• What was your role/experience prior to joining?

Before starting at Pannone I had been in private practice for approaching six years – at Clyde & Co for two years and then at Weightmans LLP. Prior to entering the legal profession, I worked in retail as a trainee assistant manager and ‘Style Advisor’ (read: personal shopper!). 

• What is your role at Pannone?

I am a paralegal in the construction team. I assist the head of construction with her day-to-day work and conduct some matters of my own under her supervision. 

• Why did you join Pannone?

What drew me to Pannone Corporate was the fact that it was a boutique firm that focused on commercial law and, as such, was a specialist in this area of work. The staff are so experienced because of that focus, and it has a hugely impressive roster of clients. As a result, the exposure and training available to a junior lawyer like me is fantastic. 

• What route did you go down, in terms of training and qualifications?

I am currently in the process of completing my CILEx qualification and will shortly qualify as a Chartered Legal Executive. 

• Why did you choose this route?

I began my legal career as a legal apprentice. I don’t have a degree – I withdrew from the University of Manchester because, despite the advice from all my teachers, I felt that university wasn’t for me. I loved the idea of higher education but, in reality, I found I wanted to learn in a more practical environment. As I was living away from home, I needed to ensure I was still earning, so an apprenticeship was ideal for me. Doing it this way also means that, by the time I am formally qualified, I will have had the benefit of eight-plus years’ legal work experience, which puts me in a great position compared to graduates and other newly qualified solicitors. 

• What does a typical day look like?

It might sound like an over-done answer, but genuinely each day is very different! In construction law, you do both contentious and non-contentious work. So, one day I may be working on a dispute for a client which might involve document review, possibly drafting submissions in adjudication or court proceedings and/or providing strategic advice to the client; the next I could be working on the contracts underlying a new building project, drafting a contract, or providing comments on a draft received from another firm to ensure that the client’s position is protected and there are no sneaky clauses in there that might cause them trouble down the line! 

• What is the most satisfying aspect of your job?

The most satisfying aspect of the job for me is its variety – I purposefully sought a role in an area that provided variation to keep me hooked. My manager in my first construction role told me that even after 35 years in the sector he was still presented with work that he’d never encountered before. After four years specialising in construction, this is certainly ringing true and I can’t wait to keep being surprised for the rest of my career. 

• What are your career ambitions?

Following completion of my CILEx qualifications, I am considering completing the SQE in order to cross-qualify as a solicitor. After I’ve achieved that I don’t intend to focus on any particular thing; I think there is some danger in having too fixed a plan. I just want to keep enjoying my work and be open to whatever opportunities arise. 

• If you were managing partner for the day, what’s the first thing you would do? 

Get the corporate credit card out and get everyone to the pub, after so many months apart! 

• What would you be doing if you didn’t have a career in law? 

I would probably have continued working in retail. I had ideas about moving into buying or visual merchandising. I definitely wouldn’t have continued in personal shopping. Pouring champagne and hoisting people into cruise-wear is not what five-year-old me dreamed of!

• What do you enjoy doing outside of work?

The usual – walking the dog, binging on Netflix and worrying that I don’t have enough hobbies! 

• Do you have any particular skills/talents that your work colleagues may not know about?

None that I wouldn’t be ashamed to admit to! However, I fancy myself as a bit of a dancer so, maybe when we’re all allowed to socialise again, I’ll get to embarrass myself! I do also have an excellent memory for song lyrics – in conjunction, these ‘talents’ result in quite the performance!