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New Building Safety Act dramatically increases limitation period for claims

The Building Safety Act 2022 , which includes wide ranging changes to improve safety, has come into force in the United Kingdom five years after the  Grenfell Tower fire disaster which highlighted the widespread use of unsafe cladding.

The Act protects many leaseholders from unfair bills to remove unsafe cladding on their buildings with those responsible for historical safety defects, and those who own buildings, required to fund essential repairs.

The Act has implications for the professional indemnity insurance(PII) market with a dramatic increase in the limitation periods for claims to be brought in connection with unsafe buildings -not just cladding- by amending key parts of Limitation Act 1980, the Defective Premises Act 1972 and the Building Act 1984.

As a result, limitation periods for claims under the DPA will be extended for works already completed from six to 30 years, and for work completed in the future from six to 15 years. This extended limitation can be used by tenants to sue a contractor, employer, architect or sub-contractor directly as a result of defects in a dwelling that make it ‘unfit for habitation’.

The regulations could make it possible for new claims to be made under the DPA for historic building failings. Claims that had previously been considered to be statute-barred may now have more time.

Construction industry experts have warned of a potential increase in insolvency due the retrospective extended liability which comes at a time of rising inflation, material shortages and labour shortfalls. The Construction sector is also keenly aware of a potential impact on premiums for professional indemnity (PII) policies.

Under the Act, where an organisation is liable under the DPA, Building Liability Orders (BLOs) can be made against those that have a controlling interest in the organisation; making them jointly and severally liable. Those behind a company can still be subject to a BLO even if it is dissolved under Section 131 of the Act.

A new  building safety regulator – overseen by the Health & Safety Executive – will enforce a new regulatory regime on the safety and performance of multi-occupancy high-rise buildings in England. It will also consult and respond to safety concerns raised by residents through a new residents’ panel.

The Act also sets up a national regulator for construction products which will implement standards on construction manufacturers in the UK including market surveillance to spot and remove unsafe materials, as well as take action against those that break the rules.

Levelling up Secretary Michael Gove said the Act “ marks a major turning point for building safety in this country, as we introduce a tough new regime to make homes safe and help rid the sector of bad practice once and for all.

“Hundreds of thousands of innocent leaseholders now have the legal protection they rightly deserve, freeing them from a financial burden they should never have faced.”

W Denis Insurance Brokers has been arranging insurance for more than 50 years with particular specialism in all types of insurance related to the built environment. Please contact: mark.dutton@wdenis.co.uk or on 0044 (0) 7831366469, daniel.moss@wdenis.co.uk or on 0044 (0)113 2439812 if you would like to obtain a quotation or wish to discuss any insurance related issue.

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