Building Safety Act 2022 - addressing defects and recouping losses: Construction Products

As noted by Stuart Duffy in a previous article the Developer Remediation Contract ("DRC") obliges 50 of the UK's developers to remediate defective buildings in properties they were involved in constructing over the last 30 years.

The Building Safety Act 2022 ("BSA") introduced a route to recovery for developers against suppliers and manufacturers of combustible materials used in the external walls of residential buildings. This applies when manufacturers or suppliers market or supply defective construction products or use misleading statements about such products.

Developers, who have expended substantial resources to remediate buildings across the country following the UK's 'cladding crisis', should consider this new route for recovery.

What is a 'construction product'?

"Construction product" is not defined in the BSA. Instead, the BSA (within Schedule 11) cross-refers to:

1. The Construction Product Regulations 1991 (any product which is produced for incorporation in a permanent manner in works); and
2. Regulation (EU) No. 305/2011 (any product or kit which is produced and placed on the market for incorporation in a permanent manner in construction works or parts thereof and the performance of which has an effect on the performance of the construction works with respect to the basic requirements for construction works).

The BSA does define "cladding products", although in relatively broad terms, as a 'cladding system or any component of a cladding system'. 

Reform post-Grenfell – who should pay?:

The Grenfell Inquiry exposed the role of construction products (and therefore the suppliers and manufacturers) in the Grenfell Tower fire. Michael Gove, for example, previously threatened to bar suppliers and manufacturers from operating in the UK if they were found liable for building defects and refused to do the right thing.

In 2024 in the Remediation Acceleration Plan ("RAP"), the Government reiterated its commitment to take action against construction product manufacturers and noted its plan to "introduce sufficient deterrents in the future to ensure manufacturers know they will be held to account, with proportionate consequence". The RAP confirmed a system wide reform of the construction product regulatory regime in the future. However, it did not set out details of how this would look.

We are yet to see the full detail of the new regulatory regime for construction products. In fact, the Public Accounts Committee have recommended that by the end of 2025 the Government should publish more detailed proposals as to how construction product manufacturers should pay their share of remediation costs. This is especially important in the light of the overriding principles of the BSA that leaseholders do not pay the costs for remediating defective buildings. 

New cause of action under the BSA 2022:

The BSA introduces a new liability to manufacturers of 'construction products' where a product used in a building causes or contributes to a dwelling being unfit for habitation. Those bringing a claim must demonstrate, inter alia, that the proper materials were not used. The limitation period is 15 years from when the right of action accrued.

This liability is imposed on:

1. Anyone failing to comply with a construction product requirement;
2. Anyone marketing or supplying construction products if they make a misleading statement; 
3. Anyone who manufactures a defective construction product.

Damages can be recovered including for economic loss (e.g. the costs of remediation) and the scope of who may bring an action for damages is broad, covering any person who has suffered a loss as a result of the dwelling being unfit for habitation. For a developer, for example, this could potentially allow recovery by way of a contribution under the Civil Liability (Contribution) Act 1978. Accordingly, this new cause of action against manufacturers and suppliers of construction products is directly in keeping with the stated aim of the BSA in ensuring those responsible for defective buildings, pay the costs associated with remediating them. 

However, for claims relating specifically to defective 'cladding products', the limitation period is 30 years retrospectively (if the right of action accrued before 28 June 2022).

New Regulations – what is to come?:

Section 146 of the BSA gives the Secretary of State the power to make construction product regulations. In accordance with Schedule 11 of the BSA, these include general safety requirements, provisions related to 'safety critical' construction products and the possibility to create new civil penalties and criminal offences for breaching any such new regulation. As noted above, the details of any such regulations are awaited.

Interestingly, the Construction Products Reform green paper (published earlier this year) sets out the Government's current proposals for reform of the UK's construction products regime. Some of these proposals are:

1. the introduction of a risk based general safety requirement (for construction products not covered by existing regulations) to ensure manufacturers assess and control safety risks before putting products to the market;
2. the regulation of construction products be governed by a suggested new single regulator for the construction sector; 
3. stronger penalties for non-compliance, to include criminal liabilities (prison sentences) for directors.

Comment:

Following the Grenfell Inquiry, the Government seem acutely concerned with ensuring that the UK's construction product regulatory regime is updated so as to prevent a similar tragedy to that of the Grenfell Tower fire in 2017. Despite outlining such a commitment, we are yet to see the full detail of the new regulatory regime for construction products. Manufacturers and suppliers of construction products in the UK should stay alert to the outcomes of the Construction Products Reform green paper and any subsequent regulations once details are published.

The new cause of action brought in by the BSA, in particular the introduction of a 30-year retrospective limitation period, will significantly impact the construction sector as claims previously thought to be out of time may now be able to be revived. We can expect an increase in claims against suppliers and manufacturers for defective products, particularly from developers seeking to recover some of the vast remediation costs paid to date in line with obligations under the DRC.