Responsible Actors Scheme forecast for Summer 2023

The Government has recently published secondary legislation setting out its intention to implement its Responsible Actors Scheme (RAS) with further guidance to come by this Summer.

The proposals were outlined in March 2023 and last month we saw the government publish the 'draft Building Safety (Responsible Actors Scheme and Prohibitions) Regulations 2023' along with the explanatory memorandum.

The RAS, along with the Building Safety Act 2022 (BSA 2022) and the Developer remediation contract ultimately aims to improve the safety of buildings by managing fire and structural safety risks in high rise multi-occupied residential buildings. The Developer remediation contract, which was also known as the Pledge, was designed to seek assurance from developers and product manufacturers to pay for remedial works to affected buildings, by getting them to sign the agreement setting out specific obligations regarding the necessary works. The RAS gives the government the power to set up one or more building industry scheme, which will force developers to remedy defects in buildings and/or contribute to the costs associated of doing so. It sets out what prohibitions are to be imposed, when these are to be imposed and on whom. 

The RAS, once in force, will exclude developers who failed to sign the Developer remediation contract from operating in the English residential property development sector, save for some exceptions.  Key aspects of the RAS include; the type of building to which it relates, eligibility, conditions of membership, enforcement of membership conditions, planning restrictions and building regulations that apply to those who fail to join. 

In order to join the RAS, developers must agree to the Developer remediation contract and its conditions. Penalties will be imposed for failure to comply with the conditions or for failure to join the scheme. 

Eligibility is set out in detail in the draft regulations that were published in March, however a key point is that in order to be eligible for the scheme the developer must have had an average adjusted operating profit of over £10 million per year over the years 2017-2019, therefore this will exclude small businesses. 

Why is the RAS needed? The BSA 2022 has been in force since April 2022 including the sections which permits the introduction of building industry schemes. This has been used as a tactic to threaten developers along with the request for eligible developers to voluntarily sign up to the remediation contract. As of 21 April 2023, 46 of the 50 developers who had been invited to sign the contract had done so. However, as not all of the developers signed up, the RAS has been introduced to force compliance and penalise developers who have not joined. 

The government has communicated that it envisages the RAS will be extended in the future to apply to other developers who have developed or refurbished buildings with defects that are caught by the BSA 2022. The government has made its opinion on the matter clear in that the issues need to be fixed and paid for by the parties at fault. 

Looking forward, the government has made it clear that it wants to hold construction product manufacturers accountable as well as developers.  There was an initial push for both developers and manufacturers to sign up to the pledge, however this was universally rejected by manufacturers. Nonetheless, this remains an issue that is being explored by the government and manufacturers will be watching closely as this develops.