The Week That Was - 27th November 2020

Welcome to The Week That Was, a round-up of key events in the construction sector over the last seven days.

New government Help to Buy scheme to open for first-time buyers next month

The revamped Help to Buy scheme will launch on 16 December 2020 and run until 2023.  Much like the existing scheme, first time buyers will be able to borrow up to 20% (40% in London) of the price of a new build home from the government.  However, there will be regional price limits on the cost of homes purchased under the scheme, set at 1.5 times the average house price for a first-time buyer in the area.  The intention behind these limits is to ensure that that the scheme only benefits those who most require government aid.  House builders will need to comply with rigorous quality standards to qualify for the scheme.  The change follows criticism of the previous Help to Buy scheme which seemingly enhanced profits for major house builders and supported those who did not need financial assistance to purchase a home.

You can read more here

RGB Plastering Ltd v TAWE Dryling & Plastering Ltd [2020] EWHC 3028 (TCC)

The Technology and Construction Court has confirmed the need for applications for interim payment to comply strictly with contractual requirements.  In this case, a sub-contractor's application for interim payment was held to be invalid as the application did not follow the precise mechanism for interim payments set out in the sub-contract.  The sub-contract required all applications to be submitted to the email address stated, issued on a specific date and to value works up to the payment date stipulated in the sub-contract.  The Defendant's application failed in all respects.  The court found in favour of the Claimant, ruling the application for interim payment was invalid due to its non-compliance with the sub-contract, the terms of which were clear and unambiguous. 

Read the judgement here

Communication from insurers is key for SME customers during second lockdown

The results of GlobalData's 2020 SME Insurance Survey have rated insurers strongly for communication during the first lockdown, with 34% of SMEs being very satisfied with their insurer’s performance in terms of communicating the impact of COVID-19 on their insurance cover.

Ben Carey-Evans, insurance analyst at GlobalData, said: “It is key for SMEs in the UK to know exactly where they stand with their insurance, what they are covered for, and what they are not, as they continue to work under heavy restrictions. This data indicates that insurers have been doing a good job so far."

Nevertheless, the challenge for insurers will be to repeat this during the second lockdown. It is likely that claims will rise once again as businesses close and future retentions will be squeezed as budgets tighten and reports of failure to pay out claims increase.

You can read more here

Brexit: Government urges businesses to act before the end of the transition period

With six weeks to go before the end of the transition period, the government is urging businesses to take last-minute steps to prepare for the changes to be implemented on 1 January 2021, regardless of whether any deal is agreed between the UK and the EU.  The Parliamentary Business, Energy and Industrial Strategy (BEIS) Committee has requested evidence of this ahead of its session on 8 December 2020, where it will review business preparedness for Brexit. 

A number of Government initiatives have been rolled out to assist businesses in this period, including;

• The Trader Support Service (TSS), which will support traders moving goods under the Northern Ireland Protocol; and
• The Secretary of State for BEIS, Alok Sharma, has sent a series of letters to businesses in 11 industry and commerce sectors with lists of last-minute actions and a warning that failure to act may risk business operations being interrupted.

The Committee is keen to hear what measures, advice and support businesses require from the government, even at this late stage, to help mitigate any potential disruption.  Darren Jones, BEIS Committee chair, said that that it is clear that few businesses feel ready for what is to come on 1 January 2021.

You can read more here, here and here

EU workers in the construction industry

Data produced by the Office of National Statistics and aggregated by the Construction Products Association has revealed that the number of EU-born construction workers in London has halved in two years.  Since the third quarter of 2018, the London construction market has seen the number of EU-born workers drop from 115,000 to 53,000 – representing a fall of 54 per cent.  In the first quarter of 2020, the number of EU-born workers totalled 87,000 – over the next six months (which saw the pandemic hit), this number reduced to 51,000.

Whilst it is felt possible that the drop in numbers could represent a short term response to COVID-19,  there is a concern that Brexit – and the end of the free movement – may mean that some workers have decided to permanently relocate.

Potentially, this could lead to workforce shortages next year.  As economist Amandeep Bahra warns, “at this point, total construction output remains almost 10 per cent lower than it was pre-COVID, but activity in some sectors such as infrastructure and private housing is above pre-pandemic levels and if activity in other construction sectors continues to recover, particularly in London, then this could be a major issue”.

For more information, see here

Leeds student accommodation project

Alumno, a company who were established in 2006 and have since specialised in 'creating high-quality and modern accommodation for students' have been granted planning permission from Leeds Council to build a seven-storey student accommodation building in the city.  Architect Howarth Litchfield, who is a partner of Alumno, has designed the 11,955 sqm purpose-built student accommodation project, which is set to house 411 students in 53 studios.  The development will also benefit from communal facilities including a study, gym and TV room.

As yet, no appointments to actually construct the development have been made.

For further information, see here

Clarification of the scope of the EWS1 Form

On Saturday, MHCLG issued an announcement concerning the properties it expects to fall outside the scope of the EWS1 Form that was published in December 2019 to assist both mortgage companies and flat owners to understand whether the external wall systems to their flats required remediation to address any fire risks.  After the publication of the Combined Advice Note in January 2020, which exhorted those responsible for multi-storey, multi-occupancy buildings of any height to verify whether there were fire safety issues relating to any cladding on the building, there has been a significant increase in demand for fire risk assessments using the EWS1 Form, which has left many flat owners unable to move, due to the lack of people with the necessary qualifications and experience to complete the form.  MHCLG is hoping that by taking a significant number of properties out of scope of the EWS1 scheme, it will help reduce this log-jam.

You can read a copy of the announcement here  

Thank you to Hannah McDonagh, Emma Wherry, Felicity Strong, Harpreet Kaur and Jess Yates for contributing to this week's edition.