Construction
Written by Emily Snow and Sarah O'Callaghan
Key developments in 2024
This year the new Leasehold and Freehold Reform Act 2024 (the LFRA) enacted various amendments to the Building Safety Act 2022 (BSA), which came into force on 24 July 2024 and 31 October 2024. The key changes arising from the LFRA amendments include changes relating to building safety by increasing the duties of Insolvency Practitioners, and a change to the definition of “relevant defects”. Insolvency practitioners are now under a duty to provide information to the local authority and fire and rescue service, and where the building is a higher-risk building (over 18m or 7 storeys high) they must also provide this information to the Building Safety Regulator. A previous conflict between Insolvency Practitioners' legal duty to creditors and their obligation to remedy defects has also been resolved through s.118 of the LFRA. Previously, under s.125 of the BSA, amounts recovered through the courts for remediation costs could be distributed to creditors in the first instance. However, s.118 of the LFRA now prevents funds being secured for creditors that should otherwise be used for remediation. Finally, s.114 of the LFRA introduces a new defined term of “relevant steps” to both s. 120 and the definition of “relevant measures” in Schedule 8 of BSA. The effect of this is to increase freeholders’ and developers’ responsibilities in preventing or reducing the likelihood, severity and potential harm caused by a fire or collapse of the building.
As per previous years, disciplinary investigations by regulators into construction professionals have remained high. This being the case, it is vital for construction professionals to keep abreast of professional developments, engage with their regulator when required and check what insurance they have available should any investigation be made into them.
Construction firm insolvencies have also stayed high, with high profile insolvencies like ISG having big knock-on effects for those further down the supply chain.
What to look out for in 2025
The Grenfell Tower Inquiry Phase 2 report was published on 4 September 2024. The Phase 1 report, published on 30 October 2019, focused on the events of the tragedy: how the fire started, how it escaped from the originating flat, and how it spread. Phase 2 of the Inquiry examined the underlying causes of the fire and the response of the authorities to the emergency. Recommendations put forward by the Inquiry panel include (a) centralising responsibility for all aspects of fire safety under one government department; (b) appointing a construction regulator to oversee all aspects of the construction industry; (c) introducing a licensing scheme for contractors wishing to undertake the construction or refurbishment of higher-risk buildings; and (d) introducing regulation and mandatory accreditation of fire risk assessors. The aim of these recommendations is laudable. There are however practical difficulties in their implementation, and we anticipate 2025 will see various discussions taking place on how the recommendations can be implemented.
In addition, the new government's plans will start to be implemented. The government has pledged: (a) a target of building 1.5 million homes over the next 5 years; (b) an update to the National Planning Policy Framework (NPPF); and (c) to streamline the planning process to reduce delays (planning delays having caused much pain to the construction profession). It has also committed to maintain and renew the road network and to launch significant infrastructure projects. Businesses could see increased pressure to comply with regulations, particularly around net zero requirements and social housing.
AI will continue to be much discussed. Whilst a report by the House of Lords Communications and Digital Committee in February 2024 suggested construction roles are among the least likely to be threatened by Artificial Intelligence (AI), we believe it will be increasingly embraced by workers in the pre-construction phase (at least). This could reduce project risks at the outset and improve safety and efficiency on site. On any basis, the next 1-5 years will see a significant increase in the use of AI across all industries; this will include construction.
Explore Annual Insurance Review 2025
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