£1bn cost of Building Safety Bill could be passed down food chain as viability threatened

Architects fear developers will try and force new costs arising from the new Building Safety Bill on to their books.

The profession’s position in the food chain leaves it vulnerable to attempts to push extra liability its way, the director of housing practice VOP Group said.

He was responding to news that the reforms proposed in the bill could cost the industry more than £1bn in their first three years.

Future of the Profession

An impact assessment issued alongside the Building Safety Bill on Monday estimates that the residential development industry faces two-year transitional costs of £731m in moving to the new system, with an ongoing annual regulatory burden of £284m thereafter. The costs would add up to a bill of more than £3bn over the next decade.

Much of the transitional cost is made up from the requirement for owners of existing and new buildings to develop safety cases for all of England’s 12,000 high-rise buildings covered by the new regime.

These costs are on top of the £2bn developer levy already set out by the government, which was consulted on by the Treasury in April, and a further “gateway 2” levy expected to be paid by developers at the point of planning permission for high-rise buildings.

Costs are passed down to the design team who are expected to take on the additional liability, and no additional fee

Timothy Burgess, VOP Group

Charis Beverton, a partner at law firm Winckworth Sherwood, said developers will be “hit from all angles” by the new system, with costs likely to impact on scheme viability.

Architect Timothy Burgess, director of housing specialist VOP Group, said: “Will it make life harder for housing architects? Yes, it will.

Tim Burgess - Studio — VOP

Source: VOP Group

Tim Burgess of VOP Group

“Architects relish design challenges and opportunities to learn and improve their craft, so including fire safety in the planning process is no burden at all; it is always there in our thinking anyway.

“However, as always, the real issue is money and liability. Not all developers are equal, but the idea that housebuilders will ‘foot the bill to develop safety cases’ is nonsense. Developers work to make a fixed profit margin, or they don’t do the project, simple as that.

“To maintain these margins costs are passed down to the design team who are expected to take on the additional liability, and no additional fee.

“As we’ve seen with PII cover related to cladding and fire over the past couple of years, the cost of cover has doubled, and the cover diminished.

“So it is the professional team that end up footing the bill and, at some point, professional consultancy will become unviable.”

But architects would “keep battling on” because they cared so much, he said.

Insurance specialist Roger Flaxman, who predicted that PII would only get harder and more expensive, warned architects to check contracts carefully and to refuse to take on liability for aspects of a project over which they had no control.

“The problem is the structure of the whole building fraternity, with the architect very often at the beginning and end of the journey because they are the people who are supposed to know everything about the journey,” he said.

“Architects are the ones who, above anybody, want to do the job because they want to see their creation. That makes them very inclined to accept a role which is really quite burdensome from the point of view of legal liability.”

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Brendan Kilpatrick, senior partner at PRP, one of the biggest players in the residential market, said the bill had “serious implications for architects” because of the power it gave Arb to monitor their competence in relation to fire safety.

He was less concerned by the risk of architects picking up the tab for the safety reforms, saying: “The wider requirements of the bill on the construction industry are significant but should allow architects to ensure that the additional work required to ensure fire safety compliance is covered by an adjustment in fees.”

He added that this would provide opportunities for those practices with a good track record in compliance and in digital record capability.

“There are concerns in certain quarters that the new regulations will impact on the viability of marginal projects,” he said. “Experience suggests that the industry will adjust and enhanced compliance will soon become part of normal procurement arrangements.”