High-rise residential development has virtually ground to a halt since the Building Safety Regulator took on full powers. In the first instalment of a two-part series, Charlotte Banks explores the problems
When Leeds City Council approved plans for three new residential towers on the Dyecoats regeneration scheme in April 2022, construction was expected to start that summer. Three years on, excavators have only just arrived. Before submitting its plans, developer Latimer Homes had proactively redesigned the scheme to incorporate second staircases, in anticipation of one post-Grenfell reform, only to come up against another – the Building Safety Regulator (BSR). The newly established watchdog had given itself a deadline of 12 weeks to determine whether Dyecoats could start building. It took 40.
“If jobs that are on the cusp of viability have to wait 20 weeks for gateway approval, that can destroy the whole return on investment for those projects”
Lilly Gallafent, Cast Consultancy
Dyecoats is one of the lucky schemes. Since April last year, when the BSR became the arbiter of whether construction work can start on taller residential buildings, it has approved only a handful out of more than a hundred applications. New high-rise residential construction has all but ground to a halt. The bottleneck is perhaps the biggest pressure point on an industry struggling to adapt to the post-Grenfell building safety landscape. This hard stop before construction, known as gateway two, was one of the key recommendations of Dame Judith Hackitt’s Building a Safer Future report, published in 2018. Of all the changes brought in to ensure the horrifying events of June 2017 are never repeated, it might be the most revolutionary. “It’s a sea change in how these types of buildings are developed,” says Eric Johnstone, legal director at law firm Brodies.
Waiting game
At gateway two, before starting on site, contractors have to demonstrate how they are going to construct a higher-risk building (HRB), defined as being taller than 18 metres and containing more than two residential units. Work cannot start until the BSR deems that these construction plans show they meet building regulations, a level of detail provided far earlier than the construction industry is used to. “You’re doing an awful lot of expensive offsite work before you get on the ground, whereas previously you would do offsite work to a certain position, get on site, and then do some iterative processes,” says Charis Beverton, partner at law firm Winckworth Sherwood.
Clients are still unsure how they should shape their procurement approach to meet these requirements. Many are entering formal arrangements with contractors and even subcontractors before submitting a gateway two application, so they can provide the detailed design work the BSR needs.
The BSR, which sits under the Health and Safety Executive (HSE), is statutorily required to determine applications for new HRBs within 12 weeks and work on existing ones in eight weeks. But developers and contractors are widely reporting that these decisions are taking months. Some of the earliest applicants are still waiting to find out if they can start building.
“There will be a learning curve for the people doing this at the BSR”
Eric Johnstone, Brodies
In an already challenging environment for construction, these delays hike up costs and push the financial reward further and further away. Having brought them on early, clients may have to pay the contractor’s staff while the project goes through the system, to ensure they are available when the project starts. If the project requires external finance – as most projects of the scale of an HRB do – interest accumulates. The price of materials and labour goes up the longer a project takes to get started, and contractors face uncertainty about when they should place orders. “I can imagine when the bottleneck does ease, suddenly everybody could be rushing around trying to get piling rigs and things like that. And we all know what that does to the market,” says one senior housing association figure.
“If jobs that are on the cusp of viability have to wait 20 weeks for gateway approval, that can destroy the whole return on investment for those projects,” says Lilly Gallafent, chief operating officer of Cast Consultancy. Most developers factor a few months of wiggle room into programmes to deal with unexpected delays, she adds, “but now they don’t know whether to put in three months’ flow or a year’s flow.”
Certain types of developments suffer more than others when delayed, says Adam Nicholson, preconstruction director at McLaren Construction. In the student accommodation sector, completing work a few weeks late means the buildings cannot be occupied until the next academic year, for example.
Piling subcontractors tend to secure work by providing design free of charge, with an expectation that the client will keep them on when construction starts. They don’t get paid until it does. “We’re tracking over 40 projects that we’ve designed,” says Malcolm O’Sullivan, Van Elle chief operating officer. “We would expect at least 10 of them to have come to market by now. We’ve seen one.”
The delays are seriously threatening contractors’ cashflow. O’Sullivan says he’s restricting investment in new plant and moving staff across sectors until his firm gets more orders. He also warns of possible redundancies at other companies.
Short-staffed
With so much at stake, why is it taking so long for the BSR to approve applications? Experts cite multiple factors. One reason the new regulator has struggled to fulfil its duties is a lack of personnel. Each application to the BSR must be assessed by a multidisciplinary team (MDT). These teams are assembled for each project, consisting of a BSR case officer, local authority building inspector and fire safety inspector, although other specialists might be brought in depending on the application.
Philip White, who heads the BSR as the HSE’s director of building safety, is upfront about the challenges of putting the teams together. “Two thirds of the resource for assessing applications are not under our control,” he says. “It is no secret that it has been a challenge to get those MDTs set up quickly, and it has been taking up nearly half of the statutory time period for determinations.”
Cast Consultancy worked on one of the first applications under the new regime last April. When CN meets Gallafent in the following February, that application is still stuck in the earliest stages. “They wrote to me this morning that they still don’t have the multidisciplinary team. They need a structural engineer.”
“People have been warmed up to the legislation – it’s not suddenly come in. I think there was a view that it might not happen. People never really got their heads around it”
Phillip White, BSR
The regulator has also struggled with a malfunctioning IT system. “The system didn’t collapse or anything like that,” says White. “But staff were finding it difficult to access some of the documents being sent in by applicants.” Then, last June, private building control firm AIS Surveyors went into liquidation, which White said created a “perfect storm”. The regulator suddenly had to quickly assess an extra 50 complex building projects at varying stages of construction.
Could these teething issues have been anticipated? In April last year, CN asked senior BSR figures whether the regulator was equipped to deal with a sudden influx of applications. “Yes, I think we are,” said HSE operational policy lead Annette Hall at the time. “We’ve modelled a lot of this.” However, White now admits the models were wrong. “You’re never going to be perfect, but that’s one of the challenges of setting something up new,” he says. “Despite all the user testing – and we worked closely with the industry in terms of testing things out – the reality is, it was taking longer to assess [applications] than was assumed in the business case.
Delays aren’t the only complaint the industry has about the fledgling regulator. Some believe it could better communicate what it wants. The BSR has previously told CN that it was being slowed down by overly lengthy applications containing thousands of plans and drawings, but without the right detail. Others argue that it is unreasonable to expect them to unpick reams of complex legislation – there are 23 pieces of secondary legislation to the Building Safety Act just on the new building control regime – without a steer from the BSR on niche but important points of interpretation.
“If you want to ask [the BSR] a question, you have to type it in this text box that’s got about 135 characters, and I can’t ask a sensible question in 135 characters,” says Beverton, comparing it to texting on a 1990s mobile phone. “And then you wait a long time for them to say: ‘we won’t answer your question because we won’t engage with you, you should go back to your legal adviser.’ Well, I am the legal adviser, and I’m asking a question because none of the documentation is clear and neither I nor a King’s Counsel can find the solution.”
Another fear is that the BSR is deprioritising applications submitted before the influx of projects from AIS Surveyors. One source tells CN a local authority was advised by the BSR to withdraw its application and resubmit it to get ahead in the queue. Gallafent’s application also fell within the pre-June backlog. “It seems like we’re being penalised for having submitted something early, because if you submit an application now, you are more likely to get a quick response than we are on that one,” she says. When CN puts these criticisms to White, he says he does not accept them, but does not expand further.
The BSR is also seriously behind on billing. Alongside an initial fee of £189, the regulator charges £151 per hour of staff time, raised from £144 in April. But many still don’t know much time the BSR has spent assessing their applications, and thus how much they will have to pay. One developer of a new-build that has received gateway two approval tells CN it still has not received an invoice.
White blames the lack of invoicing on the IT issues. But the blockage may not be entirely the regulator’s fault. “These are important issues,” says White of the IT struggles. “But, I’m afraid, [they were of a] slightly lower order compared to the quality of applications we were receiving.”
The BSR is currently rejecting around 69 per cent of gateway two applications, White told an online conference in March. These rejections aren’t minor quibbles: the regulator constantly receives plans lacking information on fire barriers or external wall fire spread, he said. Remediation project applications regularly omit arrangements for fixing cladding to a building, or justification for their structural load, says White.
“As opaque as a lot of people think [the new building safety regime] is, in some ways it’s actually quite clear about what’s needed,” says Gallafent. “People are not doing it because they don’t want to do it. They don’t want to hear it. They don’t feel that they have to do it. It’s not because it’s not clear.” White adds: “People have been warmed up to the legislation – it’s not suddenly come in. I think there was a view that it might not happen. People never really got their heads around it.”
Hackitt has more faith in the industry. “Some people are getting it,” she says. “I think we sometimes spend too long focusing on the ones who don’t get it yet, but there are very encouraging signs of leadership among the bigger players.” She adds: “Part of the problem is that some of the people who are complaining [about delays] are people who may well have done a good job of their own gateway two applications, but they’re stuck in the queue behind people who are creating a lot of problems for the regulator.” A more balanced interpretation is that both the construction industry and the BSR are struggling with the heft of their new responsibilities. After all, the application process is new for both sides. “There will be a learning curve for the people doing this [at the BSR],” says Brodies’ Johnstone. “The first application that landed on their desk after the new regime came in will be the very first time they will have been looking at it through that lens.”
Beverton adds: “It’s an extremely complicated and fragmented introduction of a completely new regime. It’s very difficult for me even as a professional dealing with this day in, day out to make sure that I’m on top of every single bit of this legislation.”