The Building Safety Act 2022 (BSA) was introduced due to safety concerns regarding high-rise buildings after the 2017 Grenfell Tower tragedy. The legislation is intended to improve the design, construction and management of higher risk buildings.
The government has updated its guidance calling for second staircases in all new tall buildings, initially focusing on high rise buildings (those over 18m or 7 storeys) including mixed use developments. There is a transition period through to 2026 which is intended to allow time for developers to adapt to the new requirements. In the early stages of assessing the possible impact, it is evident that the very positive and necessary changes from a safety perspective might have an impact on the market including:
- The introduction of this element of the legislation will make a number of development opportunities unviable
- Schemes currently looking to obtain consent are having to be redesigned to incorporate requirements under the new legislation. In particular the introduction of the requirement for second cores/staircases can result in significant build cost increases
- The space requirement for the additional core / staircase reduces the saleable floor area, negatively impacting on the potential gross development value and subsequently viability.
- The introduction of a Building Safety Regulator and in particular the Gateway regime could have an impact, adding delays to potential sales completions which inevitably could impact on costs with developers increasing hurdle rates to insulate themselves on this.
- There is a possibility of a secondary impact on schemes that already hold planning consents, not bound by BSA regulations. Developers will be grappling with the potential impact on sales as market sentiment from purchasers adjusts. Buildings that do not have a second staircase or means of escape could see an impact on saleability (or even mortgageability as lenders adjust their appetite in light of the forthcoming rules) compared to schemes that comply with the new rules.
The BSA carries far wider positive objectives in terms of building safety but the above issues are challenging developers, construction professionals, lenders, valuers and residential development teams to identify schemes that are viable based on the proposed improved building safety measures.
If you require advice regarding the above issues, whether from a construction management/cost perspective or formal valuation advice or relating to development land sales please get in touch with one of our professionals.
