The Building Safety Act Explained: Risks, Duties and Commercial Impact

The Building Safety Act 2022 (BSA) is the most significant overhaul of building regulation in decades. A response to the Grenfell Tower tragedy, the Act is designed to improve accountability, oversight, and safety in the design, construction and management of higher-risk buildings.

The BSA has implications for developers, scheme promoters, institutional landlords, and investors. The Act is not just about compliance—it’s about risk, value, and control. Failing to understand this could mean delays, increased costs, or serious legal exposure.

The main aim of the BSA is to ensure that buildings are safe for occupation. It creates new legal duties, from planning and construction through to occupation and maintenance.

The BSA introduces:

• A new Building Safety Regulator (BSR), within the Health and Safety Executive (HSE), with powers to oversee the design, construction, and management of high-risk buildings.
• A new Gateway regime with checkpoints during the planning, design, and construction phases.
• Stricter duty holder and competency requirements, going further than the CDM Regulations.
• A new regime for the ongoing safety management of occupied higher-risk buildings.
• Extended limitation periods for claims relating to construction defects.
• New leaseholder protections, including restrictions on who pays for historical  defects.

For developers and landlords, the key is knowing which obligations apply—and when.

The most stringent requirements of the BSA apply to “higher-risk buildings” (HRBs), which are generally those that are:

• At least 18 metres in height or have at least 7 storeys; and
• Contain at least two or more residential units.

Most commercial buildings, such as office blocks, shopping centres or industrial units, will fall outside this definition. However, mixed-use developments, combining commercial premises with residential units, are within scope.

One of the most immediate impacts is the introduction of a new “Gateway” regime. This requires formal regulatory approval at three key stages:

• Gateway One: Planning submission 
  Planning applications for HRBs must include detailed fire safety statements, which should be prepared with input from specialist fire consultants.
• Gateway Two: Pre-construction authorisation 
  No building work can begin on an HRB until Gateway Two approval has been granted by the BSR. This involves submitting comprehensive design documentation, construction methods, and evidence that safety risks have been assessed and managed.
• Gateway Three: Completion and handover 
  Before a building can be legally occupied, developers must prove that it has been built in accordance with approved plans and that a full “Golden Thread” of safety information has been compiled and handed over.

These Gateways represent regulatory ‘hard stops’. Delays in approval can affect programme delivery, drawdown schedules, and even contractual obligations under forward funding or sale agreements.

For developers, the Gateways can mean:

• Extended programme durations due to regulatory reviews.
• Higher upfront costs and design-stage accountability.
• Potential liability for design errors that compromise safety.
• Careful management of D&B contractors to ensure compliance is built in—not just assumed.

Developers intending to forward fund or forward sell part-complete HRBs must ensure that Gateway obligations are clearly set out in contractual documentation, to avoid gaps in responsibility.

The BSA also introduces new duty holder roles during the design and construction phases, including:

• Client (typically the developer)
• Principal Designer
• Principal Contractor

These roles carry statutory responsibilities, more demanding than those under the CDM Regulations. In particular, the Client must ensure that other duty holders are competent and that all safety information is properly recorded and managed.

This forms part of the legal requirement to maintain a “Golden Thread” – a digital record of the building’s safety-critical information, updated in real time and preserved for the life of the building. For developers, it introduces a need to reassess consultant appointments, indemnities, and design responsibility pathways.

Failure to comply can result in criminal sanctions. Purchasers, investors and funders will demand evidence of compliance.

Once occupied, higher-risk buildings come under a separate set of duties. The landlord or freeholder (or in some cases, the Right to Manage company) becomes the “Accountable Person” (AP).

The AP’s responsibilities include:

• Registering the building with the Building Safety Regulator.
• Assessing and managing building safety risks, especially those relating to the spread of fire or structural failure.
• Producing and maintaining a Safety Case Report.
• Engaging residents in safety management and maintaining a Resident Engagement Strategy.
• Ensuring ongoing compliance and reporting.

For landlords, this creates a new layer of operational and legal risk. Failure to comply can lead to enforcement notices or criminal liability.

The BSA gives new rights to residential leaseholders in HRBs. In many cases, landlords and former developers are now prohibited from passing on remediation costs through the service charge, regardless of what the lease itself may allow.

These rights apply to historical building safety defects, particularly those involving cladding, fire-stopping, and structural issues. They also extend to related professional and legal fees, such as fire engineering reports or project management costs.

The rights are wide-ranging. Where the landlord is, or was, involved in the original development, or where they fall within a group that includes the original developer, they may be a “responsible developer” under the Act and be precluded from recovering costs. Likewise, landlords with a net worth above £2 million per building face mandatory limits on recovery, even if they had no responsibility for the defects themselves.

The BSA also introduces statutory mechanisms, such as “Remediation Contribution Orders” and “Building Liability Orders”, that can compel current or former landlords, developers, and their associated entities to fund remedial works. These tough powers may be exercisable long after the property has changed hands.

Traditional assumptions around service charge recoverability no longer apply. A cost that appears contractually recoverable may be legally irrecoverable, resulting in a capital hit that is neither anticipated nor insurable.

For acquirers of post-Grenfell assets or legacy towers, particularly those built between 1992 and 2022, due diligence must now go beyond lease summaries and EPCs. It must examine the development history, financial position of group entities, and potential exposure under the Act’s extended liability framework. What looks viable on paper may be constrained in practice.

The BSA extends the time within which claims can be brought:

• The Defective Premises Act 1972: now 30 years retrospectively (from 28 June 1992), and 15 years prospectively.
• Section 38 of the Building Act 1984: 15 years from the date the cause of action accrues.

This means that developers, contractors and consultants could face legal action for historical projects completed decades ago.

Due diligence on past projects, especially around cladding, fire-stopping, and structural design, is now more important than ever. Settlement strategies, warranty protection, and insurance coverage may all need to be reassessed.

The potential for increased litigation exposure must be considered in corporate structuring, PII cover, and settlement strategies. Historic fire safety decisions, once regarded as minor or peripheral, may now carry financial risk.

Developers and landlords must now treat compliance with the BSA as a critical part of development and investment strategy. Key actions include:

• Pre-acquisition reviews: Are you inheriting liability? Has the building been registered? Are safety case reports up to date?
• Contractual risk allocation: Are contractors and consultants properly indemnified? Who is responsible for Gateway approvals?
• Funding documentation: Are lenders imposing Act-related conditions precedent or warranties?
• Lease drafting: Do service charge clauses properly carve out unrecoverable costs?

The BSA does not just affect how buildings are delivered—it also influences how they are funded, sold and occupied. Developers and landlords must address:

• Who will be the duty holder at each stage?
• Who will maintain the Golden Thread?
• Are Gateway Two and Three obligations clearly allocated in funding documents and building contracts?
• Can remediation costs be recovered under leases?
• Are acquisitions of HRBs properly assessed for embedded liability?

Failure to address these questions can lead to increased costs, disputes, and regulatory enforcement. Lenders, institutional investors and insurers are asking detailed questions about compliance. Those who can demonstrate preparedness are best placed to secure funding and realise value.

The Building Safety Act reshapes the legal and commercial landscape for anyone developing or owning HRBs in the UK. While the new regime undoubtedly increases regulatory burden, it also offers a clearer framework for accountability and safety – a welcome development for those taking a long-term view.