Tall order: meeting BSA compliance challenges

However, its implementation via the vastly under-resourced Building Safety Regulator (BSR) has wreaked havoc with developers, investors and contractors alike.

The industry, tasked with developing 1.5 million homes over this parliament, wants to get building but finds itself hamstrung. With more than 800 residential new-build and upgrade schemes delayed, the process becomes more and more bogged down by the BSR every day that passes.

The promised 12-week response time for the gateway 2 stage of approval, under which the BSR signs off projects before construction begins, has ballooned to at least double that, and in some cases as long as 40 weeks.

In response, some developers are changing project designs, reducing the height and therefore the number of units to avoid the remit of the legislation, or in extreme cases shelving schemes all together.

The need for clarity

The recurring central theme of the discussion was lack of clarity. Simply put, the attendees said that the BSR had not made it clear to developers what information needed to be submitted and when.

“We need early consultation, an available point of contact and an understanding of exactly at what point we submit, and what to submit,” said Damien Sharkey, managing director of HUB. “If we continue on the road we’re on, the situation is only going to get worse, and we haven’t a hope of meeting the government’s housing targets.”

Richard Goodwin, construction director at Olympian Homes, said the BSR’s initial promise of an ‘open-door collaborative’ process to aid housing delivery had gone unfulfilled.

“The BSR has done the opposite and closed discussion down,” he said. “You can’t liaise with anyone before you submit and if you get it slightly wrong, it gets kicked out. As a result, everyone has had to do their own working out on what it all means.”

You wouldn’t build The Shard today, because it’s got residential in it. You don’t want to put a mixed-use building into the high-risk category
Jonathan Ring, Sellar

Kevin McHugh, senior director, construction, at Greystar, raised fears that the BSR, which everyone in the room recognised was facing resourcing issues, faced falling even further behind as schemes currently jammed in the system progressed through the gateways.

“In real terms, gateway 3 [the final checkpoint for approval of completed buildings] is quite a long way away for many of the schemes submitted last April, which might still be in for gateway 2 now,” McHugh said. “Those schemes are probably two to three years away from getting to gateway 3.

“You hope the regulator will be in a position where they can hit statutory periods by that point. But all of that is about resourcing the regulator to the point where they can clear
the backlog.”

Development impacts

Implementation of the act isn’t just slowing down the process; it is fundamentally changing how developers approach building and scheme design. The upfront and back-end costs associated with navigating the act are rendering schemes unviable.

“You wouldn’t build The Shard today, simply because it’s got residential in it,” said Jonathan Ring, development director at Sellar. “You don’t want to put a mixed-use building into the high-risk category just to get some living space into it.

“We are now looking at redesigning schemes to take them out of being high-risk properties, which seems the wrong objective, because it means delivering fewer units, but that’s what we have to do.”

Keir Freestone, project director at British Land, added: “It’s all about simplification now. Where we have got mixed-use buildings, we too are looking at separating high-risk elements completely and that fundamentally changes the way we look at projects and the public realm.”

Rob Mumford, partner at construction and development consultancy Gardiner & Theobald, agreed that the act had led to developers moving to limit their risk to avoid the costs and delays associated with BSR gateway approvals.

“We are seeing developers strategically scaling back to limit the exposure of buildings,” he said. “That naturally has an impact on communities, local authorities and affordable housing providers. There are a lot of people losing out just by virtue of developers taking a strategic, sensible approach to scaling back on high-risk buildings.”

As a result of the act, buildings that come in just above the 18m threshold, in the six- to seven-storey range, may become a thing of the past, said Nathan Cronk, building safety director at housing association Abri.

“It is creating a situation where developers are building flat-ish developments, at five or six storeys, because in terms of the incentive to go higher, you have to go much higher to make it worthwhile – otherwise the viability isn’t there,” he said.

By creating a new paradigm for the viability of developments, the BSA has had knock-on effects on deal structure and financing.

“When viability is so tricky, you have to start to structure land deals differently,” said Tom Brewerton, group development director at Unite Students.

“That means phasing payments, pushing payments back to when you have got past gateway 2, and that’s requiring landowners to adjust, which they don’t really want to do, which is going to slow down future pipeline delivery even further still.”

Why do we need to submit everything on day one? In Scotland, you get packages approved as you go. A phased sign-off would enable us to get on site and start building
Damien Sharkey, HUB

Understandably, the turmoil caused by the implementation of the act is also turning investors away from the sector.

“What the investors want is predictability of their returns, and this is creating huge amounts of uncertainty,” said Greystar’s McHugh.

“At the end of the day, investors can put their money somewhere else. It might be another asset class, it might be something completely different, and if we can’t demonstrate a good reason to invest in the industry, they will move on.”

He added: “Developers are funding a much more significant amount of design and equity because you can’t get the debt involved until you really have clarity on the gateway 2 process.

“There is a lot more money at risk. And if a scheme falls over because it’s no longer viable, because you have gone too long on the gateway 2 process, you have written all that equity money off that you can’t reinvest.”

Smoothing the process

Earlier this year, the BSR hit back at criticism over capacity constraints and delays. The regulator acknowledged the delays, but claimed that increased resourcing and new processes are now in place, adding that the “industry must also do better”.

McHugh conceded it was only fair to acknowledge that the BSR was working through an entirely new process, but added: “All we are looking for is clear guidance on what we should be submitting and what we should not. I was recently told that of the submissions the BSR sees, 85% of the information isn’t needed.”

Funmbi Adeagbo, senior technical adviser at Catalyst, said developers could do more to improve their submissions: “The design teams need to do better at curating and understanding the information, so that when it does go to the BSR, that person coming in cold doesn’t get knocked over with a pile of useless documents.”

Caroline Harper, interim managing director at Be First Regeneration, the urban regeneration arm of Barking and Dagenham council, pointed out that the building control sector “was already on its knees and struggling before the Building Safety Act came in”.

She added: “Many older people in building control who are closer to retirement have chosen not to get registered. It’s also been difficult for those trying to get registered. There’s already a real shortage and there’s no fast-track or alternative mechanisms to bring in the skills that are needed.”

One of the biggest shared frustrations with the current set-up is the need for all the documentation to be submitted to the BSR upfront in a manner that fails to recognise the commercial reality of the housing development process, particularly in securing a contractor for a scheme.

“Why do we need to submit everything on day one?” asked Sharkey. “Look at the Scottish building warrant system, where you are getting your packages approved as you go. A phased sign-off would enable us to get on site and start building and we don’t need to look very far to see where that approach works.”

Eoin Leonard, chief executive and founder of Catalyst, said Ireland’s analogous Building Control Regulations, introduced in 2014, had solved this problem already.

“The original idea was very similar to the BSA, where you would send in all your information to the local authority and they would review that,” he said. “But in Ireland, they realised quite quickly that’s not how the industry works, and the idea of staged completion was agreed. That has worked very well and we have been doing it for 11 years now.”

Paul Nash, director of building safety, UK, at Catalyst, said it would be very difficult for the UK government to go back to the legislative drawing board.

“I think what we need to focus on is getting the delivery model to work and that requires us to work with the regulator,” he said. “If the act had said ‘it’s 24 weeks and not 12 weeks’ [to get gateway 2 approval] and the BSR was adequately resourced to turn these applications around, then developers wouldn’t stop building high-risk buildings and the investors wouldn’t stop investing, because there would be that certainty.”

The panel agreed that ultimately, while developers and the BSR are currently at odds, they both want the same outcome.

“We’ve lost the whole point of this, which is keeping our residents safe,” Abri’s Cronk said. “We’ve got bogged down with technical compliance with standards and procedure and need to get back to basics.”

McHugh added: “We’re two sides of the same coin. What do we both want? Safe homes for people. Let’s get together in a room and sort this out in reasonable way.”