THE Chartered Institute of Building (CIOB) has launched its manifesto ahead of the General Election, outlining how a future UK Government can support the built environment sector. 

The manifesto, entitled ‘CIOB’s Manifesto for the Built Environment – Opportunities for future proofing the construction industry’, covers four key themes; Environmental Sustainability, Quality and Safety, The Future of Construction, and People and Skills.

It outlines short, medium and longer term policy recommendations to address some of the  challenges facing construction and society including late payments to supply chains, skills shortages, better opportunities for SMEs, and improving diversity and inclusion in the sector.  

Caroline Gumble, CEO at CIOB, said,

“Now the date for the UK General Election has been confirmed, we’ve launched our manifesto so we can engage with prospective parliamentary candidates while they’re developing their own campaigns. Candidates come from a range of backgrounds and don’t always understand the complexities and importance of the built environment sector, which is a major economic driver so it’s down to us all as the experts to educate them.

“It’s important they know what support is needed to enable the industry to play its part in creating a safe and sustainable built environment for everyone.”

CIOB’s manifesto recommendations are: 

Environmental Sustainability                

·       Develop and implement a green skills fund 

·       Adapt building regulations to include whole life carbon assessments  

·       Develop and implement a national retrofit strategy 

Quality and Safety   

·       Review the voluntary status of consumer codes for new-build housing 

·       Provide fairer opportunities for SME housebuilders 

·       Reform the current Land Value system 

Future of Construction 

·       Tackle late payment culture 

·       Develop and implement a strategy for Modern Methods of Construction 

·       Use geographical clustering to level up the UK 

People and Skills 

·       Include EDI (Equality, Diversity and Inclusion) commitments in public sector contracts 

·       Overhaul of the Apprenticeship Levy 

·       Introduce a Built Environment GCSE 

Alongside the manifesto, CIOB will also be launching a dedicated election page on its website for members to stay updated on key dates, election candidates, and what the political parties are saying in their own manifestos about the built environment. 

Caroline added, “I strongly encourage CIOB members to use this manifesto and our online resources to engage with those standing for election in the constituencies they live and work in to help push construction further up the political agenda.”

DOWNLOAD THE MANIFESTO HERE

Building Liability Orders (BLOs) are a new type of order that the High Court has the power to make under s.130 of the Building Safety Act 2022 (BSA), if it considers it “just and equitable” to do so.

Since BLOs are a novel remedy, there is very little guidance about how the courts will apply the “just and equitable” test or, indeed, about how a BLO application should be made in practice. A recent High Court ruling has provided some welcome guidance on a number of practical aspects, such as:

• At what stage in proceedings should a BLO application be made?
• Who may apply for a BLO?
• What factors might the Court consider in deciding whether it is “just and equitable” to make a BLO?

In this update, we examine the background to this case and the key takeaways.

What is a Building Liability Order?

The policy intent behind the introduction of this new type of order is to prevent developers from escaping liability for building safety defects by setting up thinly capitalised special purpose vehicles (SPVs) to carry out developments. It has been common practice for such SPVs to be wound up following completion, thus allowing their well-capitalised parent companies to avoid long-term liability for any defective works.

BLOs will target this scenario, by extending a “relevant liability” of a body corporate (Party A), so that it will also be a liability of an “associated” body corporate (Party B). In the event that a BLO is made, Parties A and B will then be jointly and severally liable for the relevant liability.

A “relevant liability” is a liability incurred either:

• under the Defective Premises Act 1972 (DPA 1972);
• under section 38 of the Building Act 1984 (BA 1984) – if and when this is brought into force; or
• as a result of a “building safety risk”.

A “building safety risk” is defined as “a risk to the safety of people in or about a building arising from the spread of fire or structural failure”. This has broad scope: while claims under the DPA 1972 are limited to dwellings, liability as a result of a “building safety risk” encompasses a wide range of potential liabilities, including in respect of non-residential buildings.

Background to the recent decision

The case of Willmott Dixon v Prater and others concerns alleged fire safety defects in the design and construction of the external wall system (EWS) at a mixed-use commercial and residential property development in London. Willmott Dixon is seeking to recoup the cost of fixing the defective EWS by claiming around £47 million from its supply chain.

This includes claims against the specialist cladding and external envelope contractor Prater Limited (Prater), its guarantor and parent company Lindner Exteriors Holding Limited (Lindner), the architects, the building services engineers and the approved inspectors. They all deny any liability.

One of the co-defendants has applied for BLOs against both English and German-registered companies within the same corporate group as its other co-defendants, Prater and Lindner. Based on publicly available information, the applicant alleged that both Prater and Lindner had largely disposed of their assets, transferring them to other companies within their corporate group in the period after Willmott Dixon’s claim against them was filed.

If ordered, the BLOs will make the additional Lindner Group companies responsible for liability attributed to Prater or Lindner in the main claim.

The issue before Mrs Justice Jefford DBE related to the application by the Lindner Group companies for a stay on the BLO claim until the main claim was resolved. They submitted that it would be unfair for them to have to deal with the BLO claim until the question of whether Prater and Lindner were liable had been resolved, and/or whether they would discharge any resulting liability.

Technology and Construction Court decision

Mrs Justice Jefford DBE rejected the application for a stay. Notably, she found that:

• A party seeking a BLO was not obliged to bring its claim at the same time as the primary claim against a related company, whether or not such a party existed at the time of the project or the time of the proceedings.
• However, if the company did exist at the relevant time and the BLO was claimed before the resolution of a main claim, it would appear that the correct approach would be to have the BLO application heard and dealt with at the same time as the primary claim. Any burdens or difficulties with ensuring that the Defendants to the additional claim were afforded a proper and cost-effective opportunity to deal with it could normally be dealt with by appropriate case management.
• On proper analysis of the legislation, BLO claims would normally raise issues that did not necessarily arise in the main claim – but resolving those issues would typically involve consideration of much of the evidence relevant to the main claim. It would, therefore, seem unnecessary and unsatisfactory to have the court deal with the same/similar issues, which might involve considering evidence already on record more than once and/or require further evidence on much the same issues.
• BLO claims are claims contingent upon the liability of others and these contingent claims (such as claims for a contribution, or claims under guarantees) are the norm, not the exception, in sophisticated litigation – and claims for BLOs are no different.
• A BLO claim does not only arise and/or is made if the company facing the main claim failed to pay – a failure to pay was (and still is) not a pre-condition under the BSA.
• BLOs may be sought by defendants to building safety claims, and not just by claimants.

In light of the above, Mrs Justice Jefford DBE declined to agree to a stay of proceedings and rejected the application, then set directions for the additional claim (including deadlines for remaining Defences and an initial case management conference).

Just and equitable?

A few notable points from the arguments – which it will be interesting to follow when the BLO applications are heard in full – included:

• First, the court noted during argument that it was entirely possible in an appropriate case that it would be “just and equitable” to impose a BLO on related companies where the primary company had disposed of assets – even if such disposal was entirely innocent and not done to “asset strip” that company; and
• Second, one of the companies facing the claim for the BLO expressly relied both in its pleaded Defence and in its submissions to the court upon the fact that Prater and Linder (the Defendants in the main claim) had valid and effective professional indemnity insurance, which would serve to meet, at least in part, the claim made against them.

Key takeaways on the use of Building Liability Orders

There are very limited circumstances in which the courts will look beyond the separate legal personality of a company and ‘pierce the corporate veil’. However, the granting of a BLO (as well as certain other provisions of the BSA, which we examine separately) will do precisely that: it will allow for the corporate veil to be ‘pierced’ by extending liability for defective construction works and/or design services to “associated” entities, such as parent or group companies.

This is thought to be the first judgment considering BLOs and, therefore, provides welcome guidance on some of these points.

How this guidance will be applied in practice will be seen as the case proceeds to full trial and the BLO applications are heard. Applications for BLOs have also been made in a number of other cases and it is expected that several of these will make their way through the courts this year.

Source: Mondaq

Prime Minister Rishi Sunak has announced that the country will head to the polling booths on 4th July 2024.

Traditionally, a General Election would send the property market into a torpor of uncertainty, and the past few election seasons have been characterised by fears of potential tax hikes and punitive measures against the prime property sector. But the feeling this time is more positive, or at least sanguine.

Estate agents, buying agents and developers have roundly welcomed news of an imminent election. As Jamie Freeman of Haringtons UK summarises: “The sooner the better, as everyone dislikes uncertainty.” Will Watson of The Buying Solution is already looking forward to a post-election market bounce, suggesting there may be a “Summer/Autumn flourish with more demand and vendors deciding to sell.”

It helps that most political polls are pointing to a clear-cut and decisive result in July, so there’s less of that uncertainty flying around. And Labour’s policies are markedly more mellow compared to the Corbyn era, with not so much distance between the two main parties. Starmer is widely perceived as a safe pair of hands after years of turbulent Conservative rule.

Exactly a year ago, PrimeResi asked a panel of property professionals about what a Labour-led government could mean for the market. Of course there were worries about higher tax rates and policies targeting international buyers, but the consensus amongst our commentators was not negative.

In September, Mark Parkinson of top-end agency Middleton Advisors talked of “cause for optimism” in the prospect of a Starmer government. “The likelihood of an incoming Labour government no longer feels like a massive threat to prime property markets in London and the country,” he said.

Then in January, a poll of residential property developers by Knight Frank found a clear majority (70%) in favour of Keir Starmer in Downing Street, rather than a Tory or Lib Dem leader.

We also already know a fair bit about Labour’s housing policy agenda, ahead of formal manifesto launches. Starmer has pledged to “get Britain building” while warning of an increase in the SDLT rate for overseas buyers; Shadow Chancellor Rachel Reeves has promised reforms and more funds for the planning system, and just this week, Shadow Housing Secretary Angela Rayner outlined her plans for planning reform, ending the leasehold regime, and building a series of new towns.

Talking Heads: On a July election

The prospect of a change in government is priced into large parts of the prime market

Lucian Cook, head of residential research at Savills: “Affordability is by far the biggest factor in the mainstream housing market. Accordingly, we expect the pace and scale of interest rate cuts to have a more significant impact on the market than the timing or outcome of the general election, not least because of the short odds on a change in government.

“Headline inflation’s fall to 2.3% in the year to April indicates two or three bank base rate cuts, this year. That is likely to mean mortgage markets remain relatively stable in the short term, with the prospect of lower borrowing costs as the year progresses.

“And with a shorter-than-expected run in to the general election, there is more opportunity for buyer demand to gain traction over the autumn, with most of the uncertainty behind us.

“At the top end of the housing market, our March client survey showed a degree of ambivalence towards the prospect of a general election, with 79% of respondents saying it had no impact whatsoever on their commitment to move over the next 12 months.

“While prime property buyers may well have to contend with higher levels of underlying taxation, VAT on private school fees and targeted measures for overseas buyers, there is a sense that wealthy domestic buyers know what they are in for.

“That means the prospect of a change in government is priced into large parts of the prime market, especially as talk of more aggressive wealth taxes (think back to the ill-fated mansion tax proposals of the early 2010s) haven’t surfaced.

“The tax treatment of non-doms is the one potential source of disruption, suggesting a cautious summer market in prime central London. It has the potential to cause increased short-term price sensitivity and act as a drag on any subsequent recovery, that feels long overdue.

“More widely, while a change in government would be unlikely to materially change the macro-economic backdrop, current indications are that it would result in a change in the focus of housing delivery and planning, with Labour putting its ambition to deliver 1.5 million homes over the next five years high up its political agenda. While that has the potential to change the housing landscape over time, it is unlikely to have a significant impact on the market in the near term.

“From a policy perspective, perhaps the biggest impact of a July general election is the prospect that the Renters Reform Bill (which currently sits at the Committee Stage at the House of Lords) will struggle to be enacted before parliament is dissolved.

“However, with both main parties advocating reform in this area, it remains a case of “when” not “if” we see the abolition of the Assured Shorthold Tenancy across England and Wales, the main issue being the manner in which new regulations are introduced and the balance between protecting Landlord and Tenants interests. In that respect, close attention is likely to be given to the potential impact on the availability of homes to rent in an already undersupplied market.”

The sooner the better, as everyone dislikes uncertainty

Jamie Freeman, director, Haringtons UK: “We have all hoped that the bad weather in the early part of the year might have been the only thing to affect the country house market, but as ever the timing of the election will impact it further by pushing activity back in the year.

“Buyers are extremely cautious currently and understandable so, for those paying schools fees, the likely increase cost will inevitably impact the funds available for a house purchase with cost of debt not aiding either. For others the prospect of a Labour government and a possible wealth tax will have similar vibes. Sellers were reluctant to show properties in the rain and preferred to wait for their gardens to bloom and for sunny weather to take photos before listing their homes. With recent spells of good weather, more properties have entered the market. However, the announcement of a general election is likely to delay activity until after.

“But with an election later in the Autumn writing off the whole year, a July election could be seen as a result. The sooner the better, as everyone dislikes uncertainty and will likely wait to see the election results before making decisions.

“The increase in cost of schools, potentially 20-30% could lead to increased competition for homes in areas with good state schools, as parents might opt to move their children from private to state education.”

An election in July is positive news for the property market

Will Watson Head of The Buying Solution: “Calling an election in July is positive news for the property market – there are many buyers and sellers sitting on their hands waiting for clarity. We want the election over so the market can adjust and all the questions surrounding the non-dom status can be addressed more quickly, particularly if we have a new Labour government.

“There’s nothing worse, for any market, particularly property, than political uncertainty. When the dust settles post July 4th we might even have a Summer/Autumn flourish with more demand and vendors deciding to sell.”

The outcome is fairly certain this time around and the markets have already taken the outcome into account

Jess Simpson, Managing Director & Founder at Jess Simpson Property Search: “A short time frame between the announcement and the election could not be a better result for the property market.  The prime market is dictated by confidence and too much uncertainty always has a negative impact in what is generally a discretionary market. The sterling/USD rate remained stable yesterday, as did the FTSE which is encouraging.

“The outcome is fairly certain this time around and the markets have already taken the outcome into account.

“Continued low inflation will hopefully continue to calm bank rates, also adding some much-needed confidence back into the market.

“The market this spring will be short and sharp.  Lots of property entering the market now, with launches late due to poor weather delaying country houses looking their finest for presentation for sale. There will be lots to choose from and hopefully more of a buyers’ market this summer.”

We don’t expect significant disruption

Dominic Agace, chief executive of estate agents Winkworth: “With positive news in the offing and a New Labour version of the Labour party being proposed, we don’t expect significant disruption.  Interest rate cuts are expected and growth upgrades for the UK paint a picture for an improving property market this year after an already positive start.

“The biggest house price growth came when Blair was in power. We saw a rise of £48 a day on the average property price, which is contrary to popular belief that the Thatcher era saw the biggest growth due to Right to Buy.”

This shotgun election means we now stand a chance of having a half decent Autumn market regardless of who is elected

Edward Heaton, founder of buying agency Heaton and Partners: “We’d expected a short selling season this year with most transactions agreed before the summer holidays followed by a dampened autumn market because of the anticipated election. This shotgun election means we now stand a chance of having a half decent Autumn market regardless of who is elected.

“It will be fascinating to see whether buyers are willing to commit to a purchase in the next couple of months and I suspect some of those that are could be rewarded with more favourable terms than they might otherwise have expected.

“For wealthy buyers, there is certainly nothing like the fear that we witnessed in the last election with the threat of a Corbyn government. I think the domestic audience is resigned to paying higher taxes probably regardless of the outcome of the election. We anticipate many international buyers will adopt a more cautious approach until the landscape becomes clearer.”

We anticipate a repeat of what happened after the General Election in 2019

Robin Thomas, consultant at Recoco Property Search: “The announcement by the Prime Minister of a General Election to take place on 4th July is excellent news for the UK property market. There is currently a large differential as to what sellers expect to achieve by way of a sale price and what buyers are prepared to pay. Many vendors are still hoping to achieve prices that were being paid in 2021/2 but prices have dropped since and buyers have been worried by the economy and interest rates.

“Now that we have a definite date for the General Election, we anticipate a repeat of what happened after the General Election in 2019 with a Government given a clear majority and thereby giving the property market the confidence it currently lacks. If this happens, we will see a much more active property market in the late summer and autumn.”

The General Election is unlikely to cause the housing market to slow down

Nigel Bishop, of buying agency Recoco Property Search: “The General Election is unlikely to cause the housing market to slow down as the majority of buyers are taking advantage of the Spring market, which has seen an influx in the number of properties being put up for sale.

“Sellers remain eager to sell now in the hope of securing the right buyer for their home – especially as, despite a higher-than-expected inflation reading, some lenders have begun cutting mortgage rates which fuels buyer demand even further.”

We need a new Government now with a clear mandate to drive the UK forward

Adam Lawrence, chief executive of property developer London Square: “We have been in limbo for so long. We welcome clarity.

“It will be good for the housing sector and business generally. We need a new Government now with a clear mandate to drive the UK forward.”

The outcome of this election will be crucial in determining the trajectory of the property market for the foreseeable future

Jerome Lartaud, director of independent buying agency, Domus Holmes: “The next six weeks will be a period of cautious observation for many in the property market. We are likely to see a stall in activity as buyers and sellers adopt a wait-and-see approach, with many preferring to delay major financial decisions until the political landscape is clearer.

“There is a concern that some homeowners and investors may decide to relocate their assets outside of the UK. This trend could be driven by uncertainties around potential policy changes and economic stability. If significant changes are anticipated in taxation or property regulations, especially regarding stamp duty or capital gains tax, we may see an outflow of investment to more stable markets.

“The outcome of this election will be crucial in determining the trajectory of the property market for the foreseeable future. Should a new government implement favourable policies, such as cuts in stamp duty or other incentives, it could rejuvenate the market and encourage both domestic and international investment. Conversely, policies perceived as detrimental to property owners and investors could exacerbate market stagnation and drive further asset relocation abroad.

“The election’s result will set the tone for market dynamics moving forward, highlighting the importance of clear and supportive housing policies in maintaining market confidence and stability.”

We don’t see the election having as big an impact as in previous years

Richard Donnell, executive director at Zoopla: “We don’t see the election having as big an impact as in previous years, particularly as there is not a huge divide in policy between the two main parties and with few specifics on housing other than a focus on reforming the private rental sector and boosting housing supply.

“We don’t see the election having as big an impact as in previous years.”

An election in the summer, when the market is traditionally slower, could have less impact on housing market activity than if one had been called for the Autumn

Tim Bannister, Rightmove’s property expert: “A look back at recent elections shows that house prices and activity usually hold steady in the lead up to the event, and we often then see a post-election bounce.

“It’s taking over seven months to move on average and we’re still seeing pent up demand from last year flowing through into 2024. This means that, for many, the desire to get on with moving is likely to outweigh waiting to see what new policies the Government could bring in.

“An election in the summer, when the market is traditionally slower, could have less impact on housing market activity than if one had been called for the Autumn. So, as we head towards this election, the housing market is likely to stay active, with activity ramping up once the election is over and things become clearer. It could mean that we’re gearing up for a stronger than usual August, especially if we see interest rates finally start to fall.”

Housing must be a key theme for all political parties

Nathan Emerson, CEO of Propertymark: “Housing is the cornerstone for every single community across the UK. It’s the foundation to a strong economy, and must be a key theme that all political parties are placing front and centre of their general election campaigns.

“Many successive governments have failed to keep pace with demand, and we would encourage potential policy makers from all sides to place a rejuvenated emphasis on tackling current issues and meeting future demand.

“There must be a sustainable mix of housing solutions for both buyers and renters, as well as a commitment to ensuring the UK leads regarding, innovation, quality, and environmental sustainability. In addition, any new government must ensure there is comprehensive support in place for first time buyers to prevent the prospect of home ownership being out of reach, but equally ensure the housing market remains balanced for all. It is also important there is a full scale commitment to ensure wider infrastructure is also planned for, as we witness an ever growing population.”

Increasing housing supply, planning reforms and the battle over building on green belt land will take more than a few new policy initiatives whichever Government comes into power

Wayne Douglas, Managing Director at City & Country: “The general election announcement comes as no surprise and I hope to see much-needed change, but it will not happen overnight. Increasing housing supply, planning reforms and the battle over building on green belt land will take more than a few new policy initiatives whichever Government comes into power. The new government must address the skills shortages that are causing the problem, such as a lack of experienced planners and a lack of skilled tradespeople. For example, the Royal Town Planning Institute revealed that 25% of planners left the public sector between 2013 and 2020, and in the same period the number in the private sector grew by 80%. And on construction sites all over the UK, complex projects are being delayed by a lack of skilled tradespeople.

“On a local and national level, the new UK Government need to create an environment where private, and particularly SME housebuilders, can thrive and ultimately support the end buyer. I would urge the new Government to engage with our industry to get development off the ground more quickly and support demand for new homes across our country consistently rather than use it for short term political gain via headline-grabbing negative statements.”

We can no longer allow politics to drive the housing market the way it has over the last 30 years

Kate Faulkner OBE, property expert: “Whoever is in government next, just like interest rate changes have been de-politicised, so must our housing strategy and delivery. It is clear that successive governments over the last 30 years, of all colours, have failed to deliver a housing sector that works for all: social tenants and those in the private sector. This failure must be addressed as a new Government comes to power. If it isn’t,  we will see more people on the streets and kids growing up in unacceptable temporary accommodation.

“For every £1 spent on building a new home, £2.41 is put back into the economy, so housing drives much needed economic growth. We are short of 1mn social homes, as a result, we have 1mn households on benefits renting in a poorly regulated private rented sector and not enough affordable homes for the next generation to buy. Robbing Peter to pay Paul policies by reducing the PRS to support First Time Buyers has resulted in more people on the streets and in temporary accommodation and the biggest rise in rents we have seen for years.

“We need a strategy that eradicates our shameful housing waiting lists. Focusing on this will free up more homes to rent and buy in the private sector.

“We can no longer allow politics to drive the housing market the way it has over the last 30 years. We can fix our housing crisis, but only if the public and private sector work together to fund decent homes in all tenures.”

The small window of warning gives little time for any added uncertainty or nervousness

Kate Eales, deputy head of residential at Strutt & Parker: “The news of the general election being just six weeks away should be met by the market with a sigh of relief rather than a gasp of panic. The small window of warning gives little time for any added uncertainty or nervousness, and is good news for people wanting to sell quickly, particularly if they have deadlines to meet like the school term in September or a new job.

“Those who have been leaning on a ‘wait and see’ attitude can now proceed with confidence as, regardless of the election result, the remainder of the year will deliver a busy market fuelled by those who have been sitting on their hands and a more buoyant economy. Positive inflation figures and mortgage lenders pricing in anticipated interest rate falls have already delivered a busier market in recent weeks, with renewed motivation and confidence from both buyers and sellers alike.”

Source: PrimeResi