On 18 January 2023, the Minister for Housing, Local Government and Heritage received Government approval to draft legislation to support the remediation of apartments and duplexes with fire safety, structural safety and water ingress defects, constructed between 1991 and 2013.  The legislation will provide a basis for the establishment of a remediation scheme (the “Scheme”) aimed at protecting the safety and welfare of those living in apartments or duplexes with such defects that occurred during construction. 

The approach envisaged is a "whole building" approach which seeks to ensure that common areas and shared spaces are also remediated.  The Government envisages that the Housing Agency will play a central role in the administration of the Scheme and that owners' management companies ("OMCs") will be funded to carry out the necessary remediation works with specific limitations or exemptions on certain commercial owners. 

The Government has also decided that remediation works related to fire safety defects, entered into or commenced from 18 January 2023, will form part of the Scheme subject to certain terms and conditions.  Such works need to be agreed with local authority fire services and more details of this process will be worked out as a priority and provided to the public in due course.

Additionally, the Government has announced that they have approved the principle of allowing remediation costs already incurred or levied to be covered under the scheme if they fall within the scope of the Scheme. 

What is Covered?

In terms of which defects are covered by the Scheme, only those attributable to defective design, defective or faulty workmanship, defective materials or any combination of these factors which were in contravention of the relevant parts of the Building Regulations applicable at the time of construction will be eligible for inclusion in the scheme.  Any defects that originate from inadequate maintenance or poor management will not be included within the scope of the scheme. 

The scope, eligibility and conditions of the Scheme will ultimately depend on the legislation passed.  It is envisaged that the legislation will be in effect from 2024 onwards. 

What is Not Covered?

Works to remediate defects arising from inadequate maintenance, a failure of sinking funds to adequately allow for end of life replacement of building and safety systems, or inadequate management of later works to the building that have inadvertently resulted in defects are not covered by the scheme.

It is also noted that irrespective of the establishment of the Scheme, responsibility for fire safety continues to rest with those who control the premises as set out in the Fire Services Acts. 

A Scheme of Last Resort?

It is unclear as of yet whether the Scheme will operate as a scheme of last resort and whether owners will need to first seek to recover from builders/designers/insurers before seeking to rely on the scheme.  Obviously, many of these cases may potentially face limitation issues given the time which has elapsed since completion.

The Scheme also creates an uncertain situation for OMCs who have already expended monies on remediation works which they are currently seeking to recover by way of litigation.  In circumstances where the scheme will not be in place until 2024, there may be somewhat of a ‘no-man's land’ in respect of existing sets of proceedings regarding fire safety defects, until the wording of the Act becomes clear and its interaction with existing proceedings is fully known. 

Of particular note is that the Scheme does not apply to commercial owners and, therefore, in many mixed use developments, it appears that there will be certain limitations and exemptions placed on commercial owners within those developments. 

Interestingly, in line with the "whole building approach", this means that all parts of the building, for example, the common areas and individual apartments, must be considered together when addressing defects.  This may give rise to an interesting situation, albeit an unlikely one, if certain residents of apartment complexes do not want to participate in the remedial works scheme. 

Reforms

The Government has reiterated that the existing, and proposed building control reforms such as the Building Control (Amendment) Regulations 2014, which focus on ensuring strong and effective regulation in the construction industry and building control system, the creation of the National Building Control Management Project and the enactment in July 2022 of the Regulation of Providers of Building Works and Miscellaneous Provisions Act 2022 aim to avoid these situations arising in future. 

Central to this enhanced system of regulation and reform will be the establishment of an independent Building Standards Regulator.  This is being considered at present by Government. It will be paramount that the Building Standards Regulator has sufficient breadth of scope, effective powers of inspection and enforcement and an appropriate suite of sanctions to apply when non-compliance arises in respect of buildings.

Depending on how the Scheme operates, this may lead to a reduction in claims against construction professionals.  We shall keep this under close review over the next twelve months.