Mixed-use buildings and the BSA – how to avoid getting all mixed up!

Navigating the enhanced regime – plain sailing or choppy waters?

Multiple factors have given rise to problems with the smooth implementation of the new regime. Currently, the regime is perceived as being far from a quick, straightforward and/or a transparent process. Some of the factors behind this perception include:

• Patchy levels of competency on the part of those making applications under the new regime.
• A lack of resources at the BSR, particularly with respect to the number of people with the necessary expertise to evaluate and process applications.
• A lack of knowledge sharing within the building/fire safety consultant community, and also between them and the BSR to learn from each other to ensure compliant submissions.
• An unwillingness on the part of the construction industry to truly engage with the ethos of the building safety regime; and
• the expected teething troubles of a new regulatory regime “bedding-in” as all those in the industry upskill.

The net effect of these combined factors is that significant delays are now being encountered by those seeking Gateway 2 approval particularly for developers of high-rise residential projects which of course impacts project timelines and ultimately makes housing delivery targets hard to achieve.

What is the scale of the problem?

A response from the government to a freedom of information request (How to make a freedom of information (FOI) request: Overview – GOV.UK) raised last year relating to the performance of the BSR in processing Gateway 2 applications, revealed:

1. the total applications received between October 2023 and September 2024 by the BSR was 1,018;
2. of the 1,018 applications received only 146 applications (approximately 14%) were approved (allowing construction to proceed);
3. 25 applications were rejected outright; and
4. the remainder of the applications i.e. 847 either remained pending or “unspecified” at the time of reporting.

It is perhaps not surprising that most of the concern and frustration from this significant bottle-neck has come from large scale developers engaged in bringing forward new residential developments who, quite rightly point out if the Government wants to achieve its manifesto pledge of building 1.5 million dwellings by the end of the parliament, HRB’s will form a key part of this, and the current delays are presenting an insurmountable obstacle achieving that goal. There has been less “noise” around the impact that such delays have on commercial landlords of in occupation HRBs as they endeavour to effectively manage and enhance their property portfolios, but this does not mean that the delays are any less challenging for operators in this area.

Does the enhanced regime apply to all works in an HRB?

It is worth noting that when we are talking about the “Works” which will require an application under the new regime, we are talking about works which can include:

1. the erection or extension of a building, and/or
2. material alterations to a building, and/or
3. installation or extension of a controlled service or fitting, and/or
4. a material change of use.

The devil is however very much in the detail when it comes to works required to an existing HRB:

“Controlled services or fittings” can include a wide range of potential fit-out type works, including:

• electrical systems
• drainage or water supply systems
• gas installations
• heating systems
• ventilation systems
• fixed air conditioning systems
• fire safety system

With respect to “material alterations”, these are works which affects the structure or fire safety of a building in specific ways which could result in it becoming less compliant with a certain part of the building regulations than it was before and could include:

• removing load bearing walls or structures
• altering fire doors or escape corridors
• altering the access and facilities for disabled people

Installing, extending or altering any of these kinds of systems constitutes building work requiring gateway approval even if it’s part of a non-structural fit-out. The bottom line is therefore that relatively minor fit-out works to a HRB can trigger the need for a gateway application. The Cripps Construction Team have encountered a number of recent examples of works which have fallen under the new regime:

Example 1

Construction of an extraction flue through a multi-storey mixed-use central London listed building following the grant of a planning permission for change of use and allowing for a restaurant at ground floor level.

Example 2

Construction of a new kitchen and hot food preparation area at ground floor level of a library of a mixed-use building with HRB located within a HRB.

Bear traps

As well as the legal risks associated with non-compliance, there are significant practical and commercial risks for a landlord to be aware of and manage when a change of a tenant or other commercial circumstances prompt the need for redevelopment or refurbishment of an existing HRB. These include:

• A lack of resource. Commercial landlords are not necessarily as well-resourced and “upskilled” to deal a high volume of relatively low value construction works across their property portfolio which may require HRB gateway approval.
• Asset management teams when negotiating heads of terms for commercial lettings may make commitments to deliver landlord CAT A fit-out works without checking the HRB status of a building or taking into account the extended timescale to deliver a commercial unit due to the need to obtain gateway approvals.

Multiple commercial letting “trigger” events, of the types already identified, may necessitate landlord CAT A fit-out works requiring HRB gateway approval as a commercial condition to achieving maximum yield from its commercial tenants over the longer term. There is a risk that asset management and project development teams within a business may not

As well as the legal risks associated with non-compliance, there are significant practical and commercial risks for a landlord to be aware of and manage when a change of a tenant or other commercial circumstances prompt the need for redevelopment or refurbishment of an existing HRB. These include:

• A lack of resource. Commercial landlords are not necessarily as well-resourced and “upskilled” to deal a high volume of relatively low value construction works across their property portfolio which may require HRB gateway approval.
• Asset management teams when negotiating heads of terms for commercial lettings may make commitments to deliver landlord CAT A fit-out works without checking the HRB status of a building or taking into account the extended timescale to deliver a commercial unit due to the need to obtain gateway approvals.
• Multiple commercial letting “trigger” events, of the types already identified, may necessitate landlord CAT A fit-out works requiring HRB gateway approval as a commercial condition to achieving maximum yield from its commercial tenants over the longer term. There is a risk that asset management and project development teams within a business may not be fully aware of the regulatory requirements or the hurdles and time delays in achieving them resulting in commitments being made to incoming tenants which are unachievable.
• Applying for and obtaining these gateway approvals is not part of a landlord’s core business process in the same way that it is for a residential new build developers applying for planning and building control approval for a new HRB scheme. Commercial landlords may not have the network of consultant expertise to advise them and steer them through the process.
• A lack of awareness of the regulatory requirements and delays may result in agreements for lease and/or development agreements being negotiated which do not effectively take account of the potential delays to occupation nor factor this in when agreeing liquidated damages rates, rent free periods or longstop termination dates for delayed delivery of the commercial unit.
• A lack of communication between asset management and project delivery teams may result in a failure of the latter to ensure a flow down of commercial risks accepted under an agreement for lease to fit-out contractors and the consultant team tasked with delivering the works (and therefor best placed to manage the works).

Avoiding the bear traps

The good news is that it is possible to navigate the new building regime and minimise the risk of non-compliance but to do so requires an in-depth knowledge of the legislative and regulatory framework as well as the guidance that supports it and collaboration from all stakeholders involved on a project whether that be the construction of a new London skyscraper or the fit out of a small commercial unit where works are such that they fall within the scope of the enhanced regime.

Some key risk management tips include:

• Making sure your asset management and project teams know which assets in the portfolio are HRBs
• If you are negotiating a commercial deal (e.g. the grant of a new lease) which is likely to involve work to an HRB then engage with the internal project team that will be charged with delivering it early, before agreeing heads of terms finalising the agreement for lease.
• Project teams should cultivate a knowledge base and build a construction supply chain of reputable consultants (including experienced fire safety consultants and principal designers) who can advise on prospective works to limit friction points and to steer the project through the gateway process.
• Share knowledge (or war stories!) gained on works requiring gateway approval both from your external consultants and internally.
• Keep informed and up to date and, if possible, designate and resource an internal “expert” to liaise with your professional team.
• Always consider whether the works which you are proposing are or could potentially be reconfigured so that they are:
  1. Exempt works (as defined Schedule 2 of The Building (Higher-Risk Buildings Procedures) (England) Regulations 2023) such as replacing parts in appliances, replacing external doors and certain minor works such as replacing wash basins, baths and showers
  2. Fall within the less onerous gateway requirements for Category B works (as defined in Regulation 12 of The Building (Higher-Risk Buildings Procedures) (England) Regulations 2023)
  3. taking place within an “independent section” (see Regulation 4 of The Higher-Risk Buildings (Descriptions and Supplementary Provisions) Regulations 2023) and therefore avoid the need for gateway approval.

Be aware of and keep up to date with government guidance on submitting a gateway application.

How we can help

If you would like to discuss anything discussed in this article in further detail please contact a member of our Building Safety Act team.