Getting to grips with the new Building Safety Act Gateway regime – how will this impact development in the living sector?

One of the key parts of the Building Safety Act 2022 is the new Gateway regime for ‘higher risk buildings’, which came into full force on 1 October 2023 This is a three step approval process that is intended to ensure that, in the post-Grenfell landscape, building safety risks are properly scrutinised by the new Building Safety Regulator (the “BSR”) at the planning, design and construction phases of a development of a ‘higher risk building’ (or when carrying out works to an existing ‘higher risk building’).

What developments in the living sector will be caught by the Gateway regime?

The Gateway regime only applies to ‘higher risk buildings’.  A ‘higher risk building’ (“HRB”) is a building which:

1. contains two or more residential units (which includes PBSA and co-living) or is a care home or a hospital; and
2. is 18 metres or more in height, or seven or more storeys. 

Hotels are excluded from the Gateway regime, as they are already regulated by the Fire Safety Order 2023.

Gateway 1 – the planning stage

Gateway 1, which has been in force since 1 August 2021, requires a developer to submit as part of its planning application a fire statement setting out fire safety considerations specific to the development .  Local planning authorities are obliged to seek specialist advice on relevant applications from the BSR, as the statutory consultee on fire safety, before a decision is made on the planning application.  The purpose of Gateway 1 is to ensure that fire safety considerations are inherent within the design proposal of the relevant buildings before planning permission is granted. 

Gateway 2 – the pre-construction stage

Gateway 2 replaces the ‘deposit of plans’ stage of the building control process and is a significant change that will bring new challenges to living sector developments.  Under Gateway 2, before new HRB work can start a building control approval application must be made to the BSR. The purpose of this application is to demonstrate that HRB works will comply with all applicable requirements of the Building Regulations.  The BSR is now the building control authority for all HRBs, which means that developers will no longer be able to choose the building control body they use.

Gateway 2 is a ‘stop/go point’ and construction cannot begin until:

1. the BSR has granted building control approval for the work.  The BSR must determine an application within 12 weeks (eight weeks for a refurbishment of an existing HRB) from the date it was received (or within an agreed longer period);
2. any conditions specified by the BSR when it approves the application are fulfilled; and
3. the BSR has been notified of the intended start date of the works – at least five working days’ notice must be provided.

Living sector developers of HRBs are therefore no longer able to start construction immediately after planning permission is obtained. 

Gateway 3 – the completion stage prior to occupation

Under the third and final gateway, once the works have been completed and before the HRB is occupied, an application needs to be made to the BSR for a completion certificate (the “HRB Completion Certificate“).  The BSR will assess whether the works have been carried out in accordance with Building Regulations.  The BSR has eight weeks to determine the application (or an agreed longer period), and an inspection by the BSR should be carried out before approval is given. 

Gateway 3 is a further ‘stop/go point’.  It is a criminal offence for an HRB to be occupied before:

1. an HRB Completion Certificate has been issued; and
2. the HRB has been registered with the BSR for occupation.  This additional registration requirement is a separate step from the HRB Completion Certificate and developers cannot apply to register an HRB with the BSR until an HRB Completion Certificate has been issued.

Implications for development in the living sector

Timing – With the BSR required to review all documents and information for each HRB at each step of the three stage Gateway process, there is the potential for significant delays to transaction timetables and construction programmes, which will in turn have a knock-on effect on various matters including development costs, investor returns and risk profiles.  As a minimum, developers are likely going to need to build at least an additional 20 weeks into their programmes to take account of the approval process of the BSR at Gateways 2 and 3.  The timing issue will be particularly important for PBSA developments given the sensitivity around being able to occupy for the start of the relevant academic year.   

Occupation – One of the biggest issues the living sector will need to grapple with is the inevitable pause from practical completion of the works under the building contract to the issuing of the HRB Completion Certificate.  Delay to the issue of the HRB Completion Certificate will be of particular importance to investors, funders and lenders since occupation will not be permitted and the asset cannot generate any income until the HRB Completion Certificate is issued and the HRB has been registered with the BSR for occupation.  The key question is who takes the risk of such delay?  Investors will see this as a developer risk, but developers may be cautious about taking on all this risk here as it is too early to say how this new regime will operate in practice and there are concerns in the market about whether the BSR will be appropriately staffed to deal efficiently with the volume of applications expected.  

Golden Thread – The ‘Golden Thread’ is a pack of information about an HRB that is designed to enable those managing an HRB to keep the building safe.  The information and documents required through the three Gateways will form part of the ‘Golden Thread’ information pack.  The ‘Golden Thread’ information will not only need to be maintained during the construction of an HRB, but also throughout the HRB’s life cycle.  It will become a key document in future living sector transactions and on acquisitions of HRBs (whether completed assets or during the development phase) it will be important to get this information reviewed by a technical advisor to ensure that the information is complete and is being properly maintained.