Guidance

Amendment to the Higher-Risk Buildings (Descriptions and Supplementary Provisions) Regulations 2023 cost benefit analysis statement

Published 17 October 2023

Applies to England

Introduction 

1. This cost benefit analysis relates to an amendment being made to the Higher-Risk Buildings (Descriptions and Supplementary Provisions) Regulations 2023 (“the Regulations”). This amendment is being made through the Higher-Risk Buildings (Keeping and Provision of Information etc) (England) Regulations, which have been laid in Parliament and are subject to the affirmative legislative procedure.

2. The original Regulations were made in March 2023. Together with the Building Safety Act 2022 (“the Act”), the Regulations mean that in design and construction and when building work is carried out in existing higher-risk buildings the higher-risk regime applies to buildings which are at least 18 metres in height or have at least 7 storeys and have at least two residential units, as well as care homes and hospitals meeting the same height threshold. The in-occupation requirements apply to buildings which are at least 18 metres in height, or have at least 7 storeys, and have at least two residential units.

3. The Regulations specifically exclude certain categories of building from the scope of the higher-risk regime. In design and construction excluded categories include hotels, secure residential institutions (for example, prisons) and military premises. In occupation the excluded categories include care homes, hospitals, hotels, secure residential institutions, and military premises.

4. We are making a minor amendment to the Regulations, related to the exclusion of military premises. Currently the Regulations exclude any high-rise residential building which contains any living accommodation used by UK or foreign military personnel or provided by the Ministry of Defence. These buildings are not owned or managed by Ministry of Defence, and do not have the same security concerns. The Ministry of Defence’s internal security arrangements do not apply to them. As they are standard high-rise residential buildings, we are amending the Regulations to bring them within scope of the higher-risk regime.

5. This amendment is necessary to ensure that the Regulations align with our intention to include high-rise residential buildings within the scope of the higher-risk regime. This aligns with Dame Judith Hackitt’s recommendation that the focus of the higher-risk regime should be on high-rise residential buildings.

6. As this amendment to the Regulations will result in a description of building becoming a higher-risk building, government is required by sections 120F of the Building Act 1984 (inserted by section 31 of the Act) and section 67 of the Act to carry out and publish a cost benefit analysis. The Act sets out that if, in the view of the Secretary of State, the costs or benefits cannot reasonably be estimated, or it is not reasonably practicable to produce an estimate, then the cost benefit analysis need not estimate the costs and benefits but instead must include a statement of the Secretary of State’s opinion and an explanation for it.

7. In the Secretary of State’s opinion, it is not reasonably practicable to produce estimates of the costs and benefits that will arise from this amendment to the Regulations. Two Impact Assessments were recently published on the Regulations which set up the full requirements of the higher-risk regime, made under part 3 and part 4 of the Act. As the buildings we are proposing to add to the higher-risk regime through this amendment are standard high-rise residential buildings, they have already been accounted for in these Impact Assessments.

8. For this reason, this cost benefit analysis sets out an overview of the requirements the costs and benefits arise from, but links back to the Impact Assessments for estimates of the costs and benefits.

Costs and benefits of amending buildings defined as higher-risk buildings in the new regime

Costs of including buildings defined as higher-risk buildings in the higher-risk regime

9. Higher-risk buildings must meet the requirements of the higher-risk regime. There will be a cost of meeting these requirements for any building included within scope of the higher-risk regime.

10. For the design and construction of new higher-risk buildings and during building work in existing higher-risk buildings the requirements of the higher-risk regime include having named duty holders, a new building control application process, managing, maintaining, and handing over a digital golden thread of information, and the creation of a mandatory occurrence reporting framework.

11. There will be a cost to complying with these requirements for developers, designers, contractors, and others involved in the commissioning, design and construction of higher-risk buildings. We have estimated the full costs of compliance with the design and construction part of the higher-risk regime in the Impact Assessment on Regulations being made under part 3 of the Act. This Impact Assessment can be found linked here.

12. The requirements of in-occupation part of the higher-risk regime include registering the building prior to occupation, having named Accountable Persons (including a Principle Accountable Person), the creation of a safety case and safety case report, duties concerning residents, the ongoing management of a digital golden thread of information, and the creation of a mandatory occurrence reporting framework.

13. There will be costs to complying with these requirements for building owners, management companies and individuals involved in the management of higher-risk buildings in occupation. We have estimated the full costs of compliance with the in-occupation part of the higher-risk regime in the Impact Assessment on Regulations being made under part 4 of the Act. This Impact Assessment can be found linked here.

14. There will also be costs to government for the setting up and ongoing role of the Building Safety Regulator (the Regulator) who will oversee the new regime in design and construction and occupation. The Regulator intends to recover most of their costs from industry via cost recovery.

15. Local regulators will be required to provide assistance to the application and enforcement of the higher-risk regime by the Regulator. Local regulators, including building control teams in local authorities and fire and rescue authorities, will facilitate and assist the Regulator through a multi-disciplinary team approach and will be able to cost-recover for their functions.

Benefits of including buildings defined as higher-risk buildings in the higher-risk regime

16. We estimate that there will be benefits of including buildings defined as higher-risk buildings in the higher-risk regime. This includes benefits arising from amending the Regulations to ensure all high-rise residential buildings are captured. The full benefits of the higher-risk regime can be found in the Impact Assessments linked here and here.

17. The benefits of higher-risk regime have been estimated collectively across all the requirements in design and construction under part 3 of the Act and requirements in-occupation under part 4 of the Act. We estimate equivalent annual benefits of £95.6 million to £416.5 million per annum in monetised benefits. These benefits are realised through reducing the risk of fire incidents, avoiding the costs of solving systemic issues, reducing the risk of structural issues and indirect benefits to the construction industry. There are also non-monetised benefits created by the new higher-risk regime. These include mitigating negative mental health and wellbeing impacts arising from any existing concerns as to the safety of people’s homes, better functioning mortgage and insurance markets, as there will be greater confidence that higher-risk buildings are constructed correctly, and greater transparency in construction.