Guidance

Responsible Actors Scheme: plain English guide

Updated 15 February 2024

Applies to England

A guide explaining the Responsible Actors Scheme.

Background

Following the Grenfell Tower tragedy, it became clear that a large number of residential buildings had serious fire safety defects. In response, government is making sure that buildings are made safe through government remediation funds; it is strengthening the regulatory system for building and product safety; and it is using the tax system and legislation to make sure that industry pays a fair share of the cost of remediation of unsafe buildings, so that leaseholders are protected from paying to fix problems that they did not cause and were powerless to prevent.

On 25 April 2023, the government laid draft affirmative regulations to establish a Responsible Actors Scheme for residential developers under sections 126-129 of the Building Safety Act 2022. The regulations were signed into law on 3 July and came into force on 4 July 2023. The Responsible Actors Scheme has now been launched.

Aims of the Scheme

The Scheme aims to improve the safety and standard of buildings by requiring that any member of the Scheme must:

• identify residential buildings that are over 11 metres in height in England that they developed or refurbished over the 30 years ending on 4 April 2022, and any of those buildings known to have life-critical fire safety defects
• remediate and/or mitigate, or pay for the remediation/mitigation of, life-critical fire safety defects in those buildings; and
• reimburse government schemes for taxpayer-funded work to remediate and/or mitigate defects in those buildings, thereby assisting government to be able to pay for and implement remediation schemes designed to make buildings safe

These requirements are in accordance with the terms of a Developer Remediation Contract to be entered into between developers and the Secretary of State of the Department for Levelling Up, Housing and Communities.

The Scheme is supported by planning and building control prohibitions that impose commercial consequences on any developer who is eligible for the Scheme and is invited to join, but who chooses not to join or later fails to comply with the Scheme’s membership conditions. The prohibitions will be applied simultaneously and in conjunction with one another.

The prohibitions will act as an incentive for developers to remediate and/or mitigate defects in unsafe buildings and will make sure that responsible developers who take on the cost of remediating unsafe buildings are not disadvantaged as compared to other eligible developers who fail to do so.

The regulations make appropriate provision for company groups. For example, when dealing with a company group, the Secretary of State will nominate one eligible entity to join the Scheme on behalf of others in the group. The prohibitions will apply to other entities controlled by a prohibited developer thereby preventing a developer from avoiding prohibitions by continuing to develop buildings through other entities which it controls. Further information on the Scheme prohibitions can be found below.

Eligibility for the Scheme

The Scheme is initially focusing on major housebuilders and other large developers who have developed or refurbished multiple residential buildings that are known to have life-critical fire safety defects by virtue of having been assessed as eligible for a relevant government cladding remediation scheme.

Over time, the government intends to expand the Scheme to cover other developers who developed or refurbished defective residential buildings that are over 11 metres in height and should pay to fix them.

Developers will be eligible for the Scheme if they meet one or more of the following three sets of criteria, and they are not a Registered Provider of Social Housing (or a wholly owned subsidiary of one):

• their principal business has been residential property development; they meet the ‘profits condition’ below; and they developed or refurbished one or more residential buildings over 11 metres in height in England over the 30 years ending on 4 April 2022 (other than solely as a contractor)
• they are a developer who meets the ‘profits condition’ below; and developed or refurbished (other than solely as a contractor) two or more buildings that have been assessed as eligible for a relevant government cladding remediation scheme
• they are a developer who developed or refurbished (other than solely as a contractor) at least one residential building over 11 metres in height that qualifies for remediation under the terms set out in the developer remediation contract; and they volunteer to sign the contract and join the Scheme

The ‘profits condition’ will be met by any developer whose average annual operating profit over a 3-year period (companies’ financial years ending 2017, 2018, and 2019) was £10 million or higher. Certain exceptional items and unrealised value adjustments are excluded from consideration. The regulations set out the detail of the profits condition, including the required adjustments to the operating profits figures in accounts.

Developers will be treated as responsible for the development or refurbishment of buildings, where the development or refurbishment was undertaken by another entity in their company group.

More information about the eligibility criteria can be found in the Responsible Actors Scheme Regulations.

Conditions of membership

A developer who is eligible for the Scheme may join and remain in it only if they meet its membership conditions.

The membership conditions are:

• members of the Scheme must enter into a developer remediation contract with the Secretary of State of the Department for Levelling up Housing and Communities. The standard form contract terms are available on GOV.UK
• in accordance with the contract terms, a Scheme member must:
  • identify residential buildings that are over 11 metres in height they developed or refurbished over the 30 years ending on 4 April 2022, and any of those buildings known to have life-critical fire safety defects
  • remediate and/or mitigate or pay for the remediation/mitigation of life-critical fire safety defects in those buildings
  • reimburse government schemes for taxpayer-funded work to remediate and/or mitigate defects in those buildings
  • not undertake restructurings or certain other steps which would mean that the Scheme member cannot fulfil its obligations under the Scheme
  • meet all other obligations of the developer remediation contract, including keeping building owners, residents and DLUHC updated on the progress of remediation works
• Scheme members must comply with requests for information made by the Secretary of State pursuant to the contract and regulations, to enable the Secretary of State to carry out his monitoring and enforcement functions
• Scheme members must also not take steps to avoid their obligations under the Scheme or defeat the Scheme’s aims

The Scheme may in due course impose additional membership conditions through further regulations that would be scrutinised by Parliament.

Full details of Conditions of membership can be found in the Responsible Actors Scheme Regulations.

Applying to join the Scheme

Where a developer is identified as being likely to be eligible for the Scheme (as a residential property developer or because they have developed or refurbished at least two buildings assessed as eligible for a government remediation fund), the Secretary of State will invite the developer to join.

The regulations provide for a 60-day period for an invited developer either to join the Scheme, or to make representations to the SoS supported by evidence that the eligibility criteria are not met. If it is determined that the developer is eligible after making representations, they will be expected to join the Scheme within 30 days.

Developers who are eligible but have not yet been invited by the Secretary of State to join the Scheme, or who wish to apply to join as a volunteer, can request an invitation to join the Scheme from the Secretary of State for DLUHC.

Developers who have been invited to join the Scheme will do so by entering into a developer remediation contract with the Secretary of State for DLUHC (if they have not already done so) and committing to meet the other conditions of membership. Once they have joined, the Secretary of State will add their name to a published list of entities who are members of the Scheme.

If an eligible developer (other than a volunteer) opts not to join the Scheme after being invited, the Secretary of State will notify them and add them and entities they control to a published list of entities to which the prohibitions set out in the regulations will be applied. Part 3 of the Regulations provides an opportunity for persons to apply for an exception. If you are thinking about applying for an exception, further information can be found below.

Further information on how to join the Scheme can be found in the Responsible Actors Scheme enrolment guide. Full details of the application process can be found in the Responsible Actors Scheme Regulations.

Monitoring and enforcement

Members of the Scheme will be required to provide evidence to the Secretary of State that they are complying with the conditions of membership, principally by providing the quarterly returns stipulated under the terms of the Developer Remediation Contract.

Should a member of the Scheme fail to comply with the membership conditions, their membership may be revoked. The regulations give the member an opportunity to make representations before a final decision on revocation is taken. The Secretary of State has a power to issue a formal warning to any member of the Scheme who appears to be failing to meet the membership conditions. In appropriate circumstances, membership may be revoked without a prior formal warning being issued.

Where membership is revoked, the developer will receive confirmation, and both the developer and any entities they control will be notified that they will be added to the published list of entities to which the prohibitions set out in the regulations will be applied. The regulations provide for limited exceptions and there will be an opportunity for applications for exception. The regulations provide that developers may be removed from the list of prohibited persons and have the prohibitions lifted by either joining the Scheme for the first time or by returning to compliance with the conditions of membership (as the case may be).

Full details of monitoring can be found in the Responsible Actors Scheme Regulations.

Full details of enforcement can be found in the Responsible Actors Scheme Regulations.

The planning prohibition

The regulations set out that prohibited persons will be prohibited from carrying out major development in England.

Major development includes schemes providing 10 or more residential units, residential schemes on a site at least 0.5 hectares in size (where it is not known if it will provide 10 units or more), commercial development creating at least 1000 square metres of floorspace, and development on a site over 1 hectare in size.

Prohibited persons are required to notify the relevant local authority about their prohibited status when making relevant planning applications, reserved matters applications and prior approval applications. They will also need to notify the local planning authority if they acquire or transfer an interest in land which has the benefit of planning permission for major development.

If development of land is carried out in breach of a prohibition, this will constitute a breach of planning control. Existing enforcement powers and offences, as modified by the regulations, will be available to enforce the prohibition.

The planning prohibition will not apply to development for which planning permission was granted before the date on which the Regulations came into force, unless a subsequent application is required for all or part of the development, and that application has not been determined before that date.

Full details of the planning prohibition can be found in the Responsible Actors Scheme Regulations..

The building control prohibition

The Regulations give effect to a prohibition that prevents a prohibited person from gaining building control approval in respect of any building work that requires such approval.

In accordance with the Regulations, prohibited developers will be unable to gain building control approval to start work, including through initial notices, as well as completion or final certificates for completed work. In some cases, this may result in a notice to terminate or suspend the work.

The prohibition prescribes documents which a prohibited person is prevented from giving, and which local authorities and approved inspectors are prevented from accepting or issuing to a prohibited person or in respect of work carried out by them. These include:

• deposit of full plans, notices of passing of plans, and plans certificates
• initial notices
• completion certificates, final certificates, and certificates for buildings occupied before work is completed
• any other building control approval, including building notices, amendment notices, a notice of variation of work to which an initial notice relates, and regularisation certificates

The prescription of regularisation certificates means that a prohibited person will be unable to regularise any work conducted without the relevant building control approval.

Full details of the building control prohibition can be found in the Responsible Actors Scheme Regulations.

Exceptions to the prohibitions

The regulations also include appropriate exceptions to the prohibitions, primarily aimed at mitigating potential impact on innocent parties:

• the building control prohibition is subject to exceptions which seek to protect innocent third-party purchasers of property from a prohibited developer, including a specific exception to assist those whose deposits could be at risk if a prohibition came into effect after they had exchanged contracts
• the building control prohibition is subject to exceptions to ensure that emergency repairs and other repairs to any occupied building that are necessary for the safety of residents can proceed
• both prohibitions are subject to exceptions to exclude critical national infrastructure projects
• both prohibitions are subject to an exception which permits certain entities under developers’ control which are not in the building industry to have the prohibitions disapplied to them, where this would not frustrate the purpose of the Scheme

More information about the exceptions to the prohibitions can be found in the regulations:

• Responsible Actors Scheme Regulations – Planning prohibition exception
• Responsible Actors Scheme Regulations – Building Control prohibition exceptions
• Responsible Actors Scheme Not in Building Industry