In the previous blog we considered the introduction of the New Homes Ombudsman Service and in our final blog in this series, we will consider the extension of the prescriptive period (or time limit) for liability for construction and cladding products to 15 years.
The Building Safety Act 2022 stipulates that for prescription calculation purposes a right of action starts when the construction is completed or in other cases when works are completed. This is of importance as the period to raise a claim is not when the negligent act occurred but when the work or construction, of which the negligent act only formed part, is completed which may be quite some time later.
In addition to the 15 year period for construction products, and some cladding claims, a 30 year period applies where cladding products have been used in buildings completed before 1 June 2022. Accordingly, whilst certain claims may have previously been considered to have become "time barred" this may no longer be the case and those operating across the construction sector ought to take careful note of this.
These extended deadlines mark a major departure from the existing law in Scotland, where the standard prescriptive period is generally five years. As mentioned above, the Act is also notable for having, at the very least partly, retrospective effect, meaning some claims that have already been time-barred before the Act came into force will be resurrected by the new law. There was some uncertainty in the industry as to whether these new time limits would apply in Scotland but the legislation specifically specifies that these new time limits apply in Scotland.
What this means in practice remains to be seen but we can expect:
- Increased scrutiny on everyone involved in the supply and installation of construction products (including but not limited to cladding products).
- An up-tick in construction disputes and an entirely new category of claim, brought by homeowners and tenants against construction professionals of various kinds.
Insurers and policyholders should also consider how these developments will affect the risks their businesses carry. Meanwhile it is very likely that insurance premiums will be increased to reflect this additional risk in the industry.
It is worth giving consideration to whether the new rights of action and extended time limits will expose professionals to historic claims that might otherwise be incompetent, or time barred. For example, it could be that past notifications need to be revisited or new notifications need to be made in circumstances where there was thought to be no real risk of a valid claim.
Finally, for those thinking that this issue can simply be avoided by contractual terms limiting the period for claims it is important to note that the Act specifically prohibits the contractual variation of these time limits and that any such existing clauses will be considered null and void.
We hope you have enjoyed this final blog in the series and you can now review the entire series here:
- The Building Safety Act 2022: What liabilities are created by the Act?
Should you require assistance with any aspect of a construction contract, we have a large and experienced construction team who would be happy to discuss this with you.
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