Navigating the building regulations regime in commercial property transactions

Building control is said to be one of the earliest forms of local government in England, with the modern building regulations progressing in the aftermath of the Great Fire of London. The current Building Regulations 2010 (SI 2010/2214) are made under the Building Act 1984 as amended by the Building Safety Act 2022*.

Building control regime is separate to the planning control and the primary aim of the regulations is to ensure that buildings are safe for their occupiers and those around them. As such, investigating the building regulations position is one of the key aspects of a due diligence exercise in any property transaction, including commercial property.

The building regulations overview

With limited exceptions, the building regulations cover all types of property and apply to building works which are defined to include:

• erection and extensions of a building
• material alterations to a building
• works required in cases of a material change of use of a building

Building regulation pre-commencement approval can be obtained in a number of ways, namely by:

• applying via a local authority building control service either with full plans or by means of giving a building notice
• applying via a private sector registered building control approver
• self-certification available for certain specified types of works which can be provided by a competent person

Once works are completed, a building regulations completion or self-certification scheme certificate is issued to serve as evidence, but not conclusive evidence, that that the requirements, as specified in the certificate, have been complied with.

Common issues encountered in practice

As part of the due diligence process, it is important to establish whether there have been any works carried out at the property that may have required building control approval. This can be done through a combination of enquiries raised with the seller and carrying out appropriate building surveys and inspections.

The local authority search will normally provide a list of relevant building regulation entries showing the history of works carried out at the property. The full records can often be downloaded via the online portal if a seller cannot provide copies. This is the ideal position. However, in practice the records available via the local authority are often sparse, incomplete or not available immediately. Application to a local authority for copies of the records stored can be normally made, but this can incur additional charges and often means long waiting time. For more historic works, it is not always straightforward to establish whether the works in question required building approval at the time of being carried out due to building regulations requirements changing over time.

The risks and remedies

Risks involved in the building regulations consents and completions certificates not being available are significant. First and foremost, the absence of the building regulations evidence may indicate that the works carried out could be unsafe. Particularly, for more recent works where the availability of records should not be problematic, this risk cannot be ruled out.

If the works were carried out in breach of the regulations, the local authority may issue an enforcement notice on the property owner requiring the removal or alteration of the works carried out in breach. There are also other enforcement options available to local authorities such as compliance or stop notices and powers to issue fines or start injunction proceedings. Failure to comply with enforcement action may result in criminal liability.

The time limit for issuing of the enforcement notice have been extended by the Building Safety Act 2022 and is currently ten years in England. Various other enforcement options attract different time limits, which result in a complex picture where potential liability period depends on the enforcement option considered by the local authority.

It is important to ensure that the building regulations position is investigated and ascertained as soon as possible, as if it transpires that the building regulations records are not conclusive, one of the options available to a party interested in the property is to apply to a local authority for a retrospective regularisation certificate. The local authority may require for the works to be inspected, which may include opening up access for inspection and taking samples. If it is concluded that no remedying works are required, the local authority may issue a regularisation certificate. If additional works are needed, the local authority will specify them to be carried out before a certificate can be issued. Taking this step however would remove the chance to obtain indemnity insurance, as will be mentioned below.

In practice, if the surveys show that the works carried out are sound, it may be preferable to obtain an indemnity insurance to cover the risk of enforcement action for a breach of the building regulations. It is important to understand that the policy will not cover risks of the works defects; only the risk of enforcement action.

The possibility of obtaining an indemnity policy should be considered early in the transaction, as cover will normally only be available if the relevant local authority has not been alerted to the fact that building regulations approval was not obtained, which may occur if the authority is contacted to obtain copies of the relevant building regulations records. Hence, any such investigations need to be considered carefully so as not to put at risk a party’s chances of obtaining cover.

Please don’t hesitate to contact our Real Estate team.

* In this note, we will not cover regime applicable to higher risk buildings