Housing secretary Michael Gove threatened in January to put out of business those developers that did not sign the contract, a claim he repeated later in parliament.
“To those developers that have failed to sign the contract without good reason, let me be very clear – we are coming after you,” Gove said. “If you do not sign, you will not be able to operate freely in the housing market. Your investors will see that your business model is broken – only responsible developers are welcome here.”
The government has made clear that eligible developers who refuse to sign the contract or fail to comply with its terms face significant consequences particularly regarding their ability to operate fully within the housing market. Firstly, those who haven’t signed the contract are expected to be penalised with heavy fines or legal action, but exact details are yet to be confirmed. Similarly, those who have agreed to the contract but then subsequently do not take appropriate action from it, such as refusing to carry out selective remediation works, are also expected to be hit with significant consequences.
The Department for Levelling Up Housing and Communities (“the DLUHC”) has stated that they will use powers under the Building Safety Act 2022 (BSA) to effectively force them to sign up. The most serious of those consequences, that will effectively blacklist non-compliant developers include:
- A Responsible Actors Scheme (RAS), created under s.126-129 of the BSA, introduced under legislation on 3 July. Developers that do not sign, will not be allowed to join. This secondary legislation sets out the detail.
- Powers conferred on the Secretary of State to block developers who have not signed the Contract or failed to comply with its terms from carrying out development and from receiving building control approval, preventing them from operating as normal in the housing market “for as long as they do not resolve the problems of the past”.
In addition, the DLUHC states that it may also:
- make public the identities of developers that have not signed;
- inform investors and customers of the risks arising from continuing commercial relationships; or
- review its own commercial relationships and procurement frameworks accordingly.
If you would like to discuss anything mentioned in this article, please call our specialist team of Construction Lawyers on 0345 646 0406 or fill in our online enquiry form and a member of our Team will be very happy to assist.