1. Government Issues Ultimatum to UK Developers Over Remediation Contract

Leading UK developers were issued a strong ultimatum last month to sign the Developer Remediation Contract (DRC), which applies in England, or face severe consequences. New details have emerged about this mandate, including the government’s release of guidance outlining the key features of the Responsible Actors Scheme (RAS). This scheme will prohibit eligible developers from starting or completing projects in England unless they sign the DRC and comply with its terms, as well as those of the RAS.

2. Key Goals of the Responsible Actors Scheme (RAS)

The scheme aims to incentivize developers to promptly address life-threatening fire safety defects in residential buildings 11 metres or taller. A secondary objective is to recoup costs for government-led remedial work funded by taxpayers. While operational specifics will be finalized once regulations are published, the core structure, eligibility criteria, and membership requirements have been disclosed.

3. Implementation Timeline and Initial Focus on Major Developers

The RAS is expected to take effect in early summer 2023. The guidance confirms that the government will initially target major housebuilders and large developers. However, the scheme is likely to expand to include other developers involved in constructing or refurbishing defective buildings over 11 metres, though no timeline has been provided.

4. Eligibility Criteria for the Responsible Actors Scheme

To qualify, developers must meet a “profits condition,” defined as achieving an average annual operating profit of £10 million or more over three years. Alternatively, developers may voluntarily join by signing the DRC. Eligible developers will receive a reasonable timeframe to either join the scheme or challenge their eligibility with evidence after being invited by the Secretary of State.

5. Membership Requirements and Ongoing Obligations

Developers joining the RAS must sign the DRC with the Department for Levelling Up, Housing, and Communities (DLUHC) and adhere to all membership conditions, including:

• Identifying residential buildings over 11 metres that they developed or refurbished in the past 30 years (including those with known fire safety defects).

• Remediating defects or covering associated costs.

• Reimbursing taxpayer-funded government schemes for remedial work.

• Providing regular updates to residents and the DLUHC on progress.

• Complying with information requests from the Secretary of State.

Additional requirements, such as a “fit and proper person” test for directors and senior managers, may be introduced later.

6. Severe Consequences for Non-Compliance and Industry-Wide Implications

Eligible developers face limited options: refusal to join or expulsion from the scheme results in placement on a “prohibited persons” list. Listed developers will be barred from major development projects and denied building control approvals, potentially halting ongoing projects. As of March 24, 2023, only six developers remained unsigned. Looking ahead, the RAS may expand to include smaller developers, contractors, and suppliers. The scheme’s ripple effects will likely impact the entire industry, prompting recovery actions against contractors, professionals, and insurers involved in defective projects.

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