Last month, a number of major UK house builders announced closure of their construction sites across the UK. The Government has now confirmed that construction sites are permitted to be open as long as the correct Site Operating Procedures can be complied with.

In the last few days, many major house builders in the UK have announced a phased reopening of their construction sites.

What does this mean for Registered Providers? 

Where construction has been delayed for a few weeks, you should consider what delay provisions have been incorporated in the Development Agreement and whether the developer is able to ask for an extension of time without penalty. Now that some developers are continuing to progress with construction, you will also be expected to comply with the obligations within the Development Agreement. 

Your obligations in the Development Agreement 

You should liaise with your agents in order to confirm whether they will be able to attend on site to certify stage completions in accordance with the timescales set out in the Development Agreement. Beware of some clauses which provide that you are deemed to have accepted that a build stage is complete if an inspection is not undertaken on time. You should also ensure that you have the ability to make payments to avoid triggering any late payment penalties.

Considerations for handover 

Particular attention should be given to units that are expecting to achieve Practical Completion soon. Whilst the works may have been completed, not all of the handover documents may be readily available due to delays associated with Covid-19. Proper consideration should be made before accepting handover without a complete suite of handover documents Where you have accepted handover, this may have an impact on the onward disposal due to the movement restrictions imposed. It may become more difficult to secure tenants or arrange moving services, resulting in void periods Our Covid-19 resource centre explores provisions to include in disposal contracts to provide comfort for a potential purchaser to exchange contracts with delayed completion, available here.

With Developers looking to return to site on a phased basis, some may be seeking extensions of time to the original target dates for the build for the length of the closure. Where works are being progressed, RPs will be expected to attend site to certify completed works and make payments on time.

How can Capsticks Help?

Capsticks’ Housing team provides a truly full-service, with particular expertise in Development, Corporate and Securitisation, Housing Leasehold and Asset Management. We advise Housing Associations and Local Authorities on a range of matters including estate regeneration schemes, housing management and tenant engagement, commercial and financial issues, including disputes and governance advice. 

If you have any queries around what's discussed in this article, and the impact on your organisation, please speak to Jennifer Eng to find out more about how Capsticks can help.