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CONSULTATION ON REGULATIONS IN SUPPORT OF THE BUILDING (SCOTLAND) ACT

Building Standards (Fees) (Scotland) Regulations
Introductory Paper

The second part of the consultation concerns the Building (Fees) (Scotland) Regulations and comprises:

• this introductory paper, and
• draft regulations.

The regulations are still being refined and the views of respondents will be considered when finalising the text once the consultation is completed

Introduction

The current building control fee structure has changed little since a uniform national system was introduced with first procedural regulations. It works relatively well, but might be able to work better. Warrants are only granted after reasonable assessment and enforcement is broadly satisfactorily carried out. It is essential that any new system not only raises the necessary revenue, but is also at least as efficient as that which currently exists.

As the new building standards system is introduced, it is sensible to reform the fee structure to take account of the changes and the impact they are likely to have upon local authorities and other stakeholders. It is also necessary to develop fee structures to be applied to the new services and functions being introduced under the Act, notably those services supplied by the forthcoming Scottish Building Standards Agency (SBSA).

This paper presents proposals from the Scottish Executive to reform the building standards fee structure and invites comments on the proposals. It has been derived from initial informal consultations with a variety of stakeholders and customers.

The success so far in reforming the building control system through the Building (Scotland) Act is due in part to a clear and simple vision of what was to be achieved, combined with detailed consultation with the key stakeholders. The same principles should apply to the fee structure. It must be clear and simple, and it must command the broad support of the key stakeholders. As with the new Act, the new fee regulations should be an evolution from the existing system rather than a revolution.

Principles

The fees system must ensure that the Local Authorities and the Scottish Building Standards Agency (SBSA) have enough income to carry out their functions promptly and effectively.

Local Authorities will fulfil two functions under the new system, they will be appointed as verifiers by Scottish Ministers and they will have the duty to enforce the Regulations and the other provisions of the Act in the public interest. As verifiers they should be funded by those who benefit from the verification process. As enforcers they should be funded by the Scottish Executive, as at present.

Benefits gained by building owners (or those applying for warrants) should generally be paid for by those individuals. This would include building warrants which give the right to build, alter, extend and convert, and the acceptance of completion certificates which give the right to occupy. Verification functions would therefore be funded by the building owners and developers who benefit from them.

The decision of Scottish Ministers to only appoint local authorities as verifiers, in the first instance, means that there will be no choice for the building owner as to whom they can approach. Without competition to control the fees, it is only equitable that the fee scales should be set nationally. This will lead to some inequalities among local authorities, where the costs may be unavoidably higher in some areas than others. However a national fee scale does offer the important benefit of clear equality between applicants. With an existing structure of consistent and simple fees, a move to a more complex or varying system could be highly detrimental to public confidence and would inevitably increase the costs of administration and hence the cost to the applicants.

As the following enforcement work will be carried out by Local Authorities in the interests of public safety it should be funded by the taxpayer. No fees are therefore proposed for :

• Dangerous buildings notices;
• Defective buildings notices;
• Building regulations compliance notices;
• Building warrant enforcement notices; and
• Continuing requirements enforcement notices.

The SBSA should be mainly funded from the Scottish Executive, as at present. However the SBSA will undertake a number of new functions which offer direct benefit to the users and which should therefore be funded by those users. These are the functions related to certification, verification of crown buildings, and the giving of formal opinions on specific projects.

Warrant Fees

The basic element of the building standards system is the warrant, granted by a verifier after due consideration which permits the applicant to undertake building work.

In order to minimise bureaucracy and keep the system as simple as possible, it is proposed to retain the single inclusive fee for both building warrant and completion certificate. This fee will have to be paid on submission of the warrant application to the verifier. Where it is a staged warrant then the fee may also be paid in stages. The fee is to cover both the assessment of the application to determine if a warrant can be granted and the assessment of work on site to determine if the completion certificate can be accepted.

As in the current system, the new warrant fee scales will be related to the value of the building work. It is generally true that the large projects yield more in warrant fees than it costs to asses and inspect them and that small jobs do not yield enough. The costs of processing a small job are not proportionate to the value of the building work and hence the cost of the warrant. However, if owners engaged in small domestic jobs were charged the full costs of assessing their applications it is possible that this charge would be so high as to be a disincentive to making the application. This would increase the amount of unregulated works, to the detriment of public safety. Even as it stands the cost of a warrant in percentage terms is higher for small jobs than for large jobs. The current system is at least related to the ability to pay. It is therefore proposed that the principle of larger or more complex buildings paying higher fees should also be retained.

The proposal is for a staged increase on the current fee scale where the smaller jobs are not penalised and the largest increase occurs where the value of the building works is greatest. The basic warrant fees proposed are as set out below:

For example the warrant fee for a project where the value of the building works was 35,000 would be 520. This is made up of a basic fee of 400 (the fee for a job between 20-100,000), plus two additional sums of 60 to cover the amount over 20,000.

Although the minimum fee will rise from 70 to 100 it is expected that the proposed changes in the building work which is permitted without warrant (under schedule 3 of the Building Regulations) will greatly reduce the number of warrants required. The value of building work to which the minimum fee applies has also been raised (from 3,000 to 5,000). This will increase the amount of work covered by the flat fee and reduce the potential for disputes over whether or not the value of the works falls within the range for the minimum fee.

The estimated value of building work will be determined by the verifier based on information provided by the applicant. In calculating the value of the works the applicant must consider the market costs rather than any discounted costs which they might be able to achieve. For example even if all the labour was unpaid, because it was a self-build project, the value of the building works should still include a fair assessment of the value of the labour if commercial contractors had undertaken the work. The amount of work necessary to verify compliance will be the same in both cases, it may even be higher in a self-build project, so it is only fair that the warrant fee should be the same.

If the verifier feels the value estimate provided by the applicant is incorrect they should check the amount by reference to established independent indices of building costs. The RICS Building Cost Information Surveys of Tender Prices would provide such a measure. This provides the mean, lowest, median and highest prices in /m2 for works of different character. It also provides a modifier which can be applied to reflect geographical variations throughout Scotland.

If the verifier believes the value of the works is higher than that stated they can refuse to consider a warrant application unless the fee is increased.

The fee has been set at zero for works in respect of the dwelling of a disabled person where the works are solely for the benefit of the disabled person. In the technical handbooks a disabled person is defined as a person with a physical, hearing or sight impairment which affects their mobility or their use of buildings.

The Disability Discrimination Act will be fully in force before the start date of the new Fees Regulations, and therefore non-domestic buildings should have already removed all barriers which might discriminate against the provision of services to disabled persons. Therefore it is not suggested that the zero fee rating should be extended to non-domestic buildings. Verifiers will still have to verify the compliance of such works and it is only fair that those applying for the warrant to do such works should bear the cost of such verification.

Applications for a warrant for conversion when there is to be no building work and when the conversion has not yet taken place should be charged at the level of the cheapest warrant fee (100).

Applications for a warrant for demolition only, when work has not already begun, should be charged at the level of the cheapest warrant fee (100). This is because the verifier is only assessing the issues related to demolition covered by the Building Regulations such as the protection of the site and the finished state of service connections. In considering a demolition warrant the verifier is not considering the method of demolition itself.

The following is a comparison of the proposal with the current fee scale and the last national fee scale for England and Wales.

Discounts for Certification

Where an approved certifier of design or construction approves part or all of an application for warrant or completion certificate, this will result in less work for the verifier who will only be required to check the certifiers' status for the part in question. It is proposed that, in these circumstances, the warrant fee should be reduced to reflect this.

Where a warrant application is made with one or more Certificates from Approved Certifiers of Design, the discount would be 10% for each Certificate covering an entire section (e.g. structure). A discount of 1% would be applicable if the Certificate covers only a single item within a section (e.g. those relating to oil fired boilers), up to a maximum of 5% for any one section.

Where the submission of a completion certificate is supported by a Certificate issued by an Approved Certifier of Construction there should also be a refund on the warrant fee of 1% for each of certificate covering a defined trade or installation, (e.g. plumbing) up to maximum of 20%. These discounts shall be of the warrant fee, before any discounts given due to the presentation of Certificates from Certifiers of Design. They would only be payable if the applicant has informed the verifier before the commencement of the certified construction on site, that it is their intention to provide such certificates when they submit the Completion Certificate. This is to ensure that the verifier does not expend time and money inspecting a site during the construction when the findings of those inspections would be obviated by the Certificates provided by the Approved Certifier(s) of Construction.

Even in the highly unlikely event that both the entire design and construction was certified the total discount on the warrant fee would be limited to 80% (domestic) or 70% (non-domestic), ensuring that even in this situation the verifier would still retain 20% or 30% of the warrant fee to fund their part in the process.

Refunds for unbuilt schemes

Where a warrant is granted, but no building work, conversion or demolition has taken place, the applicant may surrender the warrant before the expiry of the time period. This time period will be set in the Procedure Regulations and is likely to be three years. In this instance, the applicant should be entitled to a 25% refund on the warrant fees paid. No refund will be given for warrants surrendered after the expiry of the time period.

Amendment to Warrant Fees

For consistency, the fee should be calculated on the same scale as a full warrant, based on the estimated change in value of building work. In order not to penalise smaller works or minor changes, amendments to warrants which increase of decrease the value of building works by less than 5,000 should attract a zero fee.

Applications for amendments to warrants for demolition or conversion (where there is no building work) will attract a set fee of 100, equivalent to the lowest warrant fee.

Extension to Warrant Fees

Applications for extensions to warrants do create additional work for the verifiers. To cover this, it is proposed that the extension of a warrant should cost:

• 40 where the original warrant fee did not exceed 400;
• 10% of the original warrant fee when that was between 400 and 1000; or
• 100 when the original warrant fee was 1000 or more.

Late Applications for Warrants

When a warrant application is made after work has started, the fee will be the standard fee for works of that value plus 25%. This should act as a deterrent and also cover the additional costs to the verifier of dealing with a retrospective warrant application. (The local authority also has powers under the Act to require work to halt until a warrant has been granted and penalties may be imposed should the courts choose to enforce them.) No discounts should be made for the presentation of Certificates from Approved Certifiers of Design.

Refunds should, however, be made in the standard manner when Certificates from Approved Certifiers of Construction are presented with a Completion Certificate when the work is complete. This does not, of course, apply to the whole building project as that had already started before any application was made, but to a work which is part of the overall project (e.g. the electrics), provided the applicant informed the verifier before this work commences that it was their intention to provide such certificates.

An application for a warrant for demolition only where work has already started will also attract a 25% penalty and be charged at 125.

It will not be possible to make a late application for a warrant to carry out a conversion where it is not intended that there should be any building work. This is because such a conversion will occur at a single point in time and not gradually. To regularise a situation where a conversion, without building work, has occurred without a warrant it will be necessary to submit a late completion certificate.

Late submissions of Completion Certificates

Where a completion certificate is submitted in connection with the construction of a building or the provision of services, fittings or equipment in connection with a building when work has been constructed without a warrant, the fee will be the standard fee for works of that value plus 25%. Again this will act as a disincentive to occupation before acceptance of a completion certificate (without permission under section 21 of the Act), and cover the additional costs to the verifier of dealing with a retrospective submission. No discounts should be made when Certificates from Approved Certifiers of Design or Construction are presented.

Submission of a completion certificate for demolition only or conversion only where work has been done without a warrant would also attract a 25% penalty and be charged at 125.

Local authority income from warrants

The appendix to this paper sets out an estimate of the likely income for verifiers from the new fee scale and compares it with the current warrant incomes of local authorities. It is calculated that the proposed scale would increase local authority income by around 11.5% over the current warrant income assuming the nature and number of building projects. This will provide transitional support to verifiers while they are running two systems (under the 1959 and the 2003 Acts) at the same time, and should help cover the additional costs of verification introduced by the new system, in particular the extra checking of structural compliance where no certificate is presented by an Approved Certifier of Design.

Fees related to seeking a view from Scottish Ministers

When developers and verifiers agree, they may submit a query to Scottish Ministers for a view (as set out in 12(2) of the Act). Scottish Ministers may agree to give a view, although they do not intend to accept frivolous or unnecessary referrals. The decision to seek a view should normally be a joint one between the applicant and the verifier, and only in exceptional circumstances will the Scottish Ministers give a view where the verifier has not been party to the request. Views will be given by email, fax or letter.

Where Ministers agree to give a view, a fee should be paid by the verifier to cover the cost of the work undertaken by the SBSA. However, this fee shall not exceed 20% of the warrant fee (before any discounts which might be applicable). Both the verifier and the applicant should be provided with an estimate from the SBSA of what the fee will be before a formal application is made. The fees will be calculated in accordance with guidance which will be published by Scottish Ministers.

It is estimated that around 100 referrals from across Scotland will be accepted during the first year of operation (an average of 3 - 4 from each verifier). It should be stressed that the provision of free advice by telephone will still remain one of the principal functions of the SBSA.

The Act also makes provision for a verifier to seek the assistance of the SBSA in the verification of a building. Where a verifier requests the SBSA to undertake verification of part of a building then an agreed fee to reflect the amount of work being verified will be charged.

Fees related to approval for inclusion on a register of Approved Certifiers

Certification is the statement by a qualified and competent person that what they are proposing to do, or have done, satisfies the Building Regulations. This competence must be determined by the SBSA. Where the SBSA agrees to accept an application from a person or scheme to be included on the registers of Approved Certifiers of Design or Construction the applicant will pay a fee which reflects the cost of assessing such an application. It is intended that applicant(s) are provided with an estimate of what the fee will be on enquiry, before an application is made. The fees will be calculated in accordance with guidance which will be published by Scottish Ministers.

In the interests of ensuring that all Approved Certifiers remain fully competent to carry out their functions, their inclusion on the Register will be for a limited time after which they would need to apply to remain on the Register. The fee charged for an application to remain on one or both of the Registers of Approved Certifiers of Design or Construction should be equal to the costs of assessing that application.

Relaxations

There will be no fees charged for relaxations under section 3 of the Building (Scotland) Act 2003. This service will be funded by the Scottish Executive as it is regarded as being necessary to accept responsibility for cases where it is not reasonable for a Building Regulation to apply, which is the criteria for relaxation.

Building Standards Register

Accessing information held on local authority building standards registers should be free of charge and it is therefore proposed to set a zero fee for this. Individual Local Authorities may, however, set a fee for the provision of copies of documents and entries in the Building Standards Register.

Building Standards Assessments

The development of Building Standards Assessments (clause 6 of the Act) is still ongoing, but it is not envisaged that it will be possible to introduce them by 1 May 2005. Therefore, these are not included in these regulations.

Crown Buildings

The fees levied on crown buildings should be the same as on non-crown buildings. In these cases the normal warrant fee should be paid to the SBSA, but it is to be expected that some of this work may be sub-contracted.

Appendix - Possible changes in income from warrant fees

This appendix seeks to estimate the possible change in income from warrant fees as a result of the new Fees Regulations. It is based on the following assumptions:

• 61,000 warrants were applied for in the financial year 2003-2004.
• the Local Government Finance Return 7 for 2001-02 (the most recent one available) indicates that the total income across all Local Authority Building Control Departments from applications for warrant and amendment to warrant in that year was 22,611,000.
• it is estimated that 3,000 warrants were exempt from any fee as the work was related to disabled access or facilities.
• it is estimated that 80% of warrant applications are for works of less than 20,000.

Current warrant income

Therefore it is assumed that the number of warrant applications issued was as follows:

This is based in part on data suggesting the rough split of warrant applications between the different ranges and partly on an estimate of what seems realistic. The numbers are not robust, but can be used for indicative purposes.

A single cost of works from each range has been selected to act as indicator for that range and give an idea of the total warrant fee income from that range. The concentration of warrant applications tend to be for lower-cost works so the indicator chosen is 1/3 of the way up the range.

The total of 24,638,500 is 2m above the reported 22,611,000 income of Local Authority Building Control Departments through warrant fees in 2001-02. This is, of course, based on very rough assessments and questionable assumptions. It is possible that this is an over-estimate of the number of warrants applied for on works of over 100,000, however the distribution pattern and the total amount of fees is close enough for the purposes of comparing the existing and proposed fee scales.

Future warrant income

Using the proposed fee scales the new income would be as follows:

*This is allowing for halving in the number of warrants for works valued at less than 3,000 (from 17,400 to 8,700). The reduction will occur because of the larger number of categories of minor work which will be permitted without warrant.

Change in warrant income

It is estimated that there should be an overall increase of 11.5% for Local Authority Building Control income. This has been achieved without unduly penalising the lower end of the market, and while still allowing many minor works to be exempt from the warrant process. The increase will help to cover the additional costs of verification introduced by the new system, in particular the extra checking of structural compliance where no certificate is presented by an Approved Certifier of Design.

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