How the Building Safety Act can affect your rebuild cost

The Building Safety Act 2022 has made rebuild cost assessments more complex for some buildings in England. Today, building safety compliance is an important consideration for affected higher-risk buildings and other complex properties where reinstatement would need to meet current building regulations.

“The Building Safety Act has changed the way risk, responsibility and building information are managed for affected high-rise residential buildings,” Gautham Rajendar, Technical Lead at RebuildCostASSESSMENT.com. “It has direct implications for rebuild valuations, particularly for higher-risk residential buildings, complex mixed-use developments and buildings where modern fire, structural or building-control requirements would materially affect reinstatement.”

What’s driving the change?

The rules bring closer oversight across design, construction and occupation for higher-risk buildings, including BSR (Building Safety Regulator) building-control approval for relevant higher-risk building work and ongoing duties for Accountable Persons and Principal Accountable Persons in occupied high-rise residential buildings.

The key point here is simple: a rebuild cost assessment should reflect what it would cost to rebuild in line with current regulations, rather than assuming it could be rebuilt to its original historic specification.

In practice, this can mean extra costs during a rebuild, including:

1. Building-control approvals for higher-risk building work,

2. Additional professional input to evidence compliance,

3. “Golden thread” records covering design, materials and specification,

4. Fire and structural safety requirements where relevant.

Each of these can introduce additional professional support, administration and evidence-gathering requirements. The cost impact will vary by building type, height, use, specification, condition and the scope of work, so it should be assessed case by case rather than applied as a flat percentage.

Building Safety Act implications for Rebuild Cost Assessments (RCAs)

A robust RCA should reflect the cost of reinstating the building under current applicable regulations, not assume the building could be rebuilt as it was before. This is particularly important for:

• higher-risk residential buildings in England: broadly, buildings with at least two residential units that are at least 18 metres high or have at least seven storeys;

• mixed-use buildings where residential, commercial, plant, access or fire-safety features make reinstatement more complex;

• buildings with cladding, fire-safety, structural or building-control issues that could materially alter reinstatement assumptions.

  
  

If relevant compliance costs are missed, the building may be at greater risk of underinsurance, particularly as BSR oversight, building assessment certificate activity and higher-risk building controls continue to shape the sector.

An RCA should not be confused with a cladding safety assessment. A rebuild cost assessment estimates the cost of reinstating a building, including relevant modern compliance assumptions. It does not confirm whether existing cladding is safe, whether an EWS1 form is required, or whether remediation works are compliant. Those questions need separate specialist advice.

“Regulation has moved faster than many insurance valuations,” Gautham added. “We consider relevant post-Act obligations where they apply, so the rebuild figure better reflects the likely cost of lawful reinstatement for the building in question.”

The broker and property owner perspective

For brokers, this creates a practical challenge and an opportunity to add value. For in-scope retail customers, a current and well-evidenced rebuild cost assessment can support Consumer Duty outcomes by helping firms evidence suitability, value and customer understanding.

For commercial clients, the same evidence can support clearer renewal discussions and a stronger advice file.

For owners, accurate and up-to-date RCAs can help reduce the risk of costly shortfalls and provide a stronger evidence base for whether the sum insured reflects current reinstatement conditions.

As the Building Safety Regulator’s oversight continues to shape higher-risk building management, rebuild assessments should be treated as an important insurance and financial risk-control tool. They do not replace statutory building safety, cladding or fire-safety compliance reports.

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