The Building Safety Act 2022 introduced a new regulatory framework for high-rise residential buildings at least 11 storeys or 18 metres in height, including purpose-built student accommodation (PBSA). Central to this regime are Gateway 2 (pre-construction approval) and Gateway 3 (completion sign-off), overseen by the Building Safety Regulator (BSR).
While designed to enhance safety and accountability, the Gateway 2 and Gateway 3 checkpoints are increasingly causing significant delays, disrupting delivery timelines and creating financial and legal risks for student housing projects.
1.1 Timing challenges
Student accommodation developments operate on tight seasonal cycles, with practical completion often scheduled just days before the academic year begins. Gateway 2 approvals —required before construction can start—are now taking up to 36 weeks, far exceeding the statutory 12-week target. Gateway 3 certification, which must be obtained before occupation, can only occur when the development has reached practical completion - the point of maximum financial outlay and the point at which, previously, revenue would be expected to commence. There is a target statutory period of 8 weeks from application for BSR Gateway 3 certification. A delay here can leave buildings finished but unoccupied, risking the loss of rental income for the entire academic year.
1.2 Who bears the risk?
The question of who bears the risk of regulatory delays is critical. Developers, contractors, investors and lenders must carefully consider contractual provisions that address delays caused by Gateway approvals. In PBSA, the stakes are high:
- Scenario 1: If the building is unavailable at the start of term, students may seek alternative accommodation for the full year. The owner could face a complete loss of rental income for that academic year.
- Scenario 2: The owner provides temporary housing (e.g. hotels), incurring higher costs and potentially covering additional student expenses (travel, food, etc) to preserve good will and mitigate long-term financial impact.
1.3 Mitigating the financial impact
To protect against these risks, developers can adopt several alternative mitigation strategies:
- Building programme float into construction timelines.
- Passing through, as far as possible, the risk of regulatory delays to supply chain.
- Contingency planning for alternative accommodation and flexible tenancy starts.
- Stakeholder collaboration with universities and operators to manage expectations and reduce reputational risk.
- Flexible funding structures to accommodate timeline shifts.
1.4 Key takeaways
- Plan for delay: Build realistic timelines that account for Gateway bottlenecks.
- Clarify risk allocation: Ensure contracts specify who bears the cost of regulatory delays.
- Communicate with students: Have contingency plans to manage expectations and preserve reputation.
[View source.]
