Plans to extend the defects liability limitation period to 30 years are being challenged as unworkable.

The Construction Industry Council has warned that the huge increase in level and extent of liability risked shutting SMEs out of the housing development and wider building market and force competent people to be excluded from providing services due to risk aversion within the insurance sector.

The insurance sector itself could undertake its own analysis of the risks and potential costs and potentially walk away from construction, it warned.

Giving evidence to the Levelling Up, Housing and Communities Committee inquiry scrutinising the approach to fixing the building safety crisis, the CIC also said the plan would jeopardise the levelling up agenda.

The evidence highlighted that the proposal to retrospectively extend the limitation period under section 1 of the Defective Premises Act to 30 years, announced by Michael Gove last month, could have dramatic consequences across the industry.

Currently, the limitation period is 6 years from the completion of the dwelling.

A clause in the Building Safety Bill proposed the retroactive extension of the limitation period under the DPA to 15 years and this is now intended to be doubled.

Graham Watts, Chief Executive of CIC said that the move would further add to the insurance pressures across the sector and could have a deleterious impact on the capability to remediate unsafe buildings and build new housing.

He said: “We desperately need to remediate hundreds of buildings across the country and increase the rate of building new homes. Yet these proposals could put this work at risk by making it impossible for companies and people to continue in the sector.

“It is vital these very late amendments must be given greater scrutiny to allow for the passage of a Bill that provides great recompense for consumers but ensures the viability of the construction sector and its ability to help deliver on the levelling up agenda.”

The CIC said that it agreed with the principles set out by Gove that leaseholders should not have to pay to remediate buildings that are unsafe and that those clearly responsible for profiteering at the expense of fire safety should be removed from government schemes that provide them with work or that provide grants, subsidies or loans to their customers.