Fire, funding and failures: cladding continued

As we know the Grenfell tragedy, a horrific national emergency, invoked the government to re-think fire and building safety completely which in turn led to the draft Building Safety Bill, something which I have spoken about in a previous article.

Funding

The Fire Safety Act (“the Act”), which has received Royal Assent, allows for a total of £5.1 billion of funding to pay for aluminium composite material (ACM) remedial works on buildings (social and private residential buildings) which are taller than 18m and plans to introduce a low-interest loan scheme for building owners in respect of buildings between 11m and 18m, with the costs then being passed onto leaseholders with a monthly repayment cap of £50.

The government has also announced that it would provide an additional £1bn to fund the “removal and replacement of unsafe non-ACM cladding systems installed on high-rise residential buildings” again both in the private and social housing sectors.

Concerns

Whilst all of this additional funding sounds great, there are some concerns amongst industry professionals and leaseholders:

  • It has been reported that the pace of the remediation work, particularly in privately owned blocks, is very slow and incredibly bureaucratic.
  • It is anticipated that the total cost of full remediation works could be up to £15 billion and that there is likely to be a shortfall in government funding.
  • Regrettably, no help has been offered for the owners of the lower buildings of 11 meters or under, which are exposed to fire safety problems.
  • Once cladding issues are remedied, non-cladding related fire issues are often encountered and these costs are not covered by the government funding. So, they are likely to be passed down to leaseholders rather unfairly.
  • There have been calls to abolish the loan scheme and have a funding system which is paid for by the government and the industry entirely, not leaseholders who have had no part to play in unsafe buildings.

Insurance

The government is expecting building owners (including housing association owners) to actively identify and pursue all reasonable claims against those involved in the original cladding installations and to pursue insurance and warranty claims where possible. If successful, the government is expecting proceeds to be returned. It remains to be seen how well this system will work or how incentivised building owners will be with the government providing up-front funding in the first instance.

Litigation

Building owners are also expected to pursue claims against developers and/or contractors who are deemed responsible for cladding issues. This is likely to lead to further litigation as often the buck gets passed down the supply chain.

Conclusion

As we navigate through this cladding crisis, many leaseholders are struggling to sell and others (even if they do qualify for funding) are caught up in the long-winded process of remediation (involving various applications, sign-offs and specialist help with the required works).

It’s clear that the cladding landscape is still developing and that there are still a number of issues that need to be resolved. Whilst we may have only scratched the surface, it is nonetheless a step (albeit a slow step) in the right direction.

Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to clients of BLM. Specialist legal advice should always be sought in any particular case.

Who to contact

Priya
Sejpal

Associate , London

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