On 4 September 2024, the Grenfell Inquiry published its Phase 2 report. The salient findings can be broadly condensed into (1) issues of systematic dishonesty, (2) deliberate and sustained strategies to manipulate testing processes, (3) conflicts of interest affecting those who were guardians of the public interest, (4) prolonged knowledge of risks but a failure to act and (5) a persistent indifference to fire safety. Importantly, the Phase 2 Report stressed there must also be drive for "much needed change".
You would be forgiven for thinking there has already been significant change (such as the introduction of EWS1's and the flurry of legislation including the Building Safety Act, the Fire Safety Act, copious numbers of Regulations and the focus on PAS:9980). You would also be forgiven for thinking why is more change therefore needed. Nevertheless I must agree there is a need for change (having acted for two core participants during Phase 2 of the Grenfell Inquiry and advised a significant number of clients in relation to fire safety and remediation).
For example the Dagenham fire on 26 August 2024, the alleged failure to comply with a Remediation Order at Orchard House in Bristol, Angela Rayner's comments that fire safety must be "accelerated" and the Phase 2 Report stating the "definition of a higher-risk building for the purposes of the Building Safety Act [must] be reviewed urgently" all demonstrate why change is needed and that it is also inevitable.
Until further legislation is tabled I would like to focus on one recent change, namely s117 Leasehold and Freehold Reform Act 2024, as I believe this is one of the most impactful changes to accelerate fire safety remediation works in recent times. s117 disapplies the prohibition of passing professional service costs to tenants via the service charge from resident management companies (RMCs) and right to manage companies (RTMs).
Please note this prohibition only applies to the professional costs arising from applications for Remediation Contribution Orders. The reason s117 is so impactful can be summarised as follows – RMCs and RTMs are the most likely entity to be contractually responsible for undertaking fire safety remedial works. This means RMCs and RTMs need to fund those works but they are also prohibited from seeking those costs from tenants. RMCs and RTMs must therefore seek legal and other advice as to who should fund these works (for example the various Government Funds, the freeholder, the developer or the manufacturer). These are professional service costs. Once liability has been established, the liable party or parties normally refuse to pay which means RMCs and RTMs must issue an application for a Remediation Contribution Order.
Again these are further (and very expensive) professional service costs. Until the introduction of s117, RMCs and RTMs were unable to (1) fund the initial legal advice, (2) fund the application for a Remediation Contribution Order and (3) most importantly remediate unsafe buildings. I know this because I acted for ten RMC / RTM clients who were all unable to undertake urgent remedial works simply due to funding issues. The introduction of s117 and removal of this prohibition means RMCs and RTMs can now fund Remediation Contribution Order applications. In effect, the floodgates are now open and I suspect we shall see an increase in such applications. Despite s117 (and to reiterate the need for change), more needs to be done. For example, a successful Remediation Contribution Order application may cost around £400,000 in professional fees alone. Despite this, the First Tier Tribunal (who hears such applications) has no real jurisdiction to make cost awards against the losing party or parties. Bizarrely such jurisdiction is available to the Tribunal in other types of applications though. Another example (from having been involved in a high profile Remediation Contribution Order application) is the amount of finger pointing and passing of blame. This led to around 100 parties being joined to the application which ultimately increased costs, overwhelmed all involved and delayed the progress of the application.
Change is overdue and a great deal of pressure will now be exerted to try and achieve this. Whilst certain ideas for change are positive and well intentioned (such as s117 Leasehold and Freehold Reform Act 2024), those changes do not work when other parts of the process are flawed. The real world impact and implications of any future changes must be considered in much greater detail before being implemented. A failure to do this will mean any changes will be of no tangible use to anyone.
Originally published by EJOT
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