Following much anticipation, the announcement on 10 January 2022 by the Secretary of State for Levelling Up, Housing and Communities, Michael Gove, on cladding remediation costs for medium height buildings between 11 and 18 metres marks a welcome change in the Government's approach. However the announcement falls short of proposing firm measures or timescale to allay leaseholders' concerns.
The most concrete part of Mr Gove's oral statement to the House of Commons relates to the immediate withdrawal of the Government's controversial Consolidated Advice Note published in January 2020, which strongly advised fire risks assessment to be carried out to external wall systems of buildings of any height. Further guidance by the British Standards Institute will be implemented, which will take a risk-based approach and is intended to bring some proportionality to remedial works. However the proposed PAS 9980, which spans some 183 pages, remains to be tested. It is hoped that RICS will now review their guidance on EWS1 assessments.
The previously floated long term loan to leaseholders of medium height buildings between 11 and 18 metres to fund remediation costs has also been scrapped.
Other key takeaways include proposed further changes to the Building Safety Bill, currently at its final stages in its passage through Parliament, to extend the time limitation period for claims to be made against developers or those responsible in the construction of a building with fire safety defects from the previously proposed 15 years to 30 years. Mr Gove also mentioned that leaseholders will be given statutory protection from liability to pay fire safety remediation costs for buildings over 11 metres (including those over 18 metres) by further amendments to the Bill.
Separately, Mr Gove wrote to the Residential Property Developer Industry on 10 January 2022, seeking a discussion with a selection of the industry's stakeholders for them to:
- Contribute to a dedicated fund for all outstanding cladding remediation costs for buildings of a height of 11-18 metres currently estimated at £4 billion;
- Fund and carry out all necessary remediation of buildings over 11 metres, including those over 18 metres in height, that they have a role in developing; and
- Provide information on all buildings over 11 metres with historical fire safety defects that they played a part in constructing in the last 30 years.
Mr Gove has set a deadline of early March 2022 for completion of the roundtable discussions and has suggested the Government will consider restricting access to Government funding and future procurements, using its planning powers and pursuing companies through the court as a means to encourage industry stakeholders to take heed. Whilst limiting public funds relating to the Help to Buy scheme may be a powerful incentive, taking the relevant companies to courts will require time to reap rewards therefore will add to the uncertainties to what is already a proposal that appears to lack specifics.
It is also noted that the imposition of a legal solution was last to be mentioned in Mr Gove's letter. A recently leaked letter from the Treasury shows that there is no new Government funding for the proposed £4 billion fund so how the proposal will be supported is an issue that is anticipated to be subject of much heated debate. It is also unclear how the figure of £4 billion was reached. Whilst there are developers who resist requests to pay for and carry out remediation, some have funded the works. Some developers responsible for defective buildings may also have been wound up some time ago. It is uncertain how the roundtable discussions will resolve this tension.
The proposal regarding remediation funding for buildings of 11-18 metres announced is limited to cladding only, which most leaseholders will be dissatisfied with. More often than not, inadequate cavity barriers or fire breaks are found in residential buildings and these defects are no less costly than cladding to remediate.
It remains to be seen when agreement may be reached between the Government and industry stakeholders and how any measures may be implemented. For the time being leaseholders, many of whom face crippling service charge bills for remediation costs and are trapped in potentially unsafe buildings that they call home, remain in limbo.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.