UK Construction & Engineering: The cladding catastrophe car crash!

By Vijay Bange and Tanya Chadha

2020 will be forever synonymous with the global pandemic. The end of the year saw the approval of vaccines and with that a hope to an end, or at least the taming, of the Covid-19 pandemic. Whilst this has dominated the media in 2020, there has been momentum in the press and Parliament about the continuing problem of dangerous cladding.

A summary of the unfolding story board is below.

  • After the tragedy of Grenfell Tower there was an independent inquiry lead by Dame Judith Hackitt concerning fire safety. Her report, Building a Safer Future, was released on 17th May 2018. The consequence was the shake up of building regulations to deal with the perceived shortcomings in the old regulations in relation to high rise buildings and fire safety. The Government was advised by an independent expert advisory panel, and an Industry Response Group.
  • Grenfell Tower was under the social housing sector umbrella. Local authorities and housing associations provide a massive stock of housing, and as such the initial Government allocated fund was to deal with ACM cladding (the dangerous cladding that was on Grenfell Tower) in relation to the social housing stock.
  • The Hackitt Report addressed existing and new high rise buildings that are ten stories or greater, outlawing the use of combustible cladding on the outside.
  • So what’s the position with buildings that are outside the definition of “relevant buildings”? The reality is there are other buildings, such as schools, hospitals, hotels and offices, that have dangerous cladding. There are also residential buildings less than ten stories high that suffer with the same problems.
  • Approved Document B, makes clear that in that case the insulation and core of cladding used must be of “limited combustibility”.
  • However, note that hotels, hostels, boarding houses, albeit residential usage, are excluded from the definition of “relevant buildings”. The rationale appears to be these are likely to be staffed, have evacuation strategies as opposed to flats and apartments which have a “stay put policy”.
  • Recent times have seen a change in the way we live and work, and living in the major city centres has become fashionable, with large top end city centre apartment blocks being built in all the major cities in the UK. A significant percentage of these are in private ownership, and have also been caught up in this problem.
  • With private sector housing, it is the responsibility of the building owners to undertake such measures to ensure the safety of residents. With long leaseholders the costs to remove and replace dangerous cladding has in cases been passed to leaseholders via the service charge.
  • Leaseholders may find themselves with hefty bills for remedial works, which may be unaffordable.
  • The Government in May 2019, acknowledging this issue, made a commitment to fund the cost of replacement of ACM cladding on privately owned buildings that were 18 metres or higher.
  • In March 2020 The Government went a step further, and set aside a Building safety Fund of £1Billion for remediation of unsafe non -ACM cladding on buildings 18 meters or taller. However, there was a registration process commencing 26th May 2020, closing 31 July 2020. Those who have registered could then submit applications for funding. Regrettably for whatever reason, there will be swathes of developments that have not registered and applied for funding, and potentially have missed the opportunity.
  • Query whether the Government will show some flexibility with late applicants given that the purpose of the fund is to remediate what is a national public health and safety issue, and it makes little sense to be punitive for late applicants. The position is unclear. It has also recently been reported in the British media that leaseholders applying for the fund are prohibited from discussing the matter with journalists or broadcasters.
  • To improve fire safety in buildings the new Fire safety Bill was introduced in March 2020, seeking to amend the Fire safety Order 2005 that “ the responsible person or duty-holder for multi-occupied, residential buildings must manage and reduce the risk of fire” for external walls, cladding, balconies, windows and entrance doors to individual flats. The intention is that these regulations will be applied retrospectively, and so will catch buildings that have already been built as well as those new builds to be as yet constructed.
  • The House of Lords has proposed amendments to the Fire safety Bill so as to prevent fire safety and remediation costs being passed onto leaseholders. Some MPs are actively pushing this cause. We shall wait and see how this unravels.
  • In relation to the private sector, there are many instances of developments where leaseholders have been asked to pay via their service charge significant sums to meet the costs of remedial works to replace dangerous cladding.
  • Building owners and/or long leaseholders may look to pursue the original builders if there was a design and build arrangement; there may be potential recourse via third party warranties against subcontractors; bonds, warranties and insurance policies need to be considered; a claim pursuant to the actual building warranty insurance will need to be considered; and the professional team may have liability, and will invariably have professional insurance cover. However, the reality is that each project will need to be considered on its facts and the myriad of contractual obligations unravelled so as to ascertain who has culpability to contribute in whole or in part for remedial costs. There are complexities as to liability.
  • Whilst the whole Grenfell tragedy highted the dangerous ACM cladding, and indeed dangerous cladding on buildings generally, the reality is that fire safety issues will not be limited to external cladding but will extend to fire compartmentation and other potential design or build problems that are a fire risk and need to be put right. Balconies and sprinkler systems included.
  • The risk of potential HSE prosecutions will be another concern for those caught up in this as building owners and leaseholders. The fact is knowing there is a problem means that it certainly cannot be ignored, and taking a passive, no action, approach cannot be an option.
  • The plight of those caught up in this nightmare is serious. Individuals have purchased apartments in developments which may be now blighted because of the problem of dangerous cladding and/or fire risk issues. They may be unsellable, difficult to re-mortgage, insure etc and long leaseholders may be trapped.
  • There remains the issue as to what will happen to other buildings that already have dangerous cladding, but are not 18 meters or taller.
  • The Government may potentially make available further funding in the future to address this issue, but one can only speculate. The reality is that The Chancellor has commendably been responsive with help from the Government in various ways to prop up the economy as a consequence of the pandemic. In short funds may be depleted with the Government coffers as it is.

In recent blogs we have spoken about how the Government considers the construction and the property sectors to be crucial for the economy, and for us to build our way out of recession. Given that, it is important for funding to be made available to resolve this issue to keep confidence in domestic the property market, particularly . It remains to be seen whether we can avoid this cladding catastrophe car crash.

© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.

The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

Proudly powered by WordPress