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The Cladding Challenge: Silent Killer!

By Vijay Bange and Tanya Chadha
March 2021
Construction Law

The Cladding Challenge: Silent Killer!

By Vijay Bange and Tanya Chadha
March 2021
Construction Law

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The ushering in of the New Year and the approval of various vaccines to fight the Covid-19 pandemic brings hope for society to return to some degree of normality. For many months, this pandemic has dominated the media. However, other significant challenges need to be grappled with, and those issues appear to be gaining momentum in the press and in Parliament. The tragedy of the fire at Grenfell Tower, and the loss of 72 lives has led to a root and branch review of dangerous cladding and fire safety generally in the UK. Dame Judith Hackitt lead the independent review of building and fire safety regulations, culminating in the Hackitt Report, Building a Safer Future, 17 May 2018. Consequently, the Building Regulations were amended to give specific guidance and prescriptive technical requirements to address the shortcomings identified[1].

The initial focus on “making safe” was on social housing and local authority owned residential properties. The Government’s Social Sector ACM Cladding Remediation Fund was launched in July 2018. However, given the sheer number of affected developments, there remains numerous residential buildings with unsafe cladding and indeed fire safety deficiencies, both in the public and private sectors some three years after the Grenfell tragedy.

Whilst the Hackitt Report addressed new and existing high rise residential buildings that are ten storeys or greater, outlawing the use of combustible cladding on the outside façade of “relevant buildings”[2], there remains similar concern with other buildings. Other residential buildings, care homes, schools, hospitals and leisure buildings that are outside the relevant buildings definition may well fall into a lacuna. Hostels, hotels and boarding houses are excluded from the definition of “relevant building”. This appears to be an oddity, but the rationale seems to be based on hotels being staffed and having evacuation strategies in place whereas blocks of flats/apartments often have a “stay put”[3] policy. The basis to treat buildings differently is somewhat tenuous.

Approved Document B makes clear that in the case of tall buildings that are not caught by the “relevant buildings” definition, the insulation and core of cladding used should be of “limited combustibility”.

An independent Expert advisory panel advised the government, and an Industry Response Group assisted with guidance on remedial works.

In March 2020, the new Fire Safety Bill was introduced with a view to improving fire safety in buildings. The Bill amends the Fire Safety Order 2005 and clarifies, inter alia, that “the responsible person or duty-holder for multi-occupied, residential buildings must manage and reduce the risk of fire” for external walls including cladding, balconies and windows and entrance doors to individual flats opening into common parts[4]. 

When it comes to cladding and fire safety, the recent change in interpretation of historic Building Regulations is retrospective. Ordinarily, building regulations are not applied retrospectively so buildings are held to the standards in force at the time of construction. That leaves building owners and leaseholders in a difficult position. Homes that were deemed safe at the time of construction and purchase are now considered unsafe and require expensive remedial works to be carried out. In the meantime, interim measures such as deploying a waking watch have to be put in place to make things safe and these often come with a hefty price tag.

In relation to building owners in the private residential sector, it is currently the responsibility of building owners to carry out necessary measures to ensure the safety of residents. In the case of long leasehold apartments, these costs may well be passed down to the leaseholders through the service charge. Local authorities have sought to identify privately owned residential buildings that have ACM cladding and that are over 18 metres.

So in the first instance, building owners and leaseholders may be left with a substantial bill for remedial works. If this is the case, it will be important to establish who is ultimately liable for the costs and whether there are any legal claims that can be pursued to recover the costs incurred. Where developments were carried out on a design and build basis, there may be recourse against the building contractor. Consultant and professional team collateral warranties should also be reviewed together with bonds, sub-contractor warranties and insurance policies. It is entirely possible that some organisations may cease to exist either as a result of the passage of time or insolvency. The legal and contractual positon is likely to be anything but straightforward. It is more likely to be an ever-evolving complex web. Nothing is clear-cut with many permutations as to who may ultimately be liable to pay in full or part for remediation works.

There was an important commitment by the Government on 9 May 2019 to the effect that it will fully fund the remedial works to replace ACM cladding on privately owned buildings 18 metres or higher.

The Government in relation to both private and social housing sectors, further announced in the March 2020 budget that it was setting aside £1 billion for a Building Safety Fund in 2020-2021 for the remediation of unsafe non-ACM cladding, again on buildings that were 18 meters or taller. The registration process was from 26 May 2020 and closed on 31 July 2020. Following registration applicants were able to submit funding applications from 31 July 2020. Detailed guidance on the funding was provided by the Ministry of Housing, Communities and Local Government. The Safety Fund was therefore open to leaseholders who would incur remediation costs via the service charge. In relation to the social sector, housing providers were required to demonstrate “the remediation costs are unaffordable or a threat to financial viability”.

Leaseholders cannot individually apply for funds. It is envisaged that building owners, freeholders or the managing agents responsible for the block should make the application for funding, but the big proviso is that they are not already meeting the costs (or able to meet the costs) for remedial works from other sources such as a warranty claim or a contractual claim against contractor or designer.

In short, whilst the Government has set aside a fund, there will invariably be both social providers and private landlords still in the dreadful scenario of having dangerous cladding but that did not apply for funding. This could for example be because the fund and application process was not known about at the time or because the building owner thought it had a claim against a third party. Whilst there is an appeals process, presumably for instances where funding is declined, it is not clear if an application can still be made notwithstanding that the date for registering was 31 July 2020. On the basis that the whole purpose of the Building Safety Fund was to address the significant safety concerns for those affected, it surely serves no purpose in being punitive in any way with late applicants. Ultimately, the Government’s intention is to help address the issue of buildings with dangerous cladding.

Unfortunately the problem does not stop there. Government funding does not yet extend to the full extent of fire safety defects experienced both in the social and private sector. The fire safety defects now being uncovered are not necessarily confined to cladding. Initial investigations often lead to the discovery of other defects concerning fire stopping, cavity barriers and ventilation to name but a few. In short addressing the dangerous cladding may well open a can of worms as to other design or build process defects that entail complex remediation, potentially decamping occupiers. Will this lead to some building owners attending to the cladding issues now using money from the fund and leaving the remediation of other defects to a later date? This would expose the owners to potential contributory liability. Practically it would undoubtedly increase the cost of repair works and would not achieve the standards of safety required.

Then there is the issue of unsafe cladding and other fire safety defects on buildings that are not 18 meters but never the less suffer the same problems. These properties will undoubtedly also suffer from the blight factor.

In November 2020, the House of Lords proposed amendments to the Fire Safety Bill that included, inter alia, preventing fire safety remediation costs being passed down to leaseholders and tenants through the service charge. The amendment will be considered by the House of Commons and the media storm surrounding this issue may well mount some pressure on decision makers. Since then, two Members of Parliament have actively launched a campaign on the issue. The proposed amendments might offer a welcome glimmer of hope for affected leaseholders but it is too early to say whether there is in fact a light at the end of the tunnel.

The issue of ACM, and non-ACM, unsafe cladding is a significant national problem. As is the plight of those who have purchased apartments at prestigious developments to now only find that they have to pay significant sums for remedial works passed down through their service charge. These remedial works are not simply vanity projects. They are borne out of necessity and to protect the health and safety of residents.

Many leaseholders now find themselves in a lose-lose situation as result of serious problems that were not of their own making.Service charges for a number of developments have increased substantially to cover the cost of remedial works.
There does not however seem to be an easy way out. The media reports that some leaseholders are finding it difficult to re-mortgage or sell their propertieswithout expensive remedial works first being carried out.

What is clear is that building owners and leaseholders cannot sit back and do nothing. Action must be taken and it must be taken reasonably, responsibly and efficiently. The Fire Safety Bill empowers fire services to take enforcement action against building owners in the event of any non-compliance. Certainly the HSE may ply pressure with threats of criminal prosecutions and hefty fines for health and safety breaches. Potentially, owners of buildings, who become aware of dangerous cladding, fire risk, and serious health and safety issues may face risk of Corporate manslaughter charges in the event of fire and fatalities.

The plight caused by dangerous cladding is now rearing its head in the media. The problem of trying to address the removal and replacement of dangerous cladding in “relevant buildings” is a huge challenge. However, the challenge is even bigger as we are yet to face up to how or when to tackle other buildings with dangerous cladding. The problem is often not only limited to the cladding, and other fire safety works are necessary. Again the same issues will exist. Who is responsible for the ultimate rectification works, cost and how will this blight affect asset value. There has been a boom over the last few decades of major city centre apartment schemes (both private and social sector). These have also fuelled the housing market, which is a significant economic cash generator. Failure to address this silent killer of dangerous cladding may make such investments less appealing.

Notes:

  1. The Building (Amendments) Regulations 2018; these amended The Building Regulations 2010, and Approved Document B Fire safety.
  2. The definition is a building 18 metres, contains one or more dwellings for residential purpose, also apply to Specified attachment”- balcony attached to an external wall,device attached to external wall for reducing heat gain by deflecting sunlight, and solar panels attached to an external wall; but exclude any room in a hotel or boarding house or hotels.
  3. Approved Document B (Fire Safety) 2019- effective from 30 August 2019 in England. This restates the “Stay Put” evacuation policy for “relevant buildings”.
  4. https://www.gov.uk/government/news/fire-safety-bill

Republished by permission.