Government to fund cladding replacement

On 9 May 2019, the government announced that they will “fully fund the replacement of unsafe aluminium composite material (ACM) cladding on high-rise private residential properties where building owners have failed to do so”. This will come as welcome news to those living in the approximately 170 privately owned high-rise buildings where these remedial works have not taken place.

The conditions for accessing the funding are set out by the government as follows:

    • The amount available is estimated at £200 million;
    • Building owners will have 3 months to access the new fund;
    • Building owners will be able to register for the fund by early July;
    • Building owners will be required to take reasonable steps to recover the costs from those responsible for the presence of the unsafe cladding;
    • High-rise buildings are defined as those above 18 metres in height.

This relatively short announcement leaves room for a number of questions:

Who will be considered “responsible for the presence of the unsafe cladding”? The cladding manufacturer? The architects? The contractors in charge of the works? Will the building owners also be included in this?

The Phase 1 report from the Grenfell Tower Inquiry is yet to be released and is expected in June, if the Chairman makes findings as to who was responsible for the presence of the cladding on Grenfell Tower this will inevitably affect who is deemed responsible for other buildings. If such findings are left until Phase 2 of the Inquiry it would not be unreasonable to suggest that a building owner will be in no better position to make such a finding than an Inquiry that has been in progress for over 18 months.

Further, what will be deemed “reasonable steps”? Will the government expect building owners to have initiated legal proceedings by early October, or will some other, less onerous, steps be considered reasonable?

Finally, will just over £1 million per building be enough to fund such works? The press release repeatedly states that the government will “fully fund” the works, and the reference to £200 million is “estimated”.  When making the announcement in Parliament, the Secretary of State for Housing, Communities and Local Government James Brokenshire MP further states that the figure is an estimated cost.  According to the Secretary of State ACM cladding has been identified on 175 private residential buildings and 159 social residential buildings. In an announcement on October 2018, the government stated that an estimate of £400 million will be allocated to fund the removal and replacement of ACM cladding on social sector high-rise housing in England owned by social landlords. If the figures cited by the Secretary of State are correct, it would appear that the fund for private residential properties is around half of that for social.

When questioned by the Shadow Secretary of State for Housing, John Healey MP, about the funding, the Secretary of State makes clear that the amount is informed by the public sector fund’s utilisation and drawdown, by the financial support that has been provided by some of the developers and builders, and by the insurance that has been activated for a number of the buildings.

Interestingly, he also goes on to say that the government “want action to be taken to continue with liability claims”. Whether or not any claims, current or prospective, are intended to supplement this fund remains to be seen.

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