Two major announcements were made this week regarding the UK Government's task to resolve the UK's cladding crisis. Firstly, the "New Approach to Building Safety" was updated by the Department for Levelling Up, Housing and Communities, in which developers and freeholders were told that they may have to foot the bill for works to remedy all fire risks, not just cladding. The Secretary of State for Levelling-Up Housing and Communities, Michael Gove, has continued to campaign to resolve the stress and burden for leaseholders "trapped" in unsellable properties.
Mr Gove went on to say that leaseholders should not have to face staggering costs of remedial works after campaigners argued a £4bn fund was simply not enough
Further to this, Mr Gove announced in the Commons, shortly after the formal update, that residents in blocks 11-18m high, who were previously ineligible for Government support, could now access it. Mr Gove passionately stated that "no leaseholder living in a building above 11m will ever face any costs for fixing dangerous cladding".
This must come as a huge relief for leaseholders affected by the cladding crisis. This issue had already been raised by the House of Lords in debating the Fire Safety Act, when it wished to grant statutory protection for those leaseholders affected by unsafe cladding and fire safety issue. Whilst we have gone the long way around, this is hugely supported and welcomed by the majority of those currently affected by the crisis.
We must ask, is Mr Gove's rhetoric that "developers" be those to pick up the bill for unsafe cladding too short-sighted?
Whilst it is exactly right that those who have mis-sold properties or cut corners should be on the hook; this cannot mean every developer or freeholder in the land. First, how do you prove blame or guilt of those who have allegedly mis-sold or cut corners? What is the standard applied here and what enquiries are taking place for the hundreds of thousands of properties that are affected? Investigating each in turn would take years; years that leaseholders should not have to wait.
Therefore, in the short term, Mr Gove has not answered who is going to pay now. There is also no consideration given to those developers who trusted contractors, who then, in turn, cut corners, and who are no longer around. Nor is there cognisance of the real-world issue of buildings passing planning, building inspections, and meeting the Building Regulations as they were at the time, but are now deemed to be unsafe by updated standards. In such instances, there is no one to "blame" and Mr Gove cannot legitimately send the bill to developers, when in fact the entire industry is partly responsible for the current state of affairs.
In our recent report – A new building safety regime – we asked business leaders, professionals, and key figures within the construction industry for their views on the UK's cladding crisis, as well as the Building Safety Bill and the Government's plans for a new building safety regime.
Our key findings include:
A new regime at what cost?
When we launched our report in December 2021, it was clear that the level of government support available to effect urgent remedial works for buildings identified as unsafe was far less than that which was required. There was also ambiguity about what it would cover. For the hundreds of thousands of leaseholders facing huge costs to replace unsafe cladding, this recent announcement will be welcome news. However, further clarification is required to ascertain whether this will include costs for all defects and whether there will be some form of retrospective limit.
Revolution not evolution
Our report explored the need for fundamental reform of building and fire safety - from legislation through to culture – to address the far-reaching effects of the cladding crisis and the future of building safety. In our discussion with industry professionals, it was widely agreed that those regulating building safety needed to be consistent. Whilst many believed the Building Safety Bill was an excellent start, there were many unanswered questions regarding the extent of reform needed for Building Regulations.
Government funding was only available for buildings over 18m in height, leaving those living in shorter buildings without any support, despite facing the same kinds of fire safety issues. Today's announcement seems to scrap the Government's plan to only fund (or loan costs for) remediation of cladding. This now aligns with guidance from the RICS.
Skills and education
Our research highlighted the apparent challenges the industry has faced in the past in employing the right skillset to monitor and manage building safety. To safeguard future building safety, it is imperative to secure the best talent for the newly created building control approvers and inspectors' roles, as well as ongoing training and best practice across the industry. This will all require further funding as well as a clear system of accreditation.
Many of those we interviewed expressed the need for a huge cultural change to address the endemic issues that have prevailed in the past, and to make sure building safety and regulatory compliance are viewed as more than just a box-ticking exercise. Government and local authorities have an opportunity to play a critical and crucial role in ensuring a rigorous checking process and the ability to penalise offending duty holders if they do not comply.
A question of liability
Whilst the Government's announcement goes some way in addressing defects in existing buildings, does this create another issue for developers who will now be turning to their contractors or sub-contractors (or to their insurers)? Many of the building owners we spoke to during the research for our report were going through the sensitive process of tracking down contractors to identify liability; some facing the even more difficult issue of contractors, consultants and subcontractors that are no longer around to face the music.
A blueprint for building better
The cladding crisis has not been just a financial problem, but a human one. The new building safety regime must balance cost, build quality and the expediency at which change is made. It is time for the Government and all those involved in the built environment to work together to bridge the gaps in the Building Safety Bill and the ongoing impact of the cladding crisis.
Whilst Mr Gove's latest comments are welcome to some, this does not seem to spell the beginning of the end for the cladding crisis. The Government, by confirming (perhaps what it should have some time ago) that leaseholders will not be liable for picking up remedial costs, and setting their sights on developers and their supply chain, now poses more questions:
- How will you prove the liability of developers who met standards the industry set but are now deemed unsafe?
- What investigations are ongoing to prove what developers mis-sold or cut corners?
- Who is going to pay for the remedial costs in the short term, when hundreds of thousands of residents remain affected by this?
These questions were raised in our recent report, and still remain unanswered.