Michael Gove, the Secretary of State for Levelling Up, Housing and Communities (DLUHC), has recently sent letters to the residential property development industry and the Construction Products Association urging them to agree a plan for funding the remediation of unsafe cladding.
These letters, alongside announcements made by the government, are part of a wider review of the cladding industry following the Grenfell disaster and the series of reforms proposed in response to the first phase of the Grenfell Inquiry. Part of these proposed reforms are included in the Building Safety Bill (BSB) which is now progressing through the House of Lords. The BSB contains provisions intended to secure the safety of buildings and to improve the standard of buildings, as well as acting as a vehicle for wider improvements to the construction industry. An article on the main provisions can be found here.
The Grenfell Inquiry is currently in Phase 2, in which a review of the testing, certification and marketing of cladding panels is being carried out.
Letter to developers
On 10 January, the DLUHC wrote a letter to the residential property development industry requiring it to agree a plan on the remediation of cladding by early March. The letter notes that the government expects the industry to agree a plan to:
- Make financial contributions to a dedicated fund which will cover the full outstanding cost of remediating unsafe cladding on 11-18 metre residential buildings;
- Fund and carry out all necessary remediation of buildings over 11 metres that the industry had a role in developing;
- Provide complete and comprehensive information on all residential buildings over 11 metres which have historic fire-safety defects and which developers have had a role in constructing over the last 30 years.
The letter warns that “all necessary steps” will be taken by the government to ensure the above framework is committed to by March 2022. These steps include restricting access to government funding, the use of planning powers, the pursuit of companies through the courts and the imposition of a solution “in law” if necessary.
Announcement to the House of Commons
In the House of Commons, the DLUHC announced a number of steps to address the cost to leaseholders of replacing defective cladding and revealed a four point plan to reset the governments approach:
- Opening up the next phase of the Building Safety Fund to drive forward taking dangerous cladding off high-rise buildings, prioritising the government’s £5.1bn funding on the highest risk
- Those at fault will be held properly to account: a new team is being established to pursue and expose companies at fault, making them fix the buildings they built and face commercial consequences if they refuse
- Restoring common sense to building assessments: indemnifying building assessors from being sued; and withdrawing the old, misinterpreted government advice that prompted too many buildings being declared as unsafe; and
- New protections for leaseholders living in their own flats: with no bills for fixing unsafe cladding and new statutory protections for leaseholders within the Building Safety Bill
Letter to Construction Products Association (CPA)
On 22 January 2022 the DLUHC wrote to Peter Caplehorn, chief executive of the CPA. The letter demands that the cladding/insulation sector agrees a clear commitment to provide financial contributions for the remediation of unsafe cladding. This financial commitment must be a significant proportion of the total remediation costs in the UK and it must start this year. According to the letter, the total remediation costs for unsafe cladding on 11-18m height buildings is estimated to be £4bn and for buildings over 18m it is £5.1bn.
The letter concludes by noting that the government is committed to “fixing this broken system” and is willing to “do whatever it takes” to achieve this goal. The letter also commits to prevent companies and directors from working in the UK industry if they are not “fully committed to upholding the safety of residents”.
Second Letter to residential property developers
On 3 February 2022 the DLUHC again wrote to the residential property developer industry with a proposal for codifying the developer’s commitment to financially contribute to the cost of remediation as set out in the letter of 10 January. The letter encloses a key features document which sets out the method which, once agreed, is intended to become legally binding. The letter encouraged developers to submit their views on the document before the deadline of 9 February 2022.
As noted in the previous letter, the key features document requires developers to commit to remediating buildings over 11 metres which they played a role in developing/refurbishing over the last 30 years and to contributing to a remediation fund for all other 11-18 metre buildings with unsafe cladding.
Under the key feature document a developer will be part of this arrangement if they have profits “from the development of residential land” over £10m per year, or they elect to join the scheme. There are also a number of other commitments for developers in the document, such as regular progress reporting and compliance with agreed controls.
What can we take from these steps by the government?
It now over four years since the Grenfell tragedy and the government recognises that the issue of building safety needs to be urgently addressed, as does the financial burden on leaseholders. While safety is undoubtedly the priority, the government also recognises the need for a common sense and proportionate response, as it acknowledges that there are too many buildings currently declared as unsafe with some in the industry seeking to profit from the current crisis.
This is a precarious balancing act and the government proposals so far lack any real detail as to how it proposes to achieve this. However, the latest communication and the key features document, if agreeable to the industry, could be the start of a process which would be a significant step forward.