In this week’s Legal Update, we look at the various developments and the current position with the government’s response to remediation of unsafe cladding, two years on from the introduction of the £1b Building Safety Fund (BSF) announced in the March 2020 budget, to support the remediation of unsafe non-ACM cladding on residential buildings of 18m and over.

Developments since March 2020

Since the inception of the BSF, we have seen additional government support in the form of :

• The introduction of a £30m ‘waking watch relief fund’ in December 2020, to help high-rise buildings install common fire alarm systems and rid themselves of spiraling waking watch costs.

• A new ‘5-point plan’ announced by the government in February 2021 backed by an additional £3.5b of funding, including :

1. Government funding for the removal of unsafe cladding for all residential high-rise buildings in England;

2. A long-term, low interest, government-backed finance scheme available for cladding removal from mid-rise buildings (between 11 and 18 metres), with a commitment that leaseholders of such buildings never pay more than £50 a month for cladding removal;

3. An industry levy and tax to ensure developers ‘play their part’. In this respect, a new ‘residential developer tax’ of 4% of developer profits derived from UK residential developments which exceed £25m will take effect from 01 April 2022, and proposals in the Building Safety Bill will enable an additional levy to be raised on developers of high-rise buildings when seeking planning permission, expected to raise at least £2b over the next 10 years to help pay for building safety remediation;

4. A ‘world-class’ new safety regime to ensure a tragedy like Grenfell never happens again; and

5. Providing confidence to this part of the housing market including lenders and surveyors.

• In September 2021, the waking watch relief fund was expected by another £5m, to meet demand.

So where are we now?

In January 2022, the new Secretary of State of the newly formed Department for Levelling Up, Housing and Communities, The Rt. Michael Gove MP, reset the government’s approach. An additional £27m was available for the installation of common alarm systems in all buildings with waking watch, thereby extending the scope of the original Waking Watch Fund, and announcements were made expressing the government’s commitment to :

• Ensuring those at fault would be held to account;

• 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

• Guaranteeing that no leaseholder living in their own flat will have to pay a penny to fix unsafe cladding -  in this respect, developers were written to, to convene a meeting and report back before Easter with a fully funded plan of action including remediating unsafe cladding on 11-18m buildings. Should industry not come to the table and agree to a solution, the government will be forced to impose one.

In order to achieve these commitments, last month, The Rt. Michael Gove MP unrevealed “tough new measures” to force industry to pay to remove dangerous cladding and protect leaseholders from exorbitant costs, referred to by some as ‘the Perpetrator Pays’ amendments to the Building Safety Bill which, if passed in law, will :

• Enable building owners and landlords to take legal action against manufacturers who used defective products on a home that has since been found unfit for habitation. The power will stretch back 30 years and allow recovery where costs have already been paid out;

• Introduce ‘Cost Contribution Orders’ to be placed on manufacturers who have been successfully prosecuted under construction products regulations, requiring manufacturers to pay their fair share on buildings requiring remediation;

• Enshrine in law the government’s commitment that no leaseholder living in their own home, or sub-letting in a building over 11m, ever pays a penny for the removal of dangerous cladding;

• Require developers that still own a building over 11m that they built or refurbished – or landlords linked to an original developer – to pay in full to fix historic building safety issues in their property. Building owners who are not linked to the developer but can afford to pay in full will be required to put up the money to do so;

• Cap contributions leaseholders have to pay, in the small number of cases where building owners do not have the resources to pay. The cap will be set at similar levels to ‘Florrie’s Law’ which applies to some repairs to social housing: £10,000 for homes outside London and £15,000 for homes in the capital.

Most recent figures according to gov.uk confirm that :

• The BSF has received 2,826 Private Sector Registrations of which 819 registrations (892 buildings) are proceeding with an application for funding;

• £1,073m has been approved for the remediation of unsafe non-ACM cladding from the BSF, of which £945m is for private sector remediation and £128m for social sector remediation; and

• 173 buildings have started remediation work, of which 19 have completed.

The Building Safety Bill was first introduced in July 2021 and is still making its way through the Parliamentary process. It therefore remains to be seen whether the government’s proposals including the ’Perpetrator Pays’ amendments will make it into law, and exactly how these measures will work in practice. However, the Government has made clear its position, insofar as high and mid-rise buildings are concerned, that leaseholders should not be expected to pay the costs for remediating dangerous cladding, or for any historic safety issues which may mean developers having to cover the costs of other defects also. We will update further as soon as there is more on this.

If you have any queries please contact a member of the team on 01435 897297 or info@kdllaw.com.

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This legal update is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of KDL Law or by KDL Law as a whole.

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