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13th March 2020

Why the Government's additional £1 billion fund for remediation of cladding on high rise residential buildings is good news for residents

In Wednesday’s Budget the Chancellor of the Exchequer, Rishi Sunak, announced that the Government would provide £1 billion to fund the removal and replacement of unsafe non-ACM cladding systems installed on high-rise residential buildings in both the private and social housing sectors. That is those buildings of 18 metres and above.

This is in addition to the £600 million that the Government has already made available to remediate those buildings clad in Aluminium Composite Material (ACM), which was the type of cladding installed on Grenfell Tower.

Welcome news for those leaseholders who have found themselves unable to sell or re-mortgage their flats because the building in which they live might be clad in an unsafe material.

The restriction on mortgage lending was a direct response to the advice from Government last year that building owners, or their appointed competent professional advisors, were responsible for checking that the external wall systems on their buildings were safe(1) and the advice highlighted some particular issues for those living in high-rise residential buildings.

Firstly, these buildings are multi-occupancy so no individual leaseholder could carry out the necessary checks. This responsibility sat with the landlord, and leaseholders found that their landlords were slow or reluctant to act.

Secondly, if the checks were carried out and identified that remediation works were required, the question then arose of who should pay for these works. Again, leaseholders found that their landlords were reluctant to pay and the cost to the leaseholders was prohibitive (even if you could get them all to agree to fund the works).

And thirdly, there was the question of who could sign-off that the external wall system was safe in order to satisfy the lender. Valuers are not qualified to assess external wall systems and there was no agreed process for the inspection and sign off of an external wall system that would allow a suitably qualified surveyor to do so.

That changed in December last year when the Royal Institution of Chartered Surveyors (RICS), The Building Societies Association (BSA), and UK Finance agreed an industry-wide process for the fire safety assessment of cladding systems on buildings above 18m.(2)

However, the issue of who would pay for the inspections, and any remediation works resulting from this, was still unresolved and began to make headlines, with those directly affected taking to the streets to highlight their plight.(3)

It is against this backdrop that the Government has now stepped in to fund the required remedial works. And there are a couple of interesting points of detail in the announcement.

Firstly, in the private sector, grants will be for the benefit of the leaseholder owners of flats, not the freeholder.

And secondly, it is a condition of the funding that building owners must pursue warranty claims and take appropriate action against those responsible for putting unsafe cladding on these buildings in the first place, with the expectation that these monies will be repaid to Government when recovered.

It is a step in the right direction, but the pace of the works required to remediate these buildings in both the private and social housing sectors is still far too slow.

The Government has already stated that it is prepared to use the powers it has under the Housing Act 2004 and the Regulatory Reform (Fire Safety) Order 2005 to enforce these works, but if as an industry we are to ensure that residents of high-rise residential buildings are safe and feel safe in their homes, then we must act now.

  1. Advice Note 14: advice on external wall systems that do not incorporate Aluminium Composite Material
  2. New industry-wide process agreed for valuation of high-rise buildings
  3. Imprisoned by cladding: The flat owners who cannot sell