Cladding Remediation Progress – Why So Slow?
It is over seven years since the tragic fire at Grenfell Tower killed 72 people and identified a crisis of unsafe cladding across high-rise buildings in the UK. Despite this high-profile crisis, the UK Government reported that as at the end of May 2024, remediation had only completed on 25% of the 4,374 residential buildings in England over 11m in height identified as having unsafe cladding[1]. In this article we consider why it has taken so long to get to this point, and whether there is any scope for optimism that the pace of remediation might pick up. It is important to note that this article addresses cladding remediation in England only, and different regimes and statistics will apply in other UK jurisdictions.
Building Safety Act 2022
We cannot discuss cladding remediation without mentioning the Building Safety Act 2022 (BSA). The BSA is one of the most significant changes in construction law in decades – it is complex, and it has been brought into force/expanded upon by swathes of secondary legislation/regulation. It has also resulted in an entirely new building control regime for higher risk buildings, a definition which captures many of the buildings that require remediation. The BSA did not receive royal assent until April 2022, and was largely not in force until April 2023, five years after the publication of the Hackitt Report whose recommendations it sought to enact.
Whilst it was not impossible for remediation projects to take place pre-BSA, the BSA opened up possible routes to remediation and funding of remediation projects that would otherwise have not been available to leaseholders/management companies.
Government Funding
The government has various funds, most notably the Building Safety Fund (BSF) and the Cladding Safety Scheme (CSS), which allow applicants to procure cladding remediation works to their buildings with government grants. The BSF was introduced in 2020 and solely covers buildings that are 18m and over in height. The CSS was introduced last summer and was originally thought to cover buildings between 11m – 18m, although it appears that some over 18m buildings will now also be included within this scheme.
From our experience over a number of government funded projects, the process to getting on site is slow. Applications must go through various checks, undertaken by the government and its cost consultants, and it is not unusual for applications to take over a year before the project can commence on site.
Developer Involvement
Since March 2023, major household developers have entered into the Developer Remediation Contract with the Government, committing to remediate life-critical fire-safety defects in buildings over 11m in height that they developed in the previous 30 years. Where a project was part of a government fund, and then its original developer signed up to the Developer Remediation Contract, the projects have for the most part been transferred out of the fund and applicants notified that they should instead engage with the developer. This has resulted in many “shovel ready” projects that might now be completed if they had remained within a fund, still being in negotiation with the developer.
The Developer Remediation Contract has also resulted in significant provisions being made in developers’ accounts, and developers have set out lengthy programmes for identifying and remediating buildings requiring works in order to make the required works manageable. This will inevitably mean that the leaseholders of the buildings at the tail end of a developers’ planned programme will be waiting quite some time until their buildings are made safe.
Building Control
The new building control regime for Higher Risk Buildings, often referred to as the Gateways regime, is now in place. As a result, remedial works to those Higher Risk Buildings cannot commence until the project design has been approved by the newly established Building Safety Regulator. Although the timeframe for such approval was initially provided as 8 weeks, anecdotal evidence suggests that 20 weeks may be more accurate. We do not yet know how long the issue of the final certificate might take, or the timeframes for approval of changes to design, but it is clear that this process is and will continue to impact the programme completion of remediation projects.
Supply Chain Issues
Construction supply chain shortages are not new, it is an issue that has been reported for years and is a significant issue for cladding remediation projects. A squeeze on fire safety professionals, a relatively niche industry, means that risk assessments and design reviews are taking longer than they might have done previously. Specialist contractors are also in high demand, which is similarly affecting remediation programmes.
These supply chain shortages are compounded further by the consistently high number of insolvencies in the construction industry, along with the tightening bond market affecting the ability to protect against such insolvencies. Developers have put aside hundreds of millions of pounds to remediate legacy projects, and they are now facing unconnected but significant issues in the wider housebuilding market. Building owners/management companies are understandably concerned about the solvency of the developers remediating their buildings, and it remains to be seen what would happen if a developer became insolvent mid-project. Would the government step in? What about those developments that had previously been rejected for grant funding? What support would be available to pay for emergency interim works to make a building liveable while the fall out from an insolvency is dealt with? These questions are unanswered, and this lack of clarity is causing further delay to building owners/management companies allowing developers to begin works on their buildings.
Is there scope for optimism?
Although it has taken quite some time to get to this quarter point, much of that has been taken up with understanding the scale of the issue, preparing and enacting much needed legal and regulatory reform, and negotiating the significant and complex Developer Remediation Contract with housebuilders. This work has been done now, and the processes that building owners and/or other responsible persons must go through, and the regulatory landscape they must navigate, in order to procure remedial works are rehearsed and largely understood. A number of the blockages will remain, but we consider there to be scope for optimism that the pace of remediation will increase, and the next 25% of remediation projects might not take another 7 years.
At Blake Morgan LLP we have a team of specialist lawyers advising clients on the remediation of their buildings, through a variety of different procurement/funding routes. If you have a remediation project that you require assistance with, please do not hesitate to get in touch.
[1] https://www.gov.uk/government/publications/building-safety-remediation-monthly-data-release-may-2024/building-safety-remediation-monthly-data-release-31-may-2024
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