Housing Secretary tells developers: Help fix the broken system

The Secretary of State for Levelling Up, Housing and Communities has, on 10 January 2022, written to housing developers warning them that they have until early March 2022 to agree a fully funded plan of action to remediate unsafe cladding on buildings between the heights of 11-18 metres. The statement forms part of the Government’s approach to overhauling building safety.

In the letter, the Secretary of State asks housing developers to agree to:

• make financial contributions to a dedicated fund to cover the full outstanding cost to remediate unsafe cladding on 11-18 metre buildings, currently estimated to be £4 billion;
• fund and undertake all necessary remediation of buildings over 11 metres that they have played a role in developing;
• provide comprehensive information on all buildings over 11 meters which have historic safety defects and which they have played a part in constructing in the last 30 years.

The Secretary of State is also inviting the 20 largest housebuilders and developer trade bodies to a roundtable discussion. It is intended that leaseholders and those affected by the Grenfell Tower fire will also be involved.

The full letter can be viewed online here.

It is anticipated that companies which are expected to contribute to the fund will be developers with annual profits of £10 million or above from housebuilding. The Secretary of State further says that while it is his hope that developers will work constructively with the Government, he is also prepared to “take all steps necessary” to resolve the issues, including “restricting access to government funding and future procurements, the use of planning powers and the pursuit of companies through the courts” and “a solution in law if needs be”.

The update and letter sheds light on the Government’s strategy for dealing with the issue of unsafe cladding in residential property. It is hoped that this will eventually lead to greater clarity for leaseholders, many of whom have been saddled with increased service charges and difficulties selling properties on account of cladding issues.

Questions remain about exactly what the Government and developers’ plan of action will look like. The Secretary of State says that the vast majority of 11-18 meter buildings are safe, and that some which have combustible cladding may be made safe through enhanced existing safety measures, such as additional sprinkler systems and fire alarms. It therefore seems unlikely that a “one size fits all” approach is going to be applied to buildings in this height range. Leaseholders of these buildings will reasonably be concerned about understanding the remedies which may be available to them, and whether they can bring proceedings against their developer if it does not comply with the new requirements.

No mention is made of houses or blocks of flats with defects which are less than 11 meters high.  Also, concerningly, the widescale problem of defective fire compartmentation has not been addressed, as the Secretary of State’s letter indicates that the proposed funding only applies to defective cladding.  This means that there is still no Government help for the many leaseholders who are facing high bills for fire safety defects.  At present there is no realistic prospect of satisfying lenders and insurers who are now aware of these issues, short of carrying out remedial works at the expense of the homeowners.  Some are able to bring claims against new build warranty insurers, but many of these are dragging their feet and trying to avoid liability based on technicalities.

In fact it is understood the Government will be looking to gloss over these other defects but confining the scope of EWS1 Forms to cladding issues.  This can only help developers at the expense of more unsuspecting home owners.

Please see the link here to our previous blog over the RICS position on EWS1 Forms.

Notwithstanding the Government’s guidance last summer that EWS1 Forms were no longer required on buildings under 18 meters, leaseholders continued to face challenges from lenders who nevertheless insist ESW1 Forms be provided due to the Government’s consolidated advice note (CAN) which recommended the use of EWS1 Forms on all new buildings. Accordingly, the Government is also to finally remove the CAN and instead provide new guidance developed by the British Standards Institute which is intended to ease restrictions faced by leaseholders in this regard.

Edwin Coe’s Property & Trusts Litigation and Construction & Engineering teams, headed up by Joanna Osborne, and partner Brenna Baye respectively, have extensive experience in dealing with residential property defects claims, and will be monitoring developments closely to see what solutions are proposed.  Brenna Baye specialises in securing cladding remedial funding for leaseholders.

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