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Paying the Price for Cladding – law or politics as March deadline called for fire safety "settlement"

11/01/2022

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United Kingdom

The Housing Secretary, Michael Gove, has made a statement in the House of Commons calling for developers to "fix their own buildings" where affected by dangerous cladding.

  Mr Gove followed up his statement with an open letter to the "Residential Property Developer Industry", calling for "the industry as a whole to work with my department through open and transparent negotiations to agree a settlement".  A link to the letter can be found here.
 
In his House of Comments statement, Mr Gove intimated that the Government, through their implementations of Building Regulations, had some responsibility.
 
It is important to note that at present there have been no changes to the law and above only serves as a statement of intent. Liability for cladding in a strict legal sense remains unchanged. The tone and content of the letter to the industry from Mr Gove clearly highlights "developers" as those holding financial responsibility.
 
The expectation is that members of the industry will publically work with the Department for Levelling Up, Housing & Communities to agree a new deal ("framework") so that Developers will:
 
  1. make contributions this year and for following years to cover the full cost of unsafe cladding on 11-18m building (estimated to be in the sum of £4bn (although we have seen figures of £15bn reported today);
  2. fund and pay for all remediation of unsafe cladding in buildings over 11m for which they played a role in developing; and
  3. provide disclosure of comprehensive documentation over the last 30 years for historic fire safety for buildings in which they played a part in.
 
Although there is currently no change to the law, Mr Gove has stated that they will take "all steps necessary" to get a public commitment to the above framework, "including restricting access to government funding and future procurements, the use of planning powers, the pursuit of companies through the courts".
 
If no action is taken by the industry to sign up to the above framework, Mr Gove has stated that a solution will be implemented in law. The Government has also announced that it will also introduce amendments to the Building Safety Bill to retrospectively extend further the legal right of building owners and leaseholders to demand compensation from their building’s developer for safety defects up to 30 years old. The Bill currently covers defects up to 15 years old, extending the limitation period under the Defective Premises Act from 6 years.
 
It is also important to note however, that just because a building has combustible cladding does not mean that the building is defective and there is, as far as we are aware,  no attempt to apply the amended Building Regulations retrospectively.  Mr Gove's letter itself notes "In relation to 11-18m buildings, the vast majority [of 11-18m buildings] are safe. Others that do have combustible cladding may also be safe or can be made safe through effective use of existing or new fire safety measures such as sprinklers and alarms.  There are, however, a small number of residential buildings with unsafe cladding which must be addressed." It is this latter category where Mr Gove's efforts appear focused. 
 
At face value, there appears to be threatened commercial consequences for an immediate failure to co-operate. As more information is provided, we will be in a better position to understand what is expected. It also remains to be seen if and how Developers impacted might look to pass on liability to their supply chains.
 
If you are potentially affected by the statements of Mr Gove, please make contact with a member of our Construction team.

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Areas of Expertise

Construction

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Real Estate