Michael Gove, the Levelling Up, Housing & Communities Secretary, released a Building Safety Statement to the House of Commons yesterday (Monday 10 January), proposing some significant changes in the Government’s response to building safety. Jim Gorrod, a partner at Stephens Scown LLP and a ‘leader’ in the field of construction law, outlines the changes and provides insight on the affect this will have on developers, leaseholders and management companies.
New funding scheme for residential buildings 11m – 18m in height
There will be a new scheme to further tackle the cladding crisis. Government funding is already available for buildings over 18m, however, leaseholders in buildings under 18m fall outside the scope of funding and face significant remedial costs, with many unable to sell or re-mortgage their properties.
To solve the funding issue, the Government is now asking developers to:
a) make financial contributions to a voluntary fund to cover the full outstanding cost to remediate unsafe cladding on buildings between 11m and 18m (it is estimated that £4 billion will be required); and
b) fund and undertake all necessary cladding remediation work on buildings over 11m that they have played a role in developing.
Developers have until early March to voluntarily agree to the £4 billion payment plan. If they fail to contribute, the Government has said that it will bring in new laws “forcing them to act”.
Proposed Extension of Limitation Period
The Government has also announced that it will make immediate amendments to the Building Safety Bill to extend the right of leaseholders to challenge those who cause defects for up to 30 years retrospectively. The current limitation period is six years. This change would significantly increase the number of leaseholders who would be able to make claims against developers for fire safety defects who otherwise would have been time barred. Further detail in relation to this amendment is awaited.
Changes to EWS1s
The Government also declared that “medium rise buildings are safe, unless there is clear evidence to the contrary” and said there must be far greater use of “sensible mitigations”, like sprinklers and fire alarms over unnecessary and costly remediation. The government has therefore withdrawn, with immediate effect, the Government’s Consolidated Advice Note, which recommends the use of EWS1 forms on all buildings. This will end the situation of buildings being declared unsafe when they are not. New guidance on the use of EWS1 forms is expected within weeks.
Although this will be welcome news for leaseholders, particularly those in buildings below 18m and those with historic defects, cladding is rarely the only problem with these buildings. There are frequently other fire safety issues such as missing fire barriers and timber balconies which will not be covered by the Government’s latest measures and still need to be addressed.
Many leaseholders have already received bills for fire remediation works or will do so very shortly. It is imperative therefore that whatever the Government does next needs to be actioned swiftly. Applications to the existing Building Safety Fund for buildings over 18m have often taken many months to be processed. Leaseholders will be hoping that any new measures provide a way out of them having to cover the remediation costs in the interim or they will face being trapped in unsafe properties that they cannot sell or re-mortgage.
Building Safety team
The designated Building Safety team at Stephens Scown has been working with developers, leaseholders and management companies in relation to claims for fire safety defects and how to manage these issues.