Almost four years on from the Grenfell disaster, the outbreak of a fire at the New Providence Wharf development in London was another reminder that much remains unresolved in tackling safety issues in multi-storey buildings. The tower block near Canary Wharf was partially covered with the same aluminium composite material (ACM) cladding which caused the tragedy at Grenfell. While many private residential buildings have completed the necessary removal works, and most have at least started work, ACM remains on numerous blocks in England.
In cases like New Providence Wharf, work has not yet started. That lack of action embodies the problems that many leaseholders are facing in getting combustible cladding replaced. The issue at New Providence Wharf has involved years of disputes and wrangling between leaseholders and developer Ballymore over the costs.
Just a few days before the fire at New Providence Wharf, the Government’s Fire Safety Bill progressed through Parliament without amendments to protect leaseholders from the cost of building safety work after MPs voted down the changes for the fifth time. Critics have complained that the legislation passes financial responsibility for repairs on to leaseholders, leaving them facing fire safety costs of up to £100,000.
The Government has pledged around £5bn to fund cladding repairs on buildings over 18 metres tall, but estimates suggest that the total cost of repairs could reach between £10bn £15bn, leaving a shortfall in funding with leaseholders footing the bill. The Government will offer loans to repair properties between 11m and 18m in height, but reports suggest that the loan scheme needs legislation before it is introduced and may not be in place for years.
In addition to enormous repair bills on the horizon, many homeowners and building owners are taking on major interim costs such as Waking Watch (whereby suitably trained staff continually patrol all floors and the exterior perimeter of the building) and soaring insurance premiums. While the property market has been experiencing a post-lockdown boom, thousands of apartment owners have been unable to sell or remortgage due to combustible materials on the exterior of their building.
With large numbers of existing apartment buildings potentially featuring combustible external materials, mortgage lenders have been unwilling to lend without evidence that the property is compliant with External Wall Fire Review (EWS1), a survey that assesses whether a building contains materials that are potentially dangerous. Homeowners have been struggling to instigate or obtain EWS1 certification, leading to sales falling through or going on hold. The Royal Institution of Chartered Surveyors has issued new guidance on EWS1 which came into effect in April 2021, significantly reducing the number of buildings that require the form. High street lenders are adjusting to the changes and Inside Housing has reported that at least two of the country’s 10 largest banks may still ask for an EWS1 form on some newly exempt buildings.
Residents and building owners are set to benefit from a new code of practice for professionals assessing external walls and cladding systems. The Government has commissioned the British Standards Institution (BSI) to draft a new code of practice for assessors when examining external walls and cladding, designed to give residents and building owners clarity on the fire risk. It aims to help professionals provide consistent, risk-based and proportionate advice on whether remediation is necessary. After a process of consultation, the BSI aiming to publish the standard in the autumn, following review by an expert steering group.
While that clarity is useful, it won’t address the issue of cost which is causing huge problems for leaseholders. The Housing, Communities and Local Government Committee (HCLGC) told the Government that leaseholders should not have to pay the expense of safety upgrades.
HCLGC Chair, Clive Betts MP, said:
“In the years since the Grenfell tragedy, we have been shocked by the reality of the danger that flammable cladding poses, by how pervasive these materials are in modern buildings and by the frequency with which fundamental fire safety measures, including fire breaks and sprinkler systems, are simply not there. £5 billion in funding is significant, but just cannot match the ongoing legacy of these fire safety failings.
“Most importantly, the Government’s recent proposals fail to adhere to the fundamental principle that leaseholders should not have to pay to fix these problems. That is why we have called on the Government to enhance support and develop a Comprehensive Building Safety Fund that targets support to where occupants are most at risk, rather than the current height- and product-based approach. Proposals to implement a loan scheme for leaseholders to pay for cladding remediation on buildings below 18 metres should also be abandoned.”
The HCLGC arrived at a conclusion which is backed by many campaign groups and stakeholders: in their view, there is an urgent need to establish a solution that matches the scale of fire safety issues, prioritising support where the risk is greatest and redressing the imbalance in financial liability. There is a growing body of opinion that the burden on leaseholders needs to be eased or removed, with the Government and industry stepping up to meet the costs required to make buildings safe.
On the same day that the Fire Safety Bill passed through Parliament, the Government launched a consultation process examining the introduction of a new Residential Property Developer Tax as part of its Building Safety Package to contribute to repair work.
Applicable to developers whose profits are £25 million, the proposed new tax is predicted to raise £2 billion in funding. The Ministry of Housing, Communities and Local Government stated that the Government believes it is right that residential property developers – “who will benefit from the restoration of confidence to the housing market” – should help fund the costs associated with the removal of unsafe cladding. The consultation on the design of the tax runs until 22 July 2021 ahead of its inclusion in the 2021-22 Finance Bill.
Housing Secretary Robert Jenrick said:
“This tax will strike the right balance between developers making a contribution and ensuring fairness for the taxpayer.”
The Financial Secretary to the Treasury, Jesse Norman, said:
“Given the significant costs associated with the removal of unsafe cladding, it is right to seek a fair contribution from the largest developers in the residential property development sector to help fund it.”
While those intentions are welcome in seeking a resolution to the funding problem, the fire at New Providence Wharf demonstrated that effective measures need to be accelerated. With lives at risk, urgent action is required to ensure we never see a repeat of Grenfell.