The ugly reality of the Building Safety Fund

With all the recent headlines on how high-rise tenants are being hit by large bills for the replacement of unsafe cladding, it is good news that the government is reconsidering its position on what should be covered in the Building Safety Fund, albeit rather late in the day.

The question rightly being asked is how on earth have we found ourselves in this position, three and a half years after Grenfell?

The bad news for leaseholders is that the fund falls short of covering all the work typically required to obtain the External Wall System (EWS1) sign-off from an accredited fire safety professional. No EWS1 sign-off ultimately means challenges in obtaining insurance cover, leaseholders unable to renew mortgages or sell their homes. The ugly reality is that currently, tenants could be forced to pay huge bills to make their buildings safe.

There is a clue in the full title of the fund, which is the “Building safety fund for the remediation of non-ACM cladding systems”. It is specifically focused on the removal and replacement of non-ACM cladding. The fund does not currently cover all the works required to make the building safe from fire risk, which is surely the primary objective for the government?

Works which are not directly related to the remediation of unsafe non-ACM cladding systems, even where these need to be undertaken at the same time, are ineligible. For example, the fund does not cover:

• Works to balconies that are not integral to the cladding.
• Other necessary fire safety works not related to an unsafe non-ACM cladding system.
• Other structural works which are not directly related to the remediation of unsafe non-ACM cladding systems.

In reality, almost all high-rise projects will require work beyond the narrow remit of replacing the combustible elements of the external cladding system to make the buildings fire safe and insurable. Whenever anything must be removed to enable the replacement of cladding, what is reinstated needs to comply with current building regulations. This is a particular problem with balconies where balustrading and timber decking needs to be replaced.

The question rightly being asked is how on earth have we found ourselves in this position, three and a half years after Grenfell?

Works to smoke ventilation systems are another common problem and we have seen instances where combustible insulation within the formation of the internal element of the external wall is not covered, but still needs to be replaced to enable the building to be deemed safe.

In addition to complying with building control, planning can be another contributor to non-eligible costs. If planning is required due to the necessary changes, additional obligations can be introduced which are not covered by the fund.

Understandably there is pressure from the government to complete the works, as fundamentally the buildings need to be made safe for residents but also to free tenants from being stuck in homes they cannot get mortgages on or sell. The obligation for securing funding sits with the building owner or managing agent, who are often not experienced in managing works of this nature. At the initial stage they may not appreciate the non-eligible costs that could arise from the project. Due to the urgency to start the works and the late realisation of ineligible costs, many tenants are only now becoming aware of the funding shortfalls.

Without a change of policy these costs are likely to be added to tenants’ mortgages or included as part of their service charge. It is understandable that they are angry and stressed that they are facing extensive bills for remediation works for their buildings which had previously been certified as compliant.

The government is encouraging a drive to recover costs through building contracts, warranties and the like. This will be rife with challenge and represents a field day for the lawyers. If the building is over 12 years old it will be hard to pursue a claim. Even with younger buildings, if they complied with building regulations at the time of construction, it will be hard to pursue a claim against the developer, builder or designer.

This presents a major challenge for the government. Clearly the works need to be carried out for the safety of the people living in these buildings, but how can it be right that leaseholders end up carrying the bill for remedial works that have arisen through faults in the system?

As more notices start to land on the doormats of tenants’ homes this issue is only going to grow. The government needs to take decisive action to remedy the matter. Clearly, appropriate safeguards need to be in place to avoid the misspending of taxpayers’ money, but the extent of work that can be covered by the government to make our tall buildings safe must surely be expanded one way or another.

Sean Clemons is an executive partner at consultants RLF, providing cost consultancy and project management services, as well as health and safety advice