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Unsafe cladding concerns for apartment leaseholders and freeholders

andrew-koffmanThe Grenfell Tower fire in 2017 left 72 people dead, many injured and hundreds homeless and shone a spotlight on the construction of high-rise apartments. It was quickly concluded that the Aluminium Composite Material (ACM), that was used to clad the building, was the reason why the fire spread so rapidly and extensively.

Building Safety Programme

Following an urgent review, the government established the ‘Building Safety Programme’ which applies to residential properties over 18 metres high (typically 6 storeys) to ensure that residents of these buildings are safe. The government, working alongside local councils and building owners, identified public and private sector high-rise residential buildings with ACM cladding systems that were unlikely to meet Building Regulations and has produced a monthly data release detailing where remedial works are up to. The government has been unequivocal in stating that it is the responsibility of the building owners to carry out the necessary measures to ensure the safety of their residents.

Other cladding materials

The government has also been looking at the safety of other cladding materials, in particular High Pressure Laminate (HPL). Rather than produce a list of safe and unsafe cladding materials, the government has urged building owners to instruct experts to carry out safety inspections and, where unsafe materials are identified, to remedy this by removal and replacement of these materials.

The government has also made a £200million fund available for property owners to help fund the cost of remedial works including the replacement of ACM, although it urges land owners to look to the company that built the property or their insurers first to fund the works.  It may however be difficult for land owners to hold the builders legally liable, for various reasons, including that the time limits for issuing claims may have already expired years ago.

Effect on leaseholders

The most recent government data release states that of 168 privately owned residential buildings with ACM cladding, remedial work has only started on 24 of them – plus another 13 have been completed. As well as endangering the safety of the residents, it is also causing a major financial problem for any residents, who will own their apartment on a leasehold basis, who are looking to sell or re-mortgage their apartment. This is because surveyors are valuing the apartment at £0 resulting in lenders being unable to lend.

In cases where non-ACM materials have been used to clad the property, leaseholders are still reporting £0 valuations from surveyors unless additional documentation, such as a safety certificate can be produced.

There have been numerous cases where building owners have carried out remedial work, removing unsafe cladding and then have tried to pass the cost of this onto leaseholders. In some cases they have been successful, in others they have accepted that they have a moral duty not to expect leaseholders to fund this, but the situation is far from clear.

What action should leaseholders take?

It is important to check whether the building has been identified as a high-rise with ACM cladding. If it has then the leaseholder needs to ascertain what remedial action the property owner plans to take and within what timescales. It is also essential that the leaseholder finds out if the cost is being classified as part of the service charge.

If the leaseholder is in a non-ACM cladded high-rise, it should find out from the property owner what safety inspections have been carried out or seek evidence that the cladding complies with Building Regulations.

Leaseholders should not delay. Often properties are owned by institutional investors and it may not be easy to track down who at the organisation has responsibility to deal with this issue. If the property owner fails to respond, it should seek legal advice.

It is important to note that the legislation only applies to high rise properties i.e. those higher than 18 metres.

What action should building owners take?

Building owners must satisfy themselves that their buildings are safe. If not they should seek advice on funding remedial works without delay. The government fund opened to applicants in September and the Secretary of State for Housing is threatening to name and shame owners who do not act in the Autumn of 2019 to make their buildings safe.

The government is being urged to provide more clarity or even intervene on this issue to force building owners to act but there is no guarantee that this will happen.

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