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CLADDING UPDATE: Reassurance for Leaseholders

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CLADDING UPDATE: Reassurance for Leaseholders

After months of anxious waiting, there appears to be light at the end of the tunnel for leaseholders who have been stuck in flats they are unable to sell due to dangerous cladding, and worried about potentially having to pay extortionate bills for its removal. Dispute Resolution Specialist, Brianna Garley, investigates.

On 10 January 2022, the Government set out its new plan to protect leaseholders and make the construction industry pay for the cladding crisis left in the wake of the Grenfell disaster.  

Secretary of State for Levelling Up, Michael Gove, has guaranteed that no leaseholder living in their own flat will have to pay a penny to fix unsafe cladding.  He has written a letter to the Residential Property Developer Industry giving them two months to agree to a financial contributions scheme that will remediate unsafe cladding on buildings, otherwise a solution will be imposed by law.

Mr Gove has made it clear that he is “prepared to take all steps necessary to make this scheme happen, including restricting access to government funding and future procurements, the use of planning powers, the pursuit of companies through the Courts and – if the industry fails to take responsibility in the way that I have set out – the imposition of a solution in law if need be”.

Mr Gove has  revealed a four point plan in respect of cladding, resetting the Government’s previous approach:

  1. Opening up the next phase of the building safety fund – this will be done on a risk basis, prioritising the most dangerous buildings first. The Government have put forward £5.1 billion worth of funding towards this. Mr Gove also wants there to be more transparency and has proposed a portal so that leaseholders can see the status of their building’s application to the Building Safety Fund.
  2. Those at fault being held properly to account – a team is in the process of being established. This team will pursue and expose companies at fault. It will force them to fix the buildings they built and the companies will face commercial consequences if they refuse.

The Government has also announced that it will introduce amendments to the Building Safety Bill which will retrospectively extend 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 only currently covers defects up to 15 years old and so the amendment will give thousands more leaseholder the right to demand this.

  1. Restoring common sense to building assessments – Mr Gove has insisted that there must be fewer unnecessary surveys and an assumption that there is no risk to life in medium and low-rise buildings unless there is clear evidence to the contrary.

The Government will be withdrawing their previous advice which was interpreted by the industry as requiring remediation of all cladding, regardless of building height.

The Government believe that as a result of the above, fewer buildings will now require an EWS1 form. For the minority that will still require them, they are introducing an indemnity scheme for building assessors who will then have the confidence to share their professional advice and opinion, without the risk of being sued.

  1. Protections for leaseholders living in their own flats – this includes the amendment to the Building Safety Bill retrospectively extending a leaseholders right to demand compensation from their developers to 30 years, along with the guarantee that the leaseholders will not have to pay anything to fix unsafe cladding.

Paul Sams, Partner and Head of our Property at Dutton Gregory welcomes the news; ’It will provide clear guidance to leaseholders, conveyancers, mortgage companies and surveyors in an area that has been somewhat chaotic for the last few years’ he says. ‘It will also subsequently be a boost for leaseholders countrywide who have been unable to sell their properties under the current guidance.’

Mr Gove has stated that the negotiations between the Government and the developers are expected to conclude in March. At this point there must be a clear, fully-funded plan of action that can be made public. Dutton Gregory will bring updates on this as they are made available.

It is, however, apparent that leaseholders can finally breathe a sigh of relief.