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Beale & Co

The UK Government announced today that it will allocate £200m to address private residential high-rise developments featuring combustible cladding, as it is alleged that freeholders and developers have failed to take appropriate action and have attempted to pass on the costs to leaseholders.  This fund is similar to one announced in 2018 for social housing high-rise developments.

Communities Secretary, Rt Hon James Brokenshire MP said the following:

“Although temporary measures are in place to ensure people living in these buildings are safe, too many owners are treating this as a permanent fix. Others are trying to pass on the costs to residents by threatening them with bills running to thousands of pounds.

While some building owners have been swift to act, and I thank them for doing the right thing, I am now calling time on the delay tactics of others. If these reckless building owners won’t act, the government will.”

The fund has been made available to remove and replace combustible cladding from 176 privately owned high-rise buildings over 18 metres in height. It has been estimated that, based on costs for remedying social housing, the costs for remedial works will be in the region of £4m-£5m per building. As such, the government’s £200m fund averages out at £1.2m per building, potentially leaving a significant shortfall.

Owners of private buildings will have three months to access the new fund. Any claim made against this fund by owners will be on the condition that owners take “reasonable steps” to recover costs/funding from those “responsible for the presence of the unsafe cladding”.  Owners will not be able to claim against the fund “where a warranty provider has accepted liability”.

Although leaseholders will appreciate the government arranging this £200m fund, it remains to be seen whether this is sufficient to fund all 176 buildings as there is a significant discrepancy between the average cost of remedial works and what the government has provided.

In addition, the requirement to take “reasonable steps” to recover the costs from those “responsible for the presence of the unsafe cladding” it is likely to mean that there will be significant follow on litigation.