Government Funding for ACM Cladding Replacement

On 09 May 2019, the then Housing Secretary, James Brokenshire, announced that the Government will fund the replacement of unsafe aluminium composite (ACM) cladding from around 176 high-rise private sector residential buildings, thereby protecting thousands of leaseholders from potentially significant costs. As has been well documented, the spread of the catastrophic fire at Grenfell Tower in June 2017 has been attributed in part to the presence of ACM cladding in the building.

The fund of £200 million will be available for buildings over 18 metres high and building owners will have 3 months to access the fund. However, as a condition of funding, they will be required to show they have taken reasonable steps to recover the costs from those responsible for any defects. That might include building designers, developers, or contractors.  Building owners will be able to register for the fund by early July 2019.

This step has been taken after building owners failed to take action and sought to offload the costs onto leaseholders. Indeed, a number of recent cases in the First Tier Tribunal (Property Chamber), such as FirstPort Property Services Ltd – v – Various leaseholders [2018] and Pemberton Reversions Ltd – v – Various leaseholders [2018], have determined that a landlord can recover the reasonable costs of removal of cladding defects from the tenant if the tenant was obliged under the lease to pay those costs.   Such decisions have led to public outrage, resulting in some developers, such as Barratt Developments, agreeing to meet the costs of reinforcing fire safety on buildings which they have developed.

As to the implementation of the fund, further details are awaited in particular:

  • Clarity on the qualifying criteria for accessing the fund;
  • Details of the application process; and
  • What will happen if and when the fund is exhausted.

The Government announcement will be a welcome development for building owners and tenants, who might otherwise be left with unaffordable costs.   The figures as at May 2019 showed that 166 private buildings were yet to begin work to remove and replace ACM cladding, compared to 23 in the social sector.

The Government is already considering other steps, in particular the implementation of reforms following the recommendations made by Dame Judith Hackett in her review of building regulations and fire safety, as was as reforms to service charges to include mandatory sinking funds to cover unexpected building maintenance costs. The Government is already fully funding the costs of removal of ACM cladding on social housing properties.

This article is not intended and should not be relied upon for legal advice, Should you wish to discuss your matter, please contact Joe Reeves of our Litigation Department on 0207 481 6383 or joe.reeves@wellerslawgroup.com.