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Government Cladding – Q&A
David Flack, Head of Health and Safety at HML, shares his knowledge and answers the most common questions that we receive from our clients regarding the Government’s Building Safety Fund and the steps that should be followed for the removal of unsafe non-ACM cladding.
How long have you been working in the Health & Safety property sector?
It’s coming up on ten years now. I started working for a Health & Safety Consultancy, that primarily served the residential block management sector. Then, almost six years ago, I joined HML as one of our H&S Inspectors, before taking on the role of Head of Health and Safety just over three years ago.
What is the building safety fund?
Following the Grenfell Tower tragedy, the Government announced last March a new £1 billion fund that would meet the cost of removing and replacing unsafe non-ACM cladding on high-rise residential buildings and they encouraged building owners to register their properties that fall in this category for the fund. This initiative aims to ensure that tenants in residential high-rise buildings with an external wall system live in a safe home.
How do you feel about the introduction of the building safety fund?
I think it’s definitely a welcome step in the right direction. Before the announcement of the fund, it was looking likely that leaseholders would have to bear these, frankly, eye watering costs. The fund at least aims to take away a proportion of these costs, but unfortunately doesn’t go far enough. There are certain costs associated with the cladding (such as initial surveys, and waking watch costs), that aren’t covered by the fund, that really should be.
Also, the slightly arbitrary building height cut off for the fund, means that some buildings below this height, aren’t eligible. There have been numerous calls from the industry, and from experts, that the fund should be allocated based on risk, rather than building height.
Are all residential buildings able to apply for the fund?
For the time being, the buildings eligible for the fund are the residential buildings that are 18 metres or more above the ground and fitted with combustible materials. Buildings under 18 metres in height are not able to apply for the fund. The main priority is to support leaseholders in both the private and social sector to ensure they live in a safe building and to do so, aren’t faced with demands for large sums of money.
Building owners should explore every opportunity to fund the remediation costs themselves before applying for the Government’s fund or passing on costs to their leaseholders. Additionally, remediation works that had already started or had been committed to before the Budget announcement of the fund on 11 March 2020 may not be eligible for the fund.
£1 billion sounds a lot of money, will it sort all of the buildings that need work carried out?
Almost certainly, no. According to the Ministry of Housing, Communities and Local Government (MHCLG) there have been 1,857 registrations from buildings in London and 1,197 from buildings in the rest of England.
Originally the Government estimated that there are about 1,700 towers with high-risk cladding systems across the UK and even then, they thought that the £1bn fund would cover only a third of those buildings, while the cost of remediation for all of them was expected to be between £3bn and £3.5bn.
However, the Government is further supporting the remediation costs of other unsafe buildings, by providing an extra £600 million fund for the replacement of ACM cladding systems.
The fund application is apparently quite complex to complete, is this correct?
The application process can be complicated, indeed, as a lot of information is required by the applicants. The application should be made and submitted online by the Responsible Entity for the building and consists of two stages. The first stage involves initial legal due diligence to ensure that the applicants meet the eligibility criteria for the fund. At this point, the applicants are offered the Pre-Tender Support (pre-Works contract support) in case they have indicated that they need it. This would be 10% of the estimated eligible costs. The applicants at this stage also need to provide information about the building such as location, footprint and service charge provisions. After having completed the first stage of the application process, there is a second stage which involves a firm proposal, including a detailed project plan and costs.
Building owners should also demonstrate in their application that they have taken all reasonable steps to cover the cost of remediation through insurance claims, warranties and legal action, etc. before applying for the fund.
Will there be any impact from statutory guidance on buildings outside of the 18metre specification?
Yes, the Government has already published an amendment to the statutory guidance to building safety regulations which ensures the mandatory instalment of sprinkler systems and consistent wayfinding signage in all new high-rise blocks over 11 metres in height.
Does this mean that building owners might need to have some surveys carried out to their buildings in order to apply for the fund, and if so, how are these paid for?
Yes. Building owners, before applying for the fund, are required to have some surveys carried out by ‘competent professionals’ who will sign off project works and all relevant documentation. Moreover, the information provided by the ‘competent professionals’ works as evidence of the accuracy of applicants’ answers in the fund application. As ‘competent professionals’ are defined as someone “who are qualified in their field, are a member of a professional body, hold Professional Indemnity Insurance, are knowledgeable and have significant experience relevant to work specific technical aspects involved, are aware of the current state of knowledge in their field, and have accumulated sufficient experience to be recognised as having a successful track record.” As you can imagine, due to the sheer number of buildings currently going through the application, it can sometimes be difficult securing these competent professionals for the projects. Furthermore, as these initial surveys aren’t covered by the fund, it will usually fall back to the leaseholders to cover the costs of these surveys through the service charge.
What are the timescales of the Building Safety Fund?
The fund is available in the financial year 2020/21. The registration process was open from 1st June 2020 to 31st July 2020 so that building owners who were interested in including their properties could express their interest. After the first assessment, the eligible buildings are invited to apply. The application process for both stages started on 31 July 2020. The full application needs to have been made, with the scope of works, contractors nominated, and project costs determined by December 31st. A very tall order, considering the amount of work and input that needs to go into each one. There is no limit on the number of registrations, however, the MHCLG will stop accepting and approving new applications once the £1 billion funding has been allocated. Additionally, the Government is prioritising funding for buildings which can demonstrate that the cladding remediation works will have started by March 2021. In this way, building owners are encouraged to start with the remediation works as soon as possible.
Is this achievable?
Well, judging from the complexity of fund application the deadline seems to be very tight. It is unlikely that all eligible buildings will manage to benefit from the fund for this reason, building owners needed to have started with the process and have had the initial surveys conducted, to be in with any hope of securing the funding.
What’s happening to improve the situation?
Here at HML, we give our best to protect the leaseholders from being charged with remediation costs to fix something that is not their fault. For this reason, we are involved with ARMA, IRPM and other large Managing Agents, to lobby the government on the extension and expanding of the funding.
It’s still unclear what direction the Government are going to take on the matter, but we are in an open line of communication with government members and we aim to achieve the following:
- Extend the full application deadline, to enable all currently eligible buildings the opportunity to benefit from the fund, and the complexity of the fund application shouldn’t be detrimental to those applying, because of the unrealistic deadlines.
- Increasing fund and expanding scope – We believe that the fund shouldn’t be limited only to buildings over 18m. There are thousands of buildings that are fitted with unsafe cladding which are unable to make an application because the height of the building places them outside of the scope of the fund.