An update on the remediation of dangerous cladding in England

This article was co-authored by Ciara Burrows, Trainee Solicitor and Abbie Law, Trainee Solicitor.

A report from the National Audit Office has found that, seven years on from the Grenfell Tower fire, there has been progress to the remediation of dangerous cladding on medium-rise buildings (11-18 metres). However, the progress has been slow and it is still unclear how much longer it will take to make all affected buildings safe, causing significant uncertainty for the construction sector, the insurance market, and residents.

Current Status

Following the fire at Grenfell Tower on 14 June 2017, subsequent testing revealed that the use of aluminium composite material (ACM) and other flammable cladding in England was widespread. Therefore, the scale and impact of the cladding crisis has proved to be much more extensive than was initially anticipated by the Government. By July 2023, the Ministry of Housing, Communities & Local Government (MHCLG), responsible for building safety, had introduced a single remediation portfolio to help fund, monitor and enforce the remediation of unsafe cladding on medium-rise buildings (11-18 metres). This portfolio included the Building Safety Fund, which granted funding to support the remediation of high-rise buildings (over 18 metres) with non-ACM flammable cladding.

As at August 2024, 4,771 medium-rise buildings (the equivalent of 258,000 individual homes) have been identified and included in the portfolio, leaving up to 60% of the 9,000 to 12,000 buildings that the MHCLG estimate will need remediating still to be identified. Of all medium-rise buildings that may come within the scope of the portfolio, remediation work has been completed on only 1,392 buildings, costing the MHCLG £2.3 billion. The MHCLG currently estimates that the remediation of unsafe cladding on all medium-rise buildings in England will be completed by 2035, costing a total of £16.6 billion. Consequently, the remediation of dangerous cladding has been slow and it will take longer than expected before all affected buildings are made safe.

Implications

The Construction Sector

• The financial burden of increased remediation activity will be borne by developers, landlords and their associates.
• Difficulties and/or delays in identifying affected buildings may also distort stakeholders' perception of their actual exposure to remediation liability.
• This may in turn create the risk of under-insurance as stakeholders underestimate the degree to which they are implicated in proposed remediation schemes.

The Insurance Market

• The substantial increase in remediation activity, coupled with the Government's willingness to enforce remediation contribution orders by virtue of powers conferred by recent legislation (the Building Safety Act 2022), increases exposure for the parties involved in the design & construction of buildings.
• Seven years after Grenfell, insurers will not be surprised by the increase of claims/notifications, but the delay in the identification of affected buildings may result in coverage disputes that centre around fair presentation and known circumstances.

Residents

The Building Safety Act 2022 provides a degree of protection to most leaseholders against costly remediation bills, by ensuring that those responsible for the cladding pay for the remediation works. Despite this, many have experienced increases in insurance premiums (some as high as 500%) because of the increased risk involved with dangerous cladding. In most cases, residents will struggle to access affordable insurance to protect them against a potential fire. Therefore, hundreds of thousands of residents continue to suffer significant emotional and financial distress.

This is enhanced by the absence of published milestones and transparency on the progress of remediation works, causing uncertainty as to when affected medium-rise buildings will be made safe. Therefore, many residents continue to live in fear of the impacts of fire, with the prospects of remediation being their only solution.

Comment

In light of new statutory mechanisms available to the Government to enforce remediation and the pressure to ensure building safety, we anticipate remediation activity will continue to be a topic of disputes where each case is expected to turn on its facts.

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