No easy answers to the cladding crisis

No easy answers to the cladding crisis
Hollie Adams/Bloomberg

So now we know, or do we?

Much of what was said by Michael Gove, secretary of state for levelling up, in his recent, widely trailed cladding speech sounded as though a new knight in shining armour had entered the fray, supercharging the previous approach and putting the so-called ‘wrong-uns’ on notice: “We are coming for you.”

More specifically they have been given a deadline in March to come up with a fully funded plan to cough up an extra £4bn – in addition to the £2bn set to be raised by the residential property developers tax and the money from the levy on new tall buildings.

They were further admonished that “those who profit must pay and be held to account”. The key theme was polluter pays, meaning “the owners, the freeholders the responsible people”, although the solution seems to be expected from the major developers only.

Those that had nothing to do with the pollution can accordingly be forgiven for thinking they should not pay and that their constitutions, shareholders or balance sheets mean they should resist doing do.

There is also a concerning lack of understanding that freeholders are often far removed from the original developers, with a minor financial interest in the building, based on recovery of all costs from the leaseholders. Many have no links to the construction of the buildings they 'own', and of course some freeholds are also owned by the leaseholders themselves. Regardless, a new task force is already said to be training its sights on the wrongdoers.

Alongside the big money announcement were some further embellishments. The loan system for the remediation of buildings below 18m was summarily dismissed, although what should happen to the work or the bills for the work is not clear. Claims are to be allowed for 30 years rather than six, but again if the original wrongdoer no longer exists it is hard to see how this will help leaseholders.

The ‘wrongly interpreted’ guidance note will be withdrawn, but with no alternative for the industry to rely on, it remains to be seen how buyers, lenders and surveyors will adapt and whether the EWS1 form, which provides assurance that the building meets government standards, will simply disappear.

A new promise of £27m for fire alarms rounded out the additional promises. As a piece of parliamentary theatre it was impressive enough, but it is difficult to conclude that the plan is anything other than the latest, hope-filled stab at an intractable and complex problem.

Getting hopes up?

More painfully, many leaseholders listening to the initial speech will have had their hopes raised by the entirely uncontroversial statements that they were the innocent parties in all of this, and that they should not have to pay. Many will however remember that, a year or so ago, a bill to protect leaseholders from being saddled with fire safety costs was voted down. As the recent debate wore on it also became clear that monies already spent are unlikely to be refunded, and that the scope of what would be paid for remained linked to the previous narrow definition of cladding.