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Cladding after Grenfell Tower – who foots the bill?

Posted by Jamie Brown on 12th June 2020

The aftermath and focus of the post Grenfell Tower inquiry was very much on cladding. The rapidity and ferocity of the fire instantly put a national emphasis on the specification of cladding on high-rise buildings.

The aluminium and polyethylene (ACM) cladding, which covered the entire exterior, was identified as a major catalyst in the spread of the fire. The polyethylene polymer filler releases intense energy when set alight, enabling the fire to spread swiftly and engulf all four sides of the 23-story building.

Post Grenfell Tower legislation, in addition to banning the use of combustible cladding in certain high rise buildings, requires private sector landlords to remove ACM cladding already fitted to (such high rise) buildings. In December 2018 legislation was brought in to immediately ban the usage of combustible cladding on high-rise buildings in excess of 18m tall, which also contained one or more residences. The legislation also required private sector building owners to remove and remedy any ACM cladding already fitted to buildings.

In January 2020 the government launched a consultation on extending the cladding ban so as to lower the catchment band from buildings 18m tall down to 11m tall. Alongside suggesting more stringent restrictions for the use of ACM products in buildings of all heights and widening the scope of properties that these provisions would apply to. As such commercial properties in the hospitality, leisure and care sectors are at particular scrutiny.

So, what should tenants be aware of if their leasehold property is in need of cladding remediation works?

Firstly, the government’s message is that building owners and landlords, in the private sector, ‘should do the right thing’ and replace the cladding without charge to the leaseholder. But it is acknowledged that many owners/landlords who are responsible for the remediation works will ignore the moral guidelines and attempt to recharge the cost of the work to their tenant via the service charge. This is not unlawful.

Legally, if a landlord is to carry out works of more than £250 per leaseholder or to enter into long term agreements with contractors, where the cost of the works would be more than £100 per leaseholder per annum, then the landlord must first consult the tenants. Usually, long-term agreements are referred to as ‘major works’ and a notice under the Landlord and Tenant Act 1985 (known as a Section 20 Notice) is required to be served on the tenants notifying them of the commencement of major works. If a notice is not correctly served then the level of the tenant’s contribution is limited under the statute to ‘an appropriate amount’. It is likely that cladding remediation works will surpass the threshold of the major work.

However, landlords who correctly navigate the notice requirements can demand the payment for the cost of major works either as a lump sum payment or as an increase to the service charge.

Secondly, it is not uncommon in leasehold property management (it may even be an obligation under the leases) for the landlord to build up a reserve of money, to cover the cost of large scale expenditure. It is advisable that tenants ask if their landlords have built up a cash reserve which can be used towards the cladding works. Every case will be different and the cost of the remediation work will depend on the service charge provisions in the lease.

If you are a landlord or tenant affected by the cladding issues or the statutory procedure for ‘major works’, please contact Alex Smith or Amy Rose for further advice.

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