Cladding issues and the fallout

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The Grenfell disaster in 2017 continues to impact numerous apartment owners throughout the UK. Issues over the cladding used on the building have raised concerns over the safety of other buildings. The cladding on numerous buildings must be replaced, and there is an ongoing debate over who is liable for the costs.

The government has stepped in and created a £5bn fund to cover the costs of removing cladding that has been designated inflammable and unsafe. However, the total cost is likely to exceed this, and the application process has been heavily criticised as inefficient. The fund also only covers high-rise buildings of at least eighteen storeys. Owners in blocks lower than this have only been offered loan funds.

Aside from the creation of the fund, MPs have voted five times to reject a proposal to protect leaseholders from potentially crippling costs. They have argued that the total cost could exceed £15bn and it is not the government’s responsibility to pay for this.

One developer, Barratt Developments, has addressed the cladding problem and recently brought back all ninety-five units in its Citiscape development in Croydon. However, it has advised it does not intend to adopt this approach with its other developments suffering the same problem. It has instead committed £163 million to pay for the repairs of legacy properties with cladding issues.

One option put forward by the company is that the government impose a ‘cladding’ tax on developers. This is likely to be opposed by many developers as not all have used unsafe cladding; determining who pays the tax is problematic.

As for who pays for everything, owners will argue that they bought the properties in good faith and can’t afford the additional outlay. Many people will argue it is not the taxpayer’s fault and therefore the government should not bail out property owners and investors. The developers may accept a degree of liability but don’t want to pay the full sum as it will affect their financial performance.

Of course, the developers installed the cladding and have a degree of moral, if not legal, responsibility to the owners. However, with the government being continually accused of being in bed with developers, we doubt they will be held fully accountable. Whatever is eventually decided, some owners are almost certainly going to lose out.

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