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Seven years after the Grenfell tragedy - reaching their limit… How far do the leaseholder protections stretch?

The latest on remediation orders and remediation contribution orders 

The first contested remediation contribution order case (under section 124 of the Building Safety Act 2022) was decided in January this year: Triathlon Homes LLP v Stratford Village Development Partnership, Get Living & East Village Management Ltd [2024] UKFTT 26 (PC). This was a hugely significant case, in which the developer, Get Living, was made liable to pay. It was also somewhat controversial because the investors and entities sitting behind Get Living were completely different to those that carried out the original development. 

It's possible that the case could lead to government guidance on bringing such claims, like the (non-statutory) Government guidance released after the first remediation order was made (under section 123 of the Act). However, we may need to wait to see the results of the appeal by Get Living before we see that guidance being published. 

In the meantime, with or without the outcome of the appeal, there is still considerable uncertainty about many factors that could affect whether the First-tier Tribunal (Property Chamber) (FTT) considers it ‘just and equitable’ to make a remediation contribution order for a relevant building.

Scope and standard of work to rectify relevant defects

One major factor not considered in detail in the Triathlon Homes decision, nor is likely to be considered on appeal, is the scope and standard of work required to rectify relevant defects.

So far, the remediation orders (under section 123 of the Act) made by the FTT have left considerable scope for the defects to be rectified or for the parties to return to the FTT for further directions. So these decisions may be of limited assistance in that respect.

The Triathlon Homes remediation contribution order case involved works already funded (publically in the first instance), already underway and which works the affected leaseholders desired. The works included the removal/replacement of dangerous cladding on residential blocks over 18m/7-storeys in height (i.e., relevant buildings but also higher-risk buildings under the Act). Therefore, the particular works needed to address defects that are not considered by the FTT.

Where a residential block is not a higher-risk building, but is a relevant building (over 11m/5-storeys in height), it may be possible to apply to the Cladding Safety Scheme (CSS) for public funds to enable the medium-rise block to be remediated, where there is cladding present. If the developer of the building has signed the developer remediation contract, redress for cladding and/or other defects should instead be sought from the developer under the terms of that contract.

In both cases, the works that would be funded to remediate the building would be those to fix life-critical safety defects.  

Fixing such defects in a medium-rise block that is a relevant building but not a higher-risk building may therefore only require mitigation measures (such as installation of a sprinkler system), rather than removal/replacement of dangerous cladding, where that is deemed suitable by an assessor under Fire Risk Appraisal of External Wall construction (FRAEW), using the methodology set out in PAS 9980:2022 guidance.

Further issues

This doesn't consider the effect on a building’s value (or that of a leaseholder’s interest) if dangerous cladding is left in place. While the mitigation measures should allow for safe evacuation, the building could suffer extensive damage in the event of a fire, due to rapid spread over flammable cladding that has been left in place. This is likely to lead to higher buildings insurance premiums, which leaseholders will generally have to pay through their service charges and potential claims by leaseholders based on the continued presence of the cladding is causing mental distress.

A further issue may be obtaining access to leaseholders’ flats to install and maintain whole building systems, such as sprinklers, where that is required for the system to be considered effective. Again, this is an issue where a building is not a ‘higher-risk building’, but is a ‘relevant building’, since the implied terms in section 30C of the Landlord and Tenant Act 1985 (inserted by section 112 of the Act) would not apply. Should (and can) such access be imposed on a leaseholder where the lease does not allow it and a non-intrusive option is available, such as removing the dangerous cladding? 

A complex regime

The FTT may simply uphold the outcome of a FRAEW in the context of a remediation order application, especially if lenders are willing to lend on the leasehold interest. Nevertheless, a specific conclusion within a FRAEW could be capable of challenge, with the assistance of suitable alternative expert evidence. 

A landlord left out of pocket from a remediation order may still be able to seek a remediation contribution order against a developer, or be able to pursue other relevant third-party claims.

We are now seven years from the horrific tragedy that occurred at Grenfell Tower on 14 June 2017 but the complexity of these and other types of issues in the regime created to provide for remediation and redress could be behind the very significant lack of progress in removing dangerous cladding from many medium and high rise blocks across England. Following the upcoming general election, the new government, whatever its stripe, needs to bring far greater clarity to how these gaps are to be bridged for all medium and high-rise blocks - and quickly - where the current leaseholder protections are failing to deliver. 

For more information

For any advice that might be needed about disputes with either developers or leaseholders, around building safety, contact Paul Slinger or Joanne Wright

"Government wrote to developers on 30 January 2023 asking them to sign a contract committing them to remediate unsafe buildings which they developed." Government Guidance on the Developer Remediation Contract

Tags

building safety, fire safety, leaseholder protections, housing