The cladding conundrum
By Sarah Dwight
Government moves to deal with the fallout from dangerous cladding leaves solicitors, in Sarah Dwight's view, unable to properly advise clients
On the 10 February, housing secretary Robert Jenrick gave a statement outlining new support for leaseholders faced with significant costs for the removal of unsafe cladding from their homes.
He announced an extra £3.5 billion to be allocated, to ensure leaseholders in buildings of at least 18 metres in height will face no costs for the removal of dangerous cladding. Those in buildings between 11 and 18 eighteen metres high will have access to a finance scheme which will see them contribute no more than £50 a month to the costs of cladding removal.
It was announced that this programme would be funded by a new Gateway 2 levy on developers seeking permission to build high rise residential blocks; and a new tax on the residential property development sector. The design of this tax scheme will be subject to consultation in due course.
So, how did we get to this point and where do we go from here? Cladding provides the building with thermal insulation, is known to be weather resistant and can improve the appearance of a building.
Most of us would assume that cladding is a rather modern invention, but it is interesting to learn that this is not the case. According to Bushbury Cladding Ltd, it’s believed that timber cladding has, in fact, existed since the dark ages. Evidence has been and is still to be found across Europe, for example, particularly in forest areas where there would have been a ready supply of timber.
In Britain, Anglo Saxon homes often used timber cladding. Suffolk county, for instance, still has plenty of half-timbered houses dating back to the 5th century.
The industrial revolution brought about the expansion of cities and, along with this, demand for bigger and taller buildings. A new ‘skeleton’ frame structural system (called a ‘curtain wall’) meant cladding could be light as well as independent of the building’s main structure.
By the 20th century cheap, easily transported mass produced brick became the construction material of choice for mass housing. Meanwhile, timber cladding and other types of cladding have never gone away.
As the Fire Protection Association explains, today’s cladding is formed out of various different materials including wood, metal, brick, vinyl and composite materials. Cladding systems themselves also vary, depending on factors such as the buildings’ structural requirements, use and durability.
Cladding was probably not a matter we gave thought to until the Grenfell Tower disaster on 14 June 2017, which killed 72 people and injured seventy others. The rapid spread and deadliness of the fire was attributed to the building’s cladding, and while the subsequent enquiry continues into what happened, there has been widespread outrage and calls for similar cladding to be removed from other tower blocks across the country.
So, where are we with the latest announcement? We know that the government will provide funding to ensure that leaseholders in blocks higher than 18 metres (ie at least six storeys) will face no costs for the removal of unsafe cladding. But what about those in low and medium rise blocks?
The government believes the risks are lower and so is the need for remediation. Therefore, it is to introduce a scheme to support those in low to medium rise blocks with a view that no leaseholder will pay more than £50 per month for the removal of cladding.
Government also announced a new tax, to be introduced in 2022 to cover residential property developers, which will raise £2 billion over a decade to help fund remediation costs. Government will consult on the design of this policy in due course.
But as one local surveyor has said to me, ‘It is a mess’. Up until January 2020, the only concern was flats over eighteen metres, which he said is the height of a turntable ladder on a fire engine.
Then, a government circular suggested that low rise flats should be looked at; and those with (and sometimes constructed without) cladding, required a clear cladding external wall system (EWS1) report.
Unfortunately, cladding surveyors’ professional indemnity insurance was withdrawn or uneconomic; and the only company that the surveyor, as managing agent for a block, could find last year operated under a declared uninsured shell company. He told me that not only were the reports expensive but being unable to recover damages in the event of loss made it worthless.
The revised legislation caused a total logjam in the leasehold flat market. Even though we now have proposed exemptions for low rise, non-flammable cladding and or cladding less than a certain percentage of the face of the flat block’s external wall area, it is not ideal. How, for example, are solicitors able to advise clients properly on such matters?
It’s clear that many properties are potentially dangerous for reasons other than just the construction and use of cladding. There’s also the uncertainty of the building regulations which cover the works.
Solicitors know that the absence of any clear solution means that many sales and purchases cannot proceed. This is creating an abundance of unsellable properties which has a significant knock-on effect on the housing market.
So what should conveyancing solicitors be considering when acting in the sale or purchase of a leasehold property? I think it is important to make clear to the client that we, as conveyancers, have limited knowledge of cladding.
Make sure this is covered in the retainer letter, also explaining that cladding is a matter which should be discussed with a surveyor if the client has any cladding-related issues which we mention to them.
So what steps can conveyancers think about doing when acting in the sale or purchase of a property?
First, I suggest that they always request a copy of the estate agents’ particulars. It is important to know what the building looks like. It may be that the building itself does not have any obvious cladding on the exterior which is visible, but it exists on the balcony parts or external walkways.
When acting for a lender, I would always check the up-to-date lender’s requirements for the property being bought. The UK Finance website refers to cladding on its opening page and provides a synopsis of the present position. But conveyancers should check with any lender in the matter to ascertain if it has any other requirements.
When acting for the seller, order the leasehold information pack as soon as you can and make sure the managing agents provide an up-to-date fire risk assessment. This assessment will be lengthy but it will be time well spent in reading it thoroughly and checking whether there is any mention of cladding and, if so, where the cladding is.
When acting for the buyer, ensure that you are sent a copy of the latest fire risk assessment and read it carefully. If necessary, report to your lender any comments or concerns in relation to cladding issues and ask the buyer to discuss it with a surveyor.
Form LPE1 should also be checked: is there any reference to a section 20 notice needing to be served to deal with remedial works which could include rectification of cladding? Look at the amount of service charge to be charged over the next few years: is this increasing?
What about the service charge accounts to determine if there has been an increase in the amount payable over the last three years – perhaps a ‘walking watch’ has been implemented which has increased the charges payable.
It is important to remember that we are not surveyors. We do not see the property and we are not qualified to provide an opinion on cladding. It’s my view that we ensure the client knows this.
This article was written before publication of the RICS guidance note, Valuation of properties in multi-storey, multi occupancy residential buildings with cladding (8 March 2021) Readers will note that RICS guidance changes frequently
Sarah Dwight is a sole practitioner and sits on the Law Society’s Conveyancing and Land Law Committee. She also leads the committee’s residential property working sub-group