Developers have been told to agree a plan of action to pay for the remediation of unsafe cladding on residential buildings between 11 and 18m in height within the next two months, or face commercial restrictions and the imposition of a solution in law.
The announcement made to developers today (10 Jan) by Mr Gove raises more questions than it answers. The position in law of sub-18m buildings has not before been brought before the Courts for determination, and there are a number of important points to consider.
First, certain building defects – such as the absence of cavity barriers or fire breaks – are not either under the mandatory Building Regulations or the approved document guidance a matter to which the 18m level is an applicable criteria. Second, the mandatory Building regulation B4(1) – the obligation to resist fire – applies regardless of height of the building. Third, the 18m distinction is one which only is to be found in the guidance contained in the approved documents (ADB). For all these reasons, the 18m distinction applied by the Government Building Safety Fund put in place by the Chancellor in early 2020 has always appeared difficult to justify.
In the context of uncertainty around who is liable in the construction of these buildings, there is a question mark around the statement of making developers pay. If this means a liability in civil law, then that needs to be determined and on a case-by-case basis. But it seems this is not what is meant – instead, the proposal seems to be to achieve a fund similar to the BSF which is funded by developers. There are obvious difficulties with this, including the issues of developers who no longer exist, or who were profitable when the building was completed but are not now. Insurance will only cover design failings not workmanship issues, and many of the cladding issues arising result from the latter.
James Bessey added: “Quite how government intends to make developers pay is unclear. The change to the limitation period under the Defective Premises Act 1972 from 6 to 15 years is itself controversial because it is a retrospective law change. This is controversial because parties have operated business, funding and taxation on a pre-existing state of affairs. Further penalties like this will no doubt have developers say they will be required to pay over the odds for the defects of those who have made their money and wound up trading businesses, in relation to issues which are arguable and which they will not be able to get their insurance or supply chain to engage on.
“But perhaps the biggest complaint from developers will be that the Government is implicated in all of this by not ensuring or demanding a more comprehensive and onerous regulatory regime previously, and developers have historically built according to the guidance in place. The final issue is that the letter talks of the industry as a whole – this will mean different things to different people and must be considered. It is a few short months to March and a lot needs to be achieved if the Government is to get a voluntary fund and avoid the more difficult remedies it has suggested it might take.”
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