15 May 2019

Private Sector Funding for Cladding Replacement

While funding is already available for the removal and replacement of dangerous cladding on buildings owned by councils and housing associations, the owners and occupiers of private buildings were not originally included in the government's relief plans.

The government has pledged to make £200m available to the private building owners of the estimated 156 private sector high-rise (over 18 metres) residential buildings with unsafe aluminium composite material ("ACM") cladding systems still in place.

This announcement will no doubt be welcome news for affected owners and occupiers alike, but not much is known about the fund itself and how it might be distributed.

We set out below some key pieces of information that have been released, and will keep you updated as more detail becomes available:

What is the fund for?

  • Except where a warranty claim has been accepted it is intended that the owners of all private sector high-rise (over 18 metres) residential buildings with ACM cladding will be able to utilise the fund to pay for its removal and associated remedial works.
  • As a condition of funding the building owner must take reasonable steps to recover the costs from those responsible for the presence of the unsafe cladding.
  • It is not yet known whether there will be enough money available to assist all of the buildings where removal and replacement works have not yet started.

What will the fund cover?

  • The criteria against which the Government will assess applications is apparently to be released shortly and building owners will have three months in which to access the fund.
  • It is likely that, in order to be eligible for the fund, building owners will need to confirm that they are replacing ACM cladding systems with materials that have been classified as safe.
  • The fund is also likely to include assistance for:
    • Reasonable costs which are capable of being capitalised and are associated with the removal and replacement of unsafe ACM cladding systems (including insulation), such as access (e.g. scaffolding or mast climber), removal and disposal of existing cladding, replacement materials, labour and reasonable on-costs;
    • VAT on these reasonable costs where the building owner is not able to claim this back.

What will the fund not cover?

  • Internal works, the replacement of windows, interim fire safety measures or any other non-cladding system related costs;
  • Costs associated with interim measures, Fire and Rescue services attendance costs;
  • Costs associated with decanting and accommodating occupants (if required);
  • Structural works not directly related to the remediation of ACM cladding systems.

Application process

  • The government intends to write to all potential fund applicants by mid-May and to publish the full fund application guidance by mid-July to allow building owners to start preparing their applications swiftly;
  • Building owners, or managing agents operating on behalf of building owners, will be eligible to apply for the fund on behalf of the leaseholders of the building;
  • Where leaseholders have had to pay for works already the building owner or the managing agent on their behalf would be eligible to apply to the fund for a refund;
  • If a building owner of an affected building does not apply and refuses to carry out the necessary works a high rise building then enforcement action will be considered.

Sarah is an associate in our Property Litigation team.

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