An extra £3.5bn and an indeminity scheme for EWS1 forms will help but this crisis requires a strategic approach, says Ross Gissane
An Englishman’s home is his castle, but what happens when that castle is surrounded by £15bn of potentially unsafe cladding? That is the scale of the crisis we are looking at, with up to 1,700 buildings potentially requiring remediation over the next 10 years. It is a big problem, and one that the government is only just realising the full extent of.
The recent announcement of an additional £3.5bn for replacing dangerous cladding is clearly a positive step and, by any measure, a big commitment. But from a practical perspective, it perhaps raises more questions than answers at the moment. If cladding is found to be unsafe, what should go up in its place and will this be government mandated? Who should take responsibility for rectifying issues, from planning to ongoing fire maintenance, and what information is needed to access the funds? To date, it has been an extremely difficult and costly process, and these latest government measures will be only the start of resolving a much wider problem that has been brewing for years.
Let’s focus first on the positives. The government takes the issue extremely seriously and recognises that it must intervene to protect both the safety and the finances of homeowners and occupiers. Its access to funding is not infinite, and its intention to recoup the cost of intervention from a tall building levy and further taxes on housebuilders is fiscally prudent – providing, of course, that costs are neither passed onto future customers nor end up challenging the viability of development.
However, we also need to make sure that the root of the problem is being addressed, and this means looking at fire safety issues that extend well beyond cladding. For future development, fire safety legislation currently under consideration should address many of the root causes. However, many existing properties are affected by a much wider range of defects, and there should be further mechanisms in place to ensure that replacing cladding is just one step in fixing these buildings and allocating responsibility. This includes creating the additional industry capacity and competence needed to deliver a vastly expanded programme of works, as quickly as possible.
The question of height
One of the most contentious aspects of the new measures is that direct funding is strictly limited to buildings over 18m tall or six storeys. Leaseholders in low-rise buildings will have to pay for all repair works via their service charge. The logic behind this policy is that the life safety risk is unacceptably high on taller buildings, and that the public funding is focused on the life safety issue. That may be so, but where does this leave residents of other lower rise buildings who, in many cases, are still being required by insurers to provide evidence of safe standards?
There are potentially thousands of properties which might not have any defects, but are still deemed un-mortgageable or uninsurable purely as a result of not having an EWS1 form. The ability of residents to obtain these forms has been choked by a lack of insured inspectors, and so MHCLG’s latest announcement is a clear step towards unblocking the market. Providing a state-backed indemnity scheme for qualified assessors who are unable to obtain professional indemnity insurance for the completion of the EWS1 form will be a huge step forward when it comes to giving owners, investors, insurers and mortgage providers the clarity they need, by expanding the already severely limited number of professionals who have the experience to appropriately assess a building.
A sustainable future
With £5bn government funding now confirmed for replacement cladding, and a far wider programme of works for low rise buildings, it is clear that the safety programme is a major undertaking. It is also a big opportunity for the construction industry and its clients in the housing sector to rapidly put in place much-needed safety competences ahead of building safety legislation expected to be introduced in 2022.
With such a large programme, it is also important to grasp the opportunity to develop other skills and capabilities that the industry will need in the future, as well as do all the work needed to make sure that affected properties are ‘net-zero ready’. In this respect, the industry has a great opportunity to trial new client engagement, supply chain planning and programme management capabilities, all of which will be vital for a national retrofit strategy to meet the UK’s net zero carbon commitments by 2050.
Thinking specifically about the net-zero challenge, it is worth stepping back to think about whether the recladding programme can be aligned to the UK’s net zero commitments. In new build housing, the idea of net-zero ready housing is already well established. A remediation on this scale will take time, and it is inevitable that, at some point, enhanced Building Regulations such as those proposed in the Future Homes Standard will apply. Looking even further ahead, the homes that are caught up in the cladding scandal will, in future, need to achieve minimum EPC standards to be marketable. Shouldn’t this work be done in one go?
As we think about a sustainable future, an important question, both for government and industry, will be how to combine repair funding into wider net-zero upgrades to ensure that residents and homeowners are not exposed to a future scandal of entirely avoidable programmes of repeat retrofit work.
Ensuring public confidence in the safety and standards of the buildings they live in has to be of paramount importance for our industry. Industry and government have a long way to go to restore confidence, with the design and implementation of building safety measures likely to take years. This latest announcement is a step in the right direction – addressing some of the worst fallout from the Grenfell disaster. But the measures are for repairs only and far more needs to be done to address systemic faults. They are essential measures, but will not solve a crisis that has been building for decades.
Ross Gissane, Director of Lenders and Investors at Arcadis