Government set off a panic over cladding, then dumped the consequences on young home owners
It issued unchallengeable ‘advice notes’ that condemned thousands of buildings ignoring likely risks
Remediation consultants are the same people who caused the problems in the first place
No effort to sort out cladding crisis with risk-based approach as with asbestos in the 1990s
Only LKP is demanding that housebuilders pay up for their repeated, unfailing failings
The Building Safety Bill gives consumers unlimited liability for building defects
Leasehold law means property managers now have a licence to print money to sort cladding out
… And the government’s solution? Get leaseholders to pay for all this incompetence with long-term loans!
By Liam Spender
Liam Spender is a London solicitor specialising in commercial litigation. Personally affected by cladding as a leaseholder, Liam has worked with Dean Buckner, Lucy Brown and Sebastian O’Kelly on LKP’s funding proposal
Hayley Tillotson was on the news last night. She is 28 and bankrupt. Hayley is not bankrupt because she spent all of her money partying. Hayley is bankrupt because she saved up and bought a flat.
That made Hayley a victim of the government’s drive for building safety at any cost. A cost the government thinks should be borne by those least responsible for causing building safety problems in the first place: leaseholders.
Hayley is also victim of a legal system stacked in favour of multi-billion pound developers and one which has become subject to regulatory capture.
In its chasing of headlines, the government has further stacked the system against leaseholders with further ill-conceived and hastily drafted new laws which will only make the current problems worse and more common in the future.
After Grenfell there was, quite rightly, concern that people should not live in unsafe buildings. The government decided something must be done. And so something was done.
The easiest of the easy options was chosen.
Instead of considering carefully which buildings were at risk, how best those buildings could be fixed and who should pay for the repairs the government adopted a quick, easy and headline grabbing solution: it banned combustible cladding.
The government did this not only for new buildings, by changing the Building Regulations, but also for existing buildings. Realising that retrospective changes to the law would be subject to legal challenge, the changes to existing buildings were made via the back door through a series of extra-statutory advice notes that have few, if any, means of legal challenge.
Soon after these advice notes were published – and remember these advice notes are documents that the government has no statutory power to issue – fire brigades began interpreting them as if they were commandments laid down on tablets of stone.
Buildings up and down the country were condemned because of cladding placed on them years earlier.
The inspections took no account of the fire history of the building, still less whether there was any potential source of ignition or whether any design features mitigated the risk posed by the cladding, if any risk.
Yet more buildings were condemned by managing agents, who commissioned surveys from a burgeoning new cottage industry of remediation consultants only too keen to recommend extensive and expensive works that could be managed by those same consultants.
And with the prospect of a project management fee for the managing agent managing the consultants manging the projects, what is not to like about this new drive for building safety?
It is a licence to print money and all in the name of building safety.
The government asks us to leave aside the fact that some the remediation consultants happen to be exactly the same people who designed and installed the now condemning cladding systems in the first place.
We are also asked to turn a blind eye to the fact that some of the freeholders forcing remediation costs on to leaseholders are in some cases also the developers who put up the buildings in the first place.
The sad fact of the matter is that the drive for building safety appears to have taken place without anyone considering if ripping off all the cladding was the best thing to do in all cases.
Beyond tests in laboratories of the fire performance of certain combinations of cladding and insulation, no studies have actually been undertaken as to whether the cost of ripping off all that material is actually justified by the risk of any given building catching fire and resulting in a loss of life.
Comparison with asbestos crisis
Nor have any comparisons been undertaken between different means of ensuring an appropriate level of safety for existing buildings to avoid a loss of life. Every building with cladding has been treated as if it were another Grenfell waiting to happen.
The comparison between the current moral panic the government has whipped up over cladding and what happened in relation to asbestos is instructive.
Asbestos was once a widely used building material.
It had a number of desirable properties, being a cheap, strong, readily available and versatile material that could be used in the post Second World War rebuilding of Britain.
By the 1970’s it became apparent that what made asbestos great for building also made it harmful to human health. By the time asbestos started to be banned in the UK in 1985 (a process that continued until 1999 as further evidence emerged) it was incorporated in hundreds of thousands of buildings. It was known to cause a particularly nasty form of lung cancer. Settling the insurance claims arising from asbestos contributed to the near bankrupting of Lloyds of London in the early 1990’s.
Was the response to what could have been termed “cancer timebombs” that all asbestos be immediately ripped off the roofs, out of the walls and from the pipework of every building in Britain?
No. A proportionate, risk-based approached based on evidence of likelihood of harm was adopted. Asbestos was no longer used in new buildings. It was only removed from existing buildings where there was a risk it could be disturbed or where it was likely to come into contact with people.
The rest of the asbestos was left in place until repairs, refurbishment or demolition required it was removed. Some of that asbestos remains today, nearly 40 years after it first started to be banned from new buildings.
So why the difference in approach with cladding? And why is the issue only raised in relation to cladding on residential buildings?
Even after the government’s changes to building regulations, it is still perfectly legal to stick Grenfell-style ACM cladding on a hospital, on a hotel or on an office block.
Are those buildings immune from the effects of fire?
In any case, what evidence is there justifying the expensive approach of ripping off and replacing all that cladding, even in buildings with a small amount or with design features that would make any loss of life a remote possibility?
What evidence is there that paying people in high-vis jackets to patrol buildings searching for any sign of fire will actually reduce the incidence of fire or improve the prospects of speedy evacuation? There appears to be no cogent evidence justifying the approach, only an appeal to the fear of potential consequences of fire.
The reason this evidence has not been gathered and tested is because the people making the new rules around cladding are not bearing any of the cost of implementing those rules.
It is easy to make rules that require someone else to spend money.
Civil servants do it all the time. It is far harder to justify why you have the right to spend someone else’s money. That requires proving a case, or at least a decent sales pitch. In the case of cladding the government has neither strong evidence nor a good sales pitch. All it has is the fear of fire. And it has used that fear to inflict all kinds of terrible consequences on a generation of home owners.
As the government has found out, trying to apply new rules to existing buildings is like pulling on a loose thread. Pulling on that thread has turned what was once a jumper with a loose thread into a useless half-jumper and an equally useless half-tangled pile of wool.
No action over build defects
In fact, the government has discovered that it was not only cladding that was a potential problem. It was the fact that buildings were deliberately constructed without basic fire safety measures plainly required by Building Regulations at all times.
Poking into external walls covered with cladding has shown that flats have been built without proper fire compartmentation intended to stop the spread of fire between different parts of the same building.
Fixing those problems is even more expensive than fixing the cladding. Again, no-one has actually asked whether the risk justifies the expense of the repairs or whether other, cheaper alternatives could achieve an equivalent level of safety.
Worst of all, no-one in government appears to have asked why all of these new rules and new found building safety issues involve no action at all being taken against the people who put up the buildings in the first place.
The developers who put up buildings without fire breaks and without cladding say it is not their fault. They point to regulations about cladding they say were confusing to follow.
The argument is weak.
Failure of regulation
It is no answer for people who specialise in building to say they do not understand the rules. Ignorance of the law is not a defence for anyone else, so why should it be a defence for a multi-billion pound company who can afford all manner of specialist technical and legal advice on those regulations?
Developers also hint that they have been failed by the governments inadequate product testing regime in relation to cladding and insulation. That argument is worse still. The losses arising from such a defective regime have not been felt by developers, but by leaseholders who are being made to pay. Developers have no right to complain about losses they have not suffered.
The missing fire breaks are harder to excuse.
It has been a well understood feature of the Building Regulations for decades that flats and houses are separated so as to prevent fire spreading from one part of the building to another. All the developers can do is point to certificates saying the buildings they put up, which never complied with any iteration of the Building Regulations, have certificates stating they so complied.
That ignores the fact that the certificates were frequently signed by building inspectors chosen by, and paid by, that developer.
Law fails the consumers
It ignores the fact that the buildings, certified or not, do not actually comply regardless of what the certificates say. The plain fact is that in many buildings missing their fire breaks the certificates should never have been issued.
The developers can make such specious arguments because they know that both statute and case law affords them, and the professionals who supplied them with their certificates, almost blanket immunity from any legal claim from the people now facing the ruinous costs of putting right their mistakes.
Section 38 of the Building Act 1984 – which would give a civil right of action for breach of the Building Regulations – has been left to gather dust for nearly 40 years, never having been brought into force.
The Defective Premises Act 1972 starts a six-year clock running on claims against builders from the day the building is completed.
Judges have found that building inspectors owe no duty of care in inspecting buildings even if they later turn out to be defective.
The decided cases also prevent the recovery of money losses for defective buildings, making it all but impossible to recover the costs of things like waking watches. These rules exist only for the benefit of the building industry and its allied professionals.
Such rules have long since been abolished in relation to consumer goods like cars and computers. Consumers of those goods have the benefit of legal protections entitling them to assume that goods are fit for purpose. Consumers of those goods have the right to recover a wide range of losses, including for money, if those goods turn out not to be fit for their purpose.
Why should flats and houses be any different?
Indeed, why should the rules for flats and houses not be even more strict? As it turns out, there is greater legal protection for someone buying a £2 sandwich than for someone spending £200,000 on a flat or house.
This situation is only likely to become worse in the future.
Twenty-eight-year-old Hayley Tillotson is the first person in the UK believed to have been made bankrupt because of the cladding crisis. She bought her first home in Leeds two years ago but learnt that it was clad with flammable material. Overwhelmed with the extra costs of dealing with the problems, she had to hand back her keys.
Building safety bill makes things worse …
If the government has its way, the Building Safety Bill will provide it with the statutory powers needed to issue the kind of advice notes it has produced since Grenfell, but this time on a statutory basis.
The Building Safety Bill allows such advice to be issued without any regard to the cost of implementation or whether it addresses any risk reasonably likely to occur.
The Building Safety Bill will also give a future headline-chasing government the power to reclassify entire categories of existing buildings as “higher-risk buildings” almost at the stoke of a pen, by simply placing a statutory instrument before Parliament.
The costs of this new ill-conceived statutory regime will fall entirely on leaseholders in existing buildings.
The Building Safety Bill, if passed, will create many more Hayley Tillotsons by forcing leaseholders to pay a Building Safety Charge within 28 days.
Charges which may run to potentially tens of thousands of pounds if there is any future moral panic of the kind currently being seen around cladding.
The Building Safety Bill as currently drafted is, of course, bereft of any measure that would actually make it easier to sue developers, building inspectors and other people involved in buildings for mistakes inflicting these costs on leaseholders.
The government could easily bring into force section 38 of the Building Act 1984 without the Building Safety Bill.
The six year time limit for claims under the Defective Premises Act could easily be changed by the Building Safety Bill so that time only runs from the date a defect is discovered, rather than the date a building is completed.
The government could also use the Building Safety Bill to allow money losses to be recovered from developers, by placing a duty on them to avoid causing any such loss when putting up a building.
The Building Safety Bill could also include measures to require developers to acquire run-off insurance before being allowed to wind-up any company that has ever laid a brick on a residential building.
None of those changes have been made. Why?
It appears rules are apparently still being made in the interests of the regulated as opposed to the interests of the consumer and the citizen.
The absence of rational thinking in government policy has bankrupted Hayley Tillotson.
So has the failure to adequately police the building industry, both in the past or in the nearly 4 years since the Grenfell fire.
That same approach will beggar many thousands more leaseholders if it is allowed to continue.
That is why the government must adopt a scheme that only repairs buildings where the risk actually justifies the cost. The same scheme should ensure that the cost is paid primarily by developers.
Freeholders must have their ground rents taxed to ensure they exercise proper control over their managing agents in overseeing the costs of these repairs. And perhaps managing agents should have some part of their new found project management fees levied to ensure they only oversee projects of reasonable cost.
The levy proposal developed by the LKP achieves these aims.
£200 million sounds like a lot until one realises that even with Covid raging a single developer, Persimmon, paid a dividend of £351 million in 2020. Persimmon is not alone. Other large developers have paid out billions in dividends to their shareholders since 2011. All developers plan to continue doing so, not least thanks to Help To Buy.
Solving this problem only needs the government to realise that there is a better way. The LKP proposal is a start.
Let’s not make any more Hayley Tillotsons. Let’s find a better way.