The key issue of fire safety in high-rise leasehold homes and tower blocks
In the last 12 months, fire safety in tower blocks has become a key issue, but when it comes to high-rise leaseholds, who is responsible for footing the bill?
Following the Grenfell Tower fire last June, the Government established the Building Safety Progamme as a co-ordinated national response to ensure residents of high-rise residential buildings are safe, and feel safe from the risk of fire, now and in the future.
The programme covers high-rise residential buildings over 18 metres, and is working with building owners, housing providers, schools, hospitals and the construction industry, including an Industry Response Group to support building owners in taking immediate steps to ensure their residents’ safety and in making decisions on any remedial work that is necessary to do.
As of 16 February this year, 288 residential blocks in England had been identified as having the same or a similar type of cladding that was applied to Grenfell Tower, and are described as “unlikely to meet current Building Regulation guidance.” With time sensitive remedial works essential, a Commons Briefing Paper, authored by Head of Social Policy Wendy Wilson, has asked ‘who pays for fire safety work?’
The question of responsibility has been described as “a legal quagmire” and is at the forefront of debates about how quickly the necessary work can be carried out and the financial implications for some residents, particularly those living in privately owned blocks.
Blocks owned by social landlords
When major works are carried out on blocks owned by social landlords there is no additional cost to be met by secure and assured tenants. Long leaseholders in these blocks however could be liable to pay a contribution towards the cost of the works depending on the wording of their lease agreements. As a rule, lease agreements provide for the recovery of cost of major works from long leaseholders, which can result in individuals facing substantial bills, e.g. for roof or lift replacement.
But the Government has made repeated references to a commitment by social landlords not to recover the cost of works associated with cladding safety from long leaseholders. Lord Bourne of Aberystwyth Said: “Just as social landlords are not seeking to pass on costs for cladding remediation, in the private sector we believe that the morally right thing to do is for landlords to not pass these costs onto leaseholders.”
David Orr, CEO of the National Housing Federation, the representative body of housing associations, responded to this saying: “As freeholders of leasehold properties, our members have legal responsibilities as part of their leases and are therefore legally entitled to recoup the reasonable costs through service charges.”
Privately owned blocks
As with socially owned high-rise buildings, long leaseholders could be liable to pay a contribution towards the cost of the remedial works, depending on their terms of lease. Even if a lease doesn’t explicitly detail passing on fire safety costs, the freeholder may still be able to do so. Freeholders can use a ‘sweeping-up’ clause which allows freeholders to charge leaseholders for a range of unexpected costs including money spent for the ‘benefit of the building’ and money spent to enable ‘good estate management’.
A block in Croydon has attracted media attention for doing just this. Citiscape, which is managed by Firstport on behalf of Proxima Properties, has estimated the cost of removing and replacing the cladding on the block at between £1.8 and £2 million. This could result in leaseholders facing average bills of £21,000 each, depending on the size of their flats.
Additional Government funding
On 15 January 2018, Tamara Finkelstein, Director-General, Building Safety MHCLG, confirmed that 36 requests for assistance had been received from local authorities, and by 8 March 2018, this number had risen to 41.
When questioned on whether the Government would make additional funding available to assist social landlords in carrying out fire safety work, Housing Minister Dominic Raab said: “My Department has made clear that it considers that building owners should take responsibility for funding fire safety measures including replacement of dangerous cladding. Government will consider financial flexibilities for local authorities who need to undertake essential fire safety work to make a building safe.”
The Government have called on freeholders to cover the cost of the necessary works, but despite providing additional funding for the Leasehold Advisory Service, this suggestion has been slated by critics and labelled as ‘unrealistic’.
Kindly shared by NAEA Propertymark
