Q: I own some assets with cladding that may be considered unsafe. Has case law made it clear who is liable to pay for replacement and fire safety measures?
A: This depends on the detailed construction of the lease; but if the property contains residential flats on long leases the cost will typically be borne by the leaseholders through the service charge.
However leaseholders benefit from statutory protections and have the right to apply to the First-Tier Tribunal (Property Chamber) to challenge their liability for such charges under section 27A of the Landlord and Tenant Act 1985 as well as determining whether the costs are reasonable under section 19.
The landlord or whichever party is responsible for the works must also ensure they comply with the statutory consultation process as per section 20 or seek dispensation under section 20ZA from the tribunal where the costs per flat exceed £250. Failure to do so will result in the party with responsibility being required to pay any costs exceeding £250 per flat.
Reasonable or not?
On the question of reasonableness if you receive a report from a fire safety engineer recommending that works be carried out on safety grounds or an enforcement notice under the Regulatory Reform (Fire Safety) Order 2005 requiring you to institute a 24-hour waking watch or the insurer refuses to provide cover until the works are carried out then it is likely that the costs will be reasonably incurred. But if you take steps to carry out works without good reason you run the risk of leaseholders challenging any associated costs.
Leases specify a variety of maintenance obligations and you must consider them against the scope of work to ensure leaseholders are required to pay. Works required may include removing and replacing dangerous cladding or other materials; implementing a 24-hour waking watch; remediating compartmentation issues; rectifying fire detection systems; replacing deficient fire doors; and fixing automatic opening vent systems.
As landlord you may not be contractually responsible for carrying out these works because this responsibility may fall to other parties such as a management company named in the lease which may be run by the residents; a freeholder; a head lessee; or a company that has exercised its statutory right to acquire the right to manage.
- Firstport Property Services Limited v Various Leaseholders of Citiscape Croydon CR0 1TH LON/00AH/LDC/2017/0130 (20 December 2017)
- Ground Rent Estates 5 Limited v Various Leaseholders of Nova House 1 Buckingham Gardens Slough SL1 1AY CAM/00MD/LSC/2018/0050 (28 November 2018)
- RG Securities (No. 2) Limited v Various Leaseholders of St Francis Tower 23 Franciscan Way Ipswich IP1 1NB CAM/42UD/LDC/2018/0015 (20 December 2018)
- Glenageary Estates LLP v Various Leaseholders of Babbage Point 20 Norman Road London SE10 9FA LON/00AL/LDC/2019/0019 (18 March 2019).
- Are costs covered by the government’s aluminium composite material (ACM) cladding fund?
- Are there any warranties or insurance?
- Is there potential for a claim against the developer under the Defective Premises Act 1972 or in negligence?
- Is the original developer prepared to carry out the remediation works without passing the costs on to leaseholders?
Given the problem stems from a systemic failure of the Building Regulations it is regrettable that the government has not responded to leaseholders calls to expand the ACM fund to include other cladding and material types. Unless it does so the problem and litigation will persist.