The reluctance of private landlords of high-rise residential buildings to remediate problems in cladding systems has led to the government providing funding instead. It is worth noting however that this reluctance, in most cases, will be borne out of the substantial expense of remediation and, quite simply, an inability to afford it.
Effectively, the £200m pledged is being made available to benefit leaseholders rather than landlords, notwithstanding that it will be landlords that claim the funds. This funding comes with a condition however - building owners are obligated to pursue those responsible for any unsafe cladding (or any other regulatory breaches) and any funds recovered must be handed over to the government. This condition could, in turn, have quite a knock-on effect for insurers in the construction sector who should prepare themselves for an increase in claims relating to cladding.
The government are contacting potential applicants to inform them of the conditions under which they can make a formal application for funding. The owner of the building will then have a choice as to whether to take up the funding. There is no obligation to do so and the building owners must have a contract arranged for the mediation already. The funds from an accepted application will be to spend at a particular building rather than at the applicant's discretion.
Whilst this funding is undoubtedly a positive step towards expediting the necessary work required to make these buildings safe, it is still worth noting the knock-on effect for the construction industry. In a sector that is already suffering significant difficulty, it is likely that cover for residential high-rises is going to be even more restricted. The less cover available, the higher the premiums. Building owners should also expect more onerous policy terms and they may want to take this into account when negotiating future contracts.
The £200m bill to replace Grenfell Tower-type cladding on about 150 private high-rise blocks in England is to be met by the government. Housing Secretary James Brokenshire had previously said the bill should be footed by the owners, not the taxpayer. But he said owners had been trying to offload the costs on to leaseholders and that the long wait for remedial work had caused anxiety for residents. Leaseholder groups said the news would be a "relief" but more was needed.