Purchase the updated LPC Sprinkler Rules featuring new Technical Bulletin updates

Order your copy

Government warned over cladding fund social housing issues

1 June 2020

SOCIAL LANDLORDS will ‘be forced to reduce planned development and maintenance spend’ if not allowed to ‘reclaim their full cladding remediation costs’ from the £1bn building safety fund, a number of organisations have warned.

Last week, the government revealed that the £1bn fund would open on 1 June, with leaseholders in social housing blocks revealed to be ‘eligible for support’. In March’s budget, Chancellor Rishi Sunak announced the new funding ‘to help strip combustible cladding from homes’ in both social and privately owned blocks above the original £600m funding for both, to help with removing cladding from blocks over 18m tall.

The previous funding was for buildings with aluminium composite material (ACM) cladding, but Mr Sunak said that this would ‘go beyond dealing with ACM to make sure that all unsafe combustible cladding will be removed’. The funding would ensure such cladding would be removed ‘from every private and social residential building above 18m high’, and the government would continue to try and building owners and developers pay ‘their fair share’.

This fund ‘will meet the cost for unsafe non-ACM cladding on residential buildings’, 18m and over that ‘do not comply with building regulations’, and the government urged building owners to ‘act and put the safety of residents first’, with total funding for cladding remediation now £1.6bn. The fund’s application process is designed to enable projects ‘to proceed at pace’, with building owners, freeholders and others responsible for buildings to register from today.

While ‘predominantly targeted’ at supporting private sector leaseholders ‘facing significant bills’ it was ‘clear that for leaseholders living in buildings owned by providers in the social sector, it will provide funding to meet the provider’s costs which would otherwise have been borne by leaseholders’. Landlords are expected to cover such costs ‘without increasing rent for their tenants’.

Applications ‘can be progressed alongside the development of the remediation project’, and focusing on non ACM remediation for the private sector, the fund would ‘meet the capital costs of removing and replacing’ cladding, and be provided for ‘mixed use residential and commercial developments in both sectors’. Buildings under 18m will not be included, nor will hotels, hospitals and building with no residential leaseholders.

Where work had begun on buildings with non ACM systems, or ‘where work had been previously committed to’ prior to the budget announcement, ‘these works will not [be] eligible’. Inside Housing added further details, including that the mention of social housing ‘comes after a number of warnings from social housing sector figures that costs of remediation could be pushed onto leaseholders and shared owners in the future’.

It also noted that there are ‘still concerns’ that the fund ‘will cover the cost of cladding removal from only a fraction of the blocks with dangerous non-ACM cladding’. The news outlet has now reported on the concerns expressed by the Greater London Authority, the National Housing Federation and the Labour Party, who warned that social landlords ‘will be forced to reduce planned development and maintenance spend if they are not allowed to reclaim their full cladding remediation costs’.

The three organisations called for ‘increased access to the pot for social landlords’, as under the current rules social landlords ‘will not be permitted to bid for the full cost’ of works, ‘only for the amount of funding they would have billed private leaseholders through service charges’. They will only be allowed to apply for full costs ‘if they face a threat to their financial viability without the assistance – and must provide a business case demonstrating this’.

The news outlet added that ‘this will likely mean a reduction in expenditure elsewhere’, with funds diverted to ‘repair endemic fire safety issues’, and the costs expected to ‘far exceed’ £10bn. London’s deputy mayor for housing Tom Copley wrote to Building Safety Minister Lord Greenhalgh to state that while the fund was a ‘step in the right direction’, it was ‘alarming’ that it excludes social housing providers from applying unless ‘financially threatened’.

Mr Copley called on the government to reconsider and provide ‘full access to the fund’, as this would give social landlords an ‘equal footing’ with private landlords and ensure funding for new homes was ‘not diverted to fixing fire safety issues’, or that ‘rents would not be increased to cover losses’. In response, the Ministry for Housing, Communities and Local Government (MHCLG) ‘rejected’ his claims, stating social landlords ‘were not excluded’ and funds would help meet leaseholder charges.

NHF chief executive Kate Henderson added that while thinking it was ‘good news’ that social housing leaseholders costs would be covered, the money needed for all buildings ‘is immense’, and it was likely that social housing providers ‘will have to take away funds allocated to building new homes and improving existing stock’. Labour’s Shadow Housing Minister Mike Amesbury stated in turn that ‘the size and scope of the fund will not be sufficient to make high-rise buildings safe’.

He also pointed out that the fund leaves ‘critical problems’ unresolved such as excluding social landlords and giving ‘no help’ to leaseholders facing increased insurance premiums due to fire safety issues. Ritu Saha, speaking on behalf of leaseholder groups, said in turn: ‘While we welcome the release of money for the Building Safety Programme, we have serious concerns that this fund lacks the size and scope to truly solve the crisis we face and prevent a repeat of Grenfell.’

MHCLG responded by commenting that it ‘expects a significant portion of cladding removal to be funded by those responsible for the original work’, and that it ‘expects owners who have committed to pay for works to continue to do so’, with the fund covering cladding remediation ‘where landlords would not otherwise be able to do so at the pace required’.

Government warned over cladding fund social housing issues