The government has this morning announced that it is providing the funding to pay for the replacement of unsafe cladding in a number of privately owned high rise building blocks. The £200m bill will be paid by the public purse in light of concerns that owners were trying to pass the costs to the individual leaseholders.
We understand that the Welsh Government has its own bespoke strategy working with those who own blocks with unsafe cladding on a one by one basis.
The cost of replacing Grenfell-style cladding is significant. The £200m today pledged by the government will pay for just 160 buildings – at an average cost of over £1m per building.
The obligation to maintain the exterior, structure and common parts of a block of flats will normally fall to the landlord or a management company. The tenant will ordinarily only be responsible for the internal parts of their flat. For short tenancies – those of 7 years or less – the landlord is not permitted to pass any liability for the repair of the structure to the tenant. For tenancies granted for fixed terms of more than 7 years tenants will usually pay a service charge. The lease or tenancy will generally allow the landlord or management company to recover the costs incurred in the maintenance of the structure of the building, although not always for works which amount to improvements. If works are necessary for statutory compliance they may be chargeable but not necessarily if the existing cladding is “legal” and undamaged.
The amounts of service charge which can be recovered by landlords are subject to the consultation requirements contained within the Landlord and Tenant Act 1985. A consultation will almost certainly be required where a building needs to be re-clad given the likely costs involved and landlords will have to take the views of the leaseholders into account during that process.
The position then for short tenancies is straightforward. The landlord must find the money in order to undertake any necessary works to ensure the building is safe. The position is much less clear cut in respect of tenancies granted for fixed terms of more than 7 years. Complex questions about whether the works are works which the landlord is entitled to recover the costs of, and if so whether the service charges are reasonably incurred will arise where cladding has recently been fitted to buildings but is now not fit for purpose.
It is in light of those difficulties and the ethical question whether it is right for leaseholders to have to pay for the work (given all of the concerns about a failure of regulation) that it has been decided that government should step in to foot the bill.