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Insights

29 May 2019

Government announces funding for ACM cladding

The Government announced, on 9 May 2019, that it is to allocate £200m to replace unsafe aluminium composite (ACM) cladding, from around 176 privately owned high-rise buildings.   It has already fully funded replacement of ACM cladding in the social housing sector.

The fund will be available for buildings over 18 metres high and building owners will have 3 months to access the fund.  However, it is a condition of receiving the funding that they show they have taken reasonable steps to recover the costs directly from those who are responsible for any defects.

The Government has indicated that it will publish guidance on the application process for funding including eligibility evidence criteria by mid-July and it expects the formal application process to be in the summer.

Prior to the Government’s announcement, a series of First-tier Tribunal (Property Chamber) cases such as FirstPort Property Services Ltd v Various leaseholders [unreported, 9 March 2018and Pemberton Reversions (5) Ltd v Various leaseholders [unreported, 18 July 2018], determined a landlord could recover the reasonable costs of remedying any cladding defects if the tenant was obliged to pay those costs under the terms of their lease.  In FirstPort, it was held that the costs of employing a 24hr “waking watch” service was a reasonable step taken to comply with guidance issued by the then Department for Communities and Local Government. 

The Government’s announcement is a significant development but further details are awaited in particular:

  • Clarity on the parameters for any qualifying criteria;
  • Full details of the application process; and
  • Information about what will happen if the fund is exhausted before all affected buildings have received funding.

As for other developments, the Government is also considering taking the following steps:

  • The implementation of reforms to the entire building safety system, based on the recommendations of Dame Judith Hackitt; 
  • Exploring options to increase insurance and warranties; 
  • Considering reforms to service charges including mandatory sinking funds so that unforeseen costs of maintaining a building are accounted for.
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