On 21 July 2021 the Government announced a further, significant, development in its ongoing attempts to support leaseholders in medium to lower-rise buildings (under 18m) who have faced difficulty in selling, anxiety at the potential cost of remediation and concern at the safety of their homes.
The announcement, supported by a number of leading lenders, is based on advice from an independent Expert group that includes Dame Judith Hackitt, Chair of the Independent Review of Building Regulations and Fire Safety and Sir Ken Knight, Chair of the Independent Expert Advisory Panel on building safety following the Grenfell Tower Fire.
The group was tasked to consider issues of proportionality in relation to building safety in medium and lower-rise blocks of flats, the impact on the housing market, and what more Government could do to ensure approaches that are proportionate to the level of risk. “Proportionality” is clearly the touchstone of the exercise – both in terms of risk and solution – as the Government seeks to address what many consider an overreaction and excessive risk-aversion amongst lenders and insurers to defective external wall systems.
In essence, the message (whether you agree with it or not) is clear:
- residents need to be reassured on safety;
- there is no systemic risk of fire in blocks of flats under 18 metres;
- there should be a proportionate approach to the risks posed by external wall systems on low and medium-rise buildings; and
- EWS1 forms should not be requested for buildings below 18 metres.
Before considering the details of the announcement, it is perhaps worth a quick recap of how we got here.
Following the tragic events of Grenfell, there was an urgent review of risks, focussing initially on tall buildings (over 18m) and those with the most combustible forms of ACM (Aluminium Composite Material) cladding. Through a series of Advice Notes, culminating in the January 2020 Consolidated Advice Note, other materials and make-ups were identified as high risk, and concerns extended to buildings under 18m. As the need to investigate issues grew, along with the number of buildings that might require significant remedial works, lenders and insurers responded by wanting information about the properties they were lending against or insuring.
The EWS1 Form, introduced by RICS, was developed as a way to gather and present information about a building for valuation and lending purposes, with the original intention being that EWS1 Forms would be required only for buildings over 18m. However, the market did what markets do, and ignored that intention, with EWS 1 Forms being required for leasehold buildings of all sizes and make-ups – understandable in circumstances where lenders in particular were reading headlines of leaseholders facing five or six-figure service charge bills, that would inevitably seriously impact property values. Attempts this year have sought to introduce Guidance that EWS1 Forms should be required in far more limited circumstances (see here), and the recent Expert announcement seems to show that the Government firmly putting its shoulder behind this move.
Whilst we would certainly agree that risks in buildings under 18m are generally lower, this fails to acknowledge that certain external wall make-ups, of whatever height, e.g. timber framed designs with missing or defective cavity barriers (all too common), present real life safety risks; and there cannot be a ‘one size fits all’ solution in saying that buildings under a certain height are not dangerous – so much depends on the make-up, layout, potential evacuation strategies and estate management issues. Although it is important to stress that overall instances of fire are low, fires are almost invariably contained in or around the point of ignition, and risks of injury of death are even lower, this will give little comfort to many given the experience of Grenfell and other serious fires since (which in the main were in low rise blocks of flats, often utilising a timber frame).
The Government’s response is to look to withdraw the Consolidated Advice Note, give the clearest possible guidance that EWS1 Forms should not be requested for buildings under 18m (which may eventually take the form of a more forceful directive or possibly legislate for the withdrawal of the form itself) and state in the clearest possible terms that significant remedial works should be the last resort, with mitigation measures and/or a minimal amount of remedial works to make buildings tolerably safe being the preferred course. A cornerstone of this approach seems to be a focus on risk-based guidance, which no doubt segues in to the recent Fire Safety Act, which extends the scope of Fire Risk Assessments to consider the external wall system (and fire doors) and provides that “…proof of a failure to comply with any applicable risk based guidance may be relied upon as tending to establish ….[a] contravention.”
We have previously opined that the draft PAS 9980, which sets out a code of practice for appraising and assessing the external wall construction and cladding of existing blocks of flats, and identifying mitigation measures or a minimum level of remedial works to make the risks tolerable, might be such a risk based guidance – the recent Expert statement notes that: “over the coming months government intends to withdraw the [Consolidated Advice Note] as a new industry standard, developed by the British Standards Institution (Publicly Available Specification 9980) and further guidance from the Home Office in relation to the Fire Safety Order is published. In line with the [Consolidated Advice Note], this new guidance will support a risk based proportionate approach and will help guide responsible persons on their duties and the approaches they should take, and provide a suitable framework for professional fire risk assessments that are proportionate to risk, undertaken periodically in the usual assessment cycle.”
As we observed, PAS 9980 is not designed to determine whether the external wall system has met the functional requirements of the Building Regulations, but is designed to assess the risk to the safety of residents and others in a holistic way. The Draft for Public Comment (“DPC”) that accompanied the announcement of PAS 9980 made numerous references to the fact that any assessment under its terms does not establish compliance with Building Regulations, nor is it intended to be used as a means to assess whether contractual obligations have been met. Whilst PAS 9980 has echoes of the “limitation on requirements” introduced by Regulation 8 of Building Regulations (“Parts A to D, F to K, N and P (except for paragraphs G2, H2 and J7) of Schedule 1 shall not require anything to be done except for the purpose of securing reasonable standards of health and safety for persons in or about buildings (and any others who may be affected by buildings, or matters connected with buildings”), including Part B guidance regarding fire spread, the functional requirements remain the outcome to be met, and the routes to compliance with those functional requirements are defined by the Approved Document (as amended from time to time).
It may be difficult to reconcile the risk based proportionate approach advocated by the Expert statement, and reflected in PAS 9980, with properties subject to Government funding under the ACM and Non-ACM Building Safety Funds, where the nature of funded remedial works is quite prescriptive and does not seem to permit a proportionate approach to allowing otherwise non-compliant makeups to remain substantially in place. BSF funding will not necessarily cover all costs that might otherwise be passed on to leaseholders, as well of the balance of costs that fall on the building owner. Government funding carries with it an obligation to seek recovery of funding from liable parties, such as the original contractor an insurers – the very parties responsible or liable for the costs in question.
It is possible that the Expert statement and PAS 9980 assessments will be relied on by contractors who have built defective buildings to argue that no or minimal remedial works (possibly coupled with disruptive, expensive and ongoing mitigation measures) are required. However, experiences tells us that Courts are not generally attracted to such policy arguments, and take a more black letter approach to contractual obligations at the start, rather than looking to retrospectively minimise the consequences of breaches after the fact. We would be surprised if Courts allowed liable parties to take advantage of a policy introduced to protect leaseholders from unwelcome risk and costs, to escape contractual and tortious obligations. Further, the PAS DPC noted the voluntary nature of the assessment regime: PAS cannot be used where a stakeholder (i.e. the building owner) has no appetite for a risk-based approach. In other words, a building owner can reject any PAS 9980 assessment if it would prefer to insist on its contractual right and have defects remediated to the contractual standard.
It is also important to note that, from a fire safety perspective, the focus on external wall systems as the source of safety concerns and financial pressures on leaseholders is somewhat arbitrary (although understandable in light of Grenfell and other fires). Firstly, the 18m threshold raises a question around cut-off point when considering questions of life safety – how is a building slightly over 18m with a defective and unsafe make-up markedly different from a 17.9m building with the same make-up? Secondly, defects in internal compartmentation and passive fire protection have come under increased focus generally, and as result of the Fire Safety Act, can present significant fire safety risks, and lead to substantial remediation costs that may also fall on leaseholders; and
If the Government wishes to eliminate the need for or reduce the scope of remedial works, the clearest course open to it would be to legislate accordingly, by retrospectively ruling that certain make-ups in buildings of particular heights are deemed compliant (or do not require remediation) notwithstanding non-compliance with the Building Regulations at the time of construction – a solution it already has the power to implement under sections 8 to 11 of the Building Act 1984.