A Game of Political Hot Potato: Containing the building safety crisis following the Grenfell Tower fire

January 28, 2022

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3 min read

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What's going on here?

The Grenfell Tower disaster has led to a property crisis, with countless unsafe building practices being brought to light and endless finger-pointing about who is responsible for fixing them.

What does this mean?

The Grenfell Tower fire on 14 June 2017 was one of the UK’s worst modern disasters, with 72 people directly losing their lives as a result. The inquiry into this disaster has called into question the safety of cladding materials, the efficacy of building safety regulations and the reputation of developers, inevitably leaving an adverse impact on the property market.

‘Cladding’ refers to the outer materials of buildings used to provide thermal insulation, weather resistance and a pleasing aesthetic to buildings. The initial stages of the inquiry determined that the “principal” cause of the disaster was the renovation works to the cladding in which the new material used caused the fire’s rapid spread.

Following this revelation, MPs have been struggling to contain what is now called the “cladding crisis”, as concerns about building safety have escalated. The Building Safety Bill attempts to settle uncertainties and presents a new regime to re-establish confidence in the property market by removing defective cladding.

Answers as to who would be responsible for paying to fix the cladding crisis have remained unclear – until now. On 10 January 2022, the Government announced that developers should foot the bill as opposed to property owners.

What's the big picture effect?

But who exactly has caused the “cladding crisis”? Is that the hallmark of who should pay? Stephanie Barwise QC, who is representing victims of the disaster, highlighted that the “Government’s response on realising the extent of the problem, was to react by concealment instead of candour” and contributed to “one of the greatest scandals of our time”. Government decisions involving a string of tower block fires and their causes dating back 30 years is stand-alone evidence of their blameworthy behaviour. For example, the fire at Garnock Court tower in Irvine, Scotland which resulted in one death, highlights that the Grenfell Tower Fire was not an event that took the Government by surprise.

As a result, this scandal has had a knock-on effect in the housing and property market, creating a crisis as to a lack of certainty as to which properties are safe. Michael Gove MP deemed leaseholders as innocent in the crisis. But can leaseholders really be “innocent” seeing as they’ve accepted the risk inherent in property ownership? The remediation works in this instance, however, are grossly disproportionate, amounting to more than what was paid initially for these properties in many cases.

This also creates a financial crisis, as this affects property marketability for mortgage lenders. Lenders are taking excess caution due to the distrust created in the industry. Regardless, the inability of leaseholders to meet existing mortgage payments could see these properties fall into the hands of lenders anyway, leaving them with costly repairs.

The problems then seem to come full circle for housebuilders. Barwise also highlights that from 2010 to 2015, the construction industry operated with relative freedom and “the overriding deregulatory imperative meant there were no fetters, and safety considerations were not balanced against either the environmental imperative or industry freedoms”. What is more, Gove has highlighted that the seven biggest housebuilders garnered £16bn in profits in the last three years and, as a result, any loss should lie with them.

Yet, Lisa Nandy, Shadow Housing Secretary, doubts builders will be forthcoming. It is anticipated that builders will argue that manufacturers should be served a piece of this pie and try to pass the buck in whole or in part. Gove’s announcement, which attempts to provide certainty, protect leaseholders and create financial security, saw the construction sector respond with shares in housebuilders taking a dip.

Resolving this crisis is a tall order for any government. This Government has already designated £5.1bn to the cause. There is a chain of events starting at regulation and guidance and ending in property development, which has resulted in a crisis so far-reaching that determining the question of who should pay will not be answered without some kicking and screaming in the form of a series of lawsuits. Who do you think should pay, and why?

Report written by Kerianne Pinney

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