UK Real Estate Insights
For the first time since the introduction on 28th June 2022 of new statutory powers under the Building Safety Act 2022, the Department for Levelling Up, Housing and Communities (DLUHC) has taken legal action against a freeholder of a tower-block for failing to remediate unsafe cladding.
Grey GR Limited Partnership, an organisation ultimately owned by RailPen, is the first freeholder to face legal action by DLUHC for failing to remediate unsafe cladding at its 15-storey tower block in Stevenage.
The action is being brought by the recently created Recovery Strategy Unit whose purpose is to identify and pursue organisations who repeatedly fail to remedy building defects. A press release by DLUHC states that this should act as “a warning to the rest of industry’s outliers - big and small. Step up, follow your peers and make safe the buildings you own or legal action will be taken against you.”
Grey GR has been given just 21 days to commit to remediating the fire safety defects. If it fails to commit to such remediations, DLUHC has the power to make an application to the court to force such action.
This warning is not only directed at freeholders but also their associated entities. In this case, DLUHC is considering making a further application under the Building Safety Act 2022 for a Remediation Contribution Order which will require entities associated with Grey GR or its parent, RailPen, to make contributions towards the remediation costs.
DLUHC’s legal action follows two-years of delay by Grey GR in fixing unsafe cladding despite the building being registered with the Building Safety Fund in 2020. This was due to the funding agreement not being signed and as such, no money being released by the government. The impact of this delay has had a significant effect on the lives of the 100+ residents living in the tower block who have not been able to sell their properties and have been handed excessive bills.
DLUHC has made it clear that it will not tolerate “unnecessary delays” when it comes to building safety and is examining at least 23 other buildings with similar delays. The government is also encouraging leaseholders to apply for a Remediation Order (a further remedy under the Building Safety Act 2022) if they believe the owner of their building is failing to meet its legal requirements to address fire safety defects.
This may be the first case of its kind, but it is certainly not the last. Projects and Construction Partner, Chris Leadbetter, comments that “The Building Safety Act has given muscles to the Government which it seems DLUHC is not afraid to flex. The Remediation Order made here is of relevance to freeholders and landlords but the Government’s appetite for Remediation Contribution Orders and Building Liability Orders piercing the corporate veil and seeking financial recompense from parent and sister companies (and even those linked by a common director) is yet to be seen. The Building Safety Act says those orders can only be made where it is just and equitable to do so but the parameters of that test remain undefined.
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