Cladding: progress of remediation Contents

2The toll on residents

66.While important, focusing on the rate of remediation can lead us to forget the human side of this story: the ongoing financial costs and the toll on people’s physical and mental health as they wait months, or years, for their buildings to be made safe. This chapter outlines the costs residents have faced with interim fire safety measures, including 24-hour fire patrols (‘waking watches’) and new fire alarm systems. It considers difficulties residents have had in obtaining buildings insurance, obtaining new mortgages and selling their properties. We conclude by calling on the Government to recognise the public health crisis caused by these ongoing delays.

Interim fire safety costs

67.As residents continue to wait for their buildings to be made safe, many are forced to pay very high costs for interim fire safety measures. Typically, these are incurred for the installation of new fire alarm systems and to put in place 24-hour waking watch patrols. Results of a survey undertaken by the Greater Manchester Highrise Taskforce showed that over 50% of owner occupiers and 16% of private tenants said they were suffering from increased costs, with one resident reporting an increase in service charges from £90 to £400 a month and another facing an increase in the service charge to £1,000 a month to cover the cost of remediation.93 Rituparna Saha told us about her experience and that of others in the UK Cladding Action Group she co-founded:

In my own building, from November 2017 to date, we have spent more than £400,000 across 57 flats for the fire warden and another £120,000 for the fire alarm […] My personal costs have been more than £13,700 in the last two years for waking watch and a fire alarm alone […] I can give you the example of a building in London where each leaseholder is paying £300 per month for their waking watch. In Birmingham, some leaseholders are paying over £500 a month. There is a building in Leeds where each leaseholder is paying more than £840 per month for their waking watch. This is more than the cost of their mortgage.94

She noted a recent Freedom of Information (FOI) request to fire authorities, which showed that there were, as of April 2020, 420 buildings in which waking watches were taking place.95 As highlighted by the Greater London Authority, “Delayed remediation timescales mean that waking watches will be needed for longer”, placing a significant and ongoing financial burden on leaseholders.96

Review of the effectiveness of these measures and their cost

68.Many residents doubted the effectiveness of the measures they were being forced to pay thousands of pounds for. Alex Di-Giuseppe of Manchester Cladiators called for a review of the effectiveness of the waking watch system:

The question I have to you guys is, would you feel safe if there was a waking watch warden walking round your block of residence in a high-vis jacket with a klaxon, knowing that the only way that they were going to wake you up was either knocking on your door or sounding that klaxon? Let us be brutally honest. There are normally 100 people in an apartment block, on average, and he has to get around to every person. That is people on the top floor and people on the bottom floor.97

Rituparna Saha also called for a review of interim fire safety measures, telling us that waking watches appeared to be “more for the protection of the freeholders and managing agents rather than having really anything to do with protecting the leaseholders living there”.98 Leeds Cladding Scandal, a campaigning group for residents affected by fire safety issues, told us that waking watches were often used by freeholders and management companies as their primary means of ongoing mitigation of risk, and therefore were not progressing at pace with plans for remediation:

Even where alarms could reduce or remove waking watch–and reduce significant charges to leaseholders–it is the experience of many Leeds leaseholders that building management companies have no incentive to move swiftly once a waking watch is installed.99

69.In fact, the Minister for Building Safety told us that he had already undertaken a review of waking watches and other measures to ensure buildings remain safe before they are remediated and outlined his findings to us.100 He recommended that the National Fire Chiefs Council should update their guidance for buildings where the ‘stay put’ policy had been suspended, and asked the Protection Board of the Fire and Rescue Service to encourage greater use of cost-effective measures in affected buildings. He also committed to publishing data on the costs of waking watch, noting that “frankly, some of the charges are usurious” and expressing his view that the “spotlight of transparency on the disparity of costs” would lead to a reduction in charges.

70.We are concerned that, in many cases, 24-hour waking watch fire patrols are inadequate, unduly expensive and have wrongly become the primary means of mitigating risk for many freeholders. The Government told us it had recently undertaken a review of waking watches and had called for changes to the relevant guidance. In its response to this report, the Government should outline how guidance will be changed to ensure residents have a right to the most effective fire safety measures.

71.We note the Minister’s view that some of the charges to residents for interim fire safety measures are “usurious”. We agree that greater transparency of costs could lead to lower charges for residents, but more could be done to protect residents. Last year, the Competition and Markets Authority (CMA) undertook an investigation into the leasehold sector at this Committee’s request, finding evidence of excessive and disproportionate fees charged to leaseholders. We now call on the CMA to investigate these “usurious” charges for interim fire safety measures, as part of its ongoing work into the leasehold sector.

Funding of interim fire safety costs

72.Representatives of residents, freeholders, managing agents and local authorities urged the Government to cover the costs of these interim fire safety measures. The Mayor of London told us he was “particularly concerned about […] the failure to provide funding for interim safety measures such as waking watch” and urged the Government to expand the scope of its funding.101 FirstPort, which manages 200,000 homes in the UK, highlighted the financial burden placed on leaseholders, particularly during the Coronavirus pandemic, and told us that residents needed support for these interim measures.102 Rituparna Saha emphasised the urgency for residents:

My personal costs have been more than £13,700 in the last two years for waking watch and a fire alarm alone. How many more years am I going to be able to sustain this? As I said, these costs are onerous; they are huge […] Make no mistake: this is the immediate cost that is facing us right now and it is going to make us financially destitute before even a single panel of cladding is removed from our block.103

73.Alex Di-Giuseppe, representing Manchester Cladiators, acknowledged potential constraints on the Government’s ability to fund interim fire safety costs, however.104 He told us that, while “in an ideal world” interim costs would be covered by the Government, his priority was to see the funding directed towards the rapid remediation of fire safety defects within buildings. The Minister noted Mr Di-Giuseppe’s evidence when asked whether the Government would provide funding for interim costs. He told us:

[…] the Government should not provide funding to cover the costs of waking watch or replacement for waking watch. Our view is that the Government funding, such as it is today—that is the £1 billion for non-ACM and the £600 million for ACM—needs to go against remediation, because, as Alex said, it is the speed with which we can remove this unsafe cladding that is the key.105

However, when asked whether this meant that there would be no support for residents with interim costs, the Minister said “No, I am not saying that”, noting that “as we stand today”, Government funding should be focused on the removal of cladding, and “currently” there was no funding for interim fire safety costs.106

74.Residents are facing bills of thousands of pounds while they wait for their buildings to be made safe. None of these things are the fault of residents and they shouldn’t be the ones made to pay. The Government should include the costs for interim fire safety measures in the Building Safety Fund for the remediation of affected buildings.

Buildings Insurance

75.Insurance premiums for buildings with serious fire safety defects have risen substantially over the last two years. In some cases, buildings are unable to obtain insurance cover at all, putting residents in breach of their mortgage conditions and at risk of repossession.107 However, as noted by Rituparna Saha of UKCAG, in the majority of cases the problem is that “Buildings insurance is accessible but it is not affordable”.108 The Birmingham Leaseholder Action Group told us about increases in buildings insurance in their area:

One building had an increase from £36,379 to £194,285–an increase of 434%. Another had a premium of £43,000 and were quoted £530,000 to renew, an increase of 1,133%. These costs are crippling leaseholders before remediation work can even begin.109

76.Several witnesses called on the Government to intervene directly to ensure residents are able to access more reasonably-priced insurance for their buildings. Some groups, including representatives of residents at Islington Gates in Birmingham and the Wallace Partnership Group, called on the Government to either underwrite a percentage of the policy excess on insurance premiums or a percentage of any future claim due made following a major fire.110

77.A frequently-cited proposal, from both residents groups and freeholders, was for the Government to implement a reinsurance scheme akin to Flood Re—an insurance levy and pool scheme, designed to promote the availability of insurance to those in flood risk areas—to assist residents of buildings with fire safety defects; a Fire Safety Reinsurance scheme, variously referred to as ‘Cladding Re’ or ‘Buildings Re’.111 Under Flood Re, every insurer that offers home insurance must pay into the scheme, raising £180 million a year to cover flood risks in home insurance policies.112 We heard that a similar scheme could help to reduce insurance premiums for residents in high-rise residential buildings.

78.However, the Association of British Insurers (ABI) told us they were opposed to the implementation of a ‘Cladding / Buildings Re’ scheme.113 They explained that a Government-backed reinsurance scheme was a complex and lengthy process, requiring primary legislation. They said it would be expensive to implement, noting that Flood Re cost £20 million to build the necessary infrastructure. They also told us that the number of buildings affected did not represent a systemic market failure relating to buildings insurance and the market is working as it should. The Minister highlighted the insurance industry’s opposition, but told us that the Government was working with them to “come up with practical ways in which we can ensure that we have the availability we need for building insurance”.114

79.We are concerned that buildings insurance in some high-rise and high-risk buildings has become unaffordable over the last year. The Government must ensure that residents have access to reasonably-priced buildings insurance in the period until their buildings are remediated. That is what matters; how it is done is a different question.

80.A Fire Safety Reinsurance scheme would be comprehensive and provide long-term security to residents in affected buildings. However, we hope and expect that this will not be a long-term problem. We recognise concerns that a full ‘Re’ scheme would require primary legislation, take time and cost millions to implement, while applying only to a relatively small number of buildings. Our expectation is that a simple solution would be more appropriate. The Government should act as an insurer of last resort for buildings unable to obtain insurance. For other buildings, the Government should underwrite a percentage of the insurance on any affected high-rise and high-risk buildings where premiums have increased by more than 50% in the last two years, to reduce costs for residents.

Zero valuations: selling properties and obtaining mortgages

81.Since the Grenfell Tower fire, lenders have been reluctant to provide mortgages to residents in buildings where there are significant risks of a major fire. When assessing risk, lenders have been guided by the advice issued by the Government. Several written submissions, including from the Royal Institution of Chartered Surveyors (RICS) and the Building Societies Association (BSA), noted the particular influence of the Government’s Advice Note 14—initially issued in 2017 and revised in December 2018, which concerned non-ACM wall covering systems115—and a later Advice Note concerning balconies, which have since been consolidated into a single document, Advice for Building Owners of Multi-storey, Multi-occupied Residential Buildings, issued in January 2020.116 The Government’s advice has been interpreted by lenders as requiring an inspection of the external wall system of at-risk buildings, with some valuers returning valuations of £0 on affected flats. This does not mean that these flats are worth nothing, but is instead a means by which to pause mortgage applications and the sale of affected properties until testing is able to be carried out and owners are able to confirm their buildings are safe or undertake necessary remedial works.

82.The effect of the Government’s Advice Notes has been that, particularly since December 2018, thousands of residents in buildings that have not yet been surveyed and found to be safe have struggled to sell their properties or obtain new mortgages. Rituparna Saha told us of “people who have had to put off having a family, having babies, because they cannot move”, as well as difficulties residents have faced obtaining new mortgages: “We are being moved on to higher Standard Variable Rates and this is causing our mortgage payments to increase, on top of the extensive bills that we are already facing”.117 The Minister acknowledged the “unfairness” residents faced in being forced to pay significantly higher mortgage costs due to their circumstances.118 Hackney Council told us that the Government should take a stronger lead:

We have also heard that different lenders are taking different positions and responses to the same government advice. As you can imagine this is simply an intolerable situation for any leaseholder to be placed in. This is a national issue and requires clear unambiguous national leadership on regulation and finance.119

83.While safety must always be the first priority, the Government should have been more aware that its Advice Notes were likely to have serious consequences for residents. Ministers should have issued clearer guidance to mortgage lenders and worked with them to come up with solutions in advance of issuing new advice. As it is, residents are now paying the price: unable to move home, putting off having families and forced to pay substantially higher interest rates on their mortgages. The Government must urgently work with mortgage providers to give residents the right to remain on their existing mortgage deals and not be forced to move onto expensive Standard Variable Rate mortgages. Where residents have already been forced to move onto Standard Variable Rate mortgages, lenders should immediately offer them the right to move to one of their cheaper products.

External Wall Fire Review (EWS1) process

84.The Government’s Advice Notes led mortgage providers to look for a new process to retrospectively inspect an external wall system of a building and determine whether they would be able to lend. A cross-industry group comprising RICS, BSA and UK Finance, supported by the Government, created the External Wall Fire Review (EWS1) process. The group consulted with a range of other market participants, including chartered fire engineers, developers, managing agents and building owners, although we are told that this did not include the Association of British Insurers (ABI) or representatives of residents.120 RICS told us:

It is important to be clear on the issue the EWS1 was designed to address: to provide a process whereby the external wall system could be assessed in tower blocks and other obviously high-risk buildings in order to support high quality valuation advice and informed lending decisions for consumers wishing to access finance.121

Without the EWS1 process, RICS told us access to any funding, regardless of whether a building requires remediation, would not be possible, and the home buying and selling process would not be able to continue.122

85.We heard that, despite being well-intentioned, the EWS1 process has not been working in practice. This was the view expressed to us by the Local Government Association (LGA) and the National Housing Federation (NHF), who told us that the process could even end up delaying remedial works programmes.123 Rituparna Saha told us of residents “who are completely destroyed as a result of the external wall systems survey”, and noted a survey undertaken by UKCAG which found that 84% of people have said that they cannot move on with their lives because of cladding issues, and 51% of those people said that the reason that they cannot move on is because of EWS forms.124 Concerns around the EWS1 process can be broadly summarised in three ways.

Delays due to a lack of qualified, insured surveyors

86.The EWS1 process requires a Chartered Fire Engineer to undertake a survey of each of the tens of thousands of buildings within scope. However, the Institution of Fire Engineers lists fewer than 100 Chartered Fire Engineers in the UK.125 The LGA noted that many mortgage lenders were refusing to accept sign-off by a Chartered Surveyor, insisting on a Chartered Fire Engineer. The shortage of qualified fire assessors has been further affected by an inability of many to obtain adequate Professional Indemnity Insurance to undertake their work.126 The Minister told us that he recognised that this was problem and that the Government was looking “at a number of ideas to enhance the availability of Professional Indemnity Insurance” for fire assessors.127

87.The lack of fire assessors has led to considerable delays in buildings being surveyed through the EWS1 process. Estimates vary, but it appears widely accepted that it will take several years for all buildings within scope to be signed off by a Chartered Fire Engineer. The G15, whose housing association members managed more than 600,000 homes across the country, told us that they had only received 17 successfully completed EWS1 forms as of March 2020, which at that rate would take nearly 50 years to complete the assessments on all G15 buildings within scope.128 In the meantime, as residents wait for their buildings to be assessed, they will continue to be unable to sell their properties or access reasonable mortgage rates.

High costs passed to residents

88.We heard that the costs of these surveys, which are often passed on to residents, can be very high. ARMA told us that surveys are now more likely to be intrusive, and perhaps over a large proportion of the building, which is expensive in terms of time and cost.129 Rituparna Saha reported one example of a block where £1 million had been spent on obtaining an EWS survey, which had ultimately been revealed to have no fire safety defects at all.130 Of course, where defects are found through the EWS1 process, remedial works will be required, as well as a final survey once these have been completed, creating further delays for residents.

Mission creep

89.The EWS1 process was designed for high-rise buildings above 18 metres. However, several organisations, including ARMA and the NHF, warned of a growing sense of ‘mission creep’ in the EWS1 process, with reports that some mortgage lenders—including Barclays, Lloyds and Halifax—had been asking for EWS1 forms for buildings of any height.131 Requiring EWS1 forms for an even larger number of buildings would lead to even further delays and potential stagnation of the housing market for such properties. It was noted by UK Finance, RICS and the BSA, however, that the Government’s consolidated Advice Note issued in January 2020 included a new requirement not seen in preceding advice:

Following recent events, the Expert Panel has significant concerns that consideration is not routinely given to Requirement B4 of Schedule 1 to the Building Regulations (on external walls resisting the spread of fire), particularly in circumstances where the guidance in Approved Document B is less specific. Requirement B4 is clear and requires that “the external walls of the building shall adequately resist the spread of fire over the walls and from one building to another, having regard to the height, use and location of the building.” The need to assess and manage the risk of external fire spread applies to buildings of any height.132

This updated Government advice has been interpreted by mortgage lenders as creating a new requirement that buildings of any height, with a cladding wall system, will now be subject to an inspection regime of the external wall system where this has not previously been a requirement.133

90.The industry-designed External Wall Fire Review (EWS1) was put in place to provide a process that would allow mortgage providers to make informed lending decisions on high-rise residential properties potentially at risk of serious fire safety defects. However, the EWS1 process is not working. There is a lack of qualified, insured Chartered Fire Engineers to undertake these surveys, meaning a very large number of buildings will not be inspected for many years. EWS1 surveys can be very expensive, with costs typically passed to residents through their service charges even where no fire safety defects are found. Government fire safety advice has led to a much larger number of buildings falling into the scope of the EWS1 process than had been envisaged at its inception. It is clear that the process has lacked sufficient input from leaseholder representatives, but also other important stakeholders, including the insurance industry.

91.We accept the need for surveys to take place on some buildings, but call on the Government to take full control and put in place a much faster and fairer process. Reforms could include a relaxation of the rules on who is able to undertake these surveys, clarification of which buildings should fall within scope and more guidance to ensure the correct prioritisation of buildings. The Government should provide necessary funding to ensure that all affected buildings are surveyed within the next 12 months, so residents are not forced to wait years before they are able to sell their properties or obtain new mortgages.

A public health crisis

92.We have discussed the financial costs residents have faced, but it is important too to reflect on the physical and mental health impact this has had for many of the estimated 500,000 people living in buildings with potentially serious fire safety defects.134 Alex Di-Giuseppe, representing Manchester Cladiators, described the fear many residents live with every day:

I package it up into three things. It is the fear of living in an unsafe building. It is the fear of living in the unknown; a fire could happen at any point and it is compressed with these bills that we simply cannot afford as well. It is the feeling that we are trapped; we cannot sell and we cannot move. It is the fear of the unknown and the fact that we are trapped.135

Similarly, Rituparna Saha, representing UKCAG, spoke of residents’ feelings of being trapped in their homes and the life-changing impacts this crisis has had on many of their lives:

I would summarise my life as pretty much a living nightmare […] we basically feel like we are completely trapped. We feel hopeless. We are not in control of our futures. We are constantly anxious, both for the safety of our families living in these dangerous buildings and also the pretty much blank cheque that we are being forced to write to fix defects that were not of our making. There are many of us who are completely in limbo. There are people who have had to put off having a family, having babies, because they cannot move. There are people who have been forced out of retirement back into work to pay for bills for remediation. There is a gentleman who has had to put back a major surgery so that he could spend more time to save to pay his bills.136

93.This was a clear theme of our survey of residents too, where many of the 1,350 respondents told us of the emotional distress caused by the ongoing uncertainty in their lives. Several respondents told us they were struggling with their mental health, angry that they are facing potentially unaffordable bills through no fault of their own. Responses included:137

The physical and mental health effects of this crisis were also noted in several of the written submissions we received. Hackney Council told us they had been approached by leaseholders facing considerable stress and anxiety.138 The LGA said it was important to acknowledge the psychological challenges faced by many leaseholders who are “living in constant uncertainty and being slowly bankrupted”, while “being trapped in properties they cannot sell”.139

94.Representatives of residents called on the Government to start treating this as a public health crisis. Rituparna Saha told us:

The impact that this is having on people’s mental health is huge. It cannot be underestimated. We are hearing from hundreds and hundreds of people saying, “My mental health has taken a beating. I am suffering depression and anxiety and I have suicidal thoughts.”140

She expressed her view that the Government, NHS and Public Health England had made “no effort” to recognise the mental health toll on people living in dangerous buildings and called for “real support” for people whose mental health had been affected. Ms Saha noted that the Government had prepared leaflets for people living in houses affected by flooding, and called for those in high-rise residential buildings.

95.We have heard clear evidence of the physical and mental health toll that this crisis has had on residents. We view this as a public health crisis and the Government must do so as well. The Government must ensure that residents in affected buildings are offered support by the NHS to cope with the physical and mental health toll of living in potentially dangerous buildings. This should include the provision of basic information to every resident offering signposting to services for residents worried about their safety or financial situation.

93 Greater Manchester High Rise Taskforce (CPR0029)

94 Q9 and Q11 (Rituparna Saha, UK Cladding Action Group)

95 Q9 (Rituparna Saha, UK Cladding Action Group)

96 Greater London Authority / Mayor of London (CPR0025)

97 Q10 (Alex Di-Giuseppe, Manchester Cladiators)

98 Q9 (Rituparna Saha, UK Cladding Action Group)

99 Leeds Cladding Scandal (CPR0011)

100 Q31 (Lord Greenhalgh, Minister for Building Safety)

101 Greater London Authority / Mayor of London (CPR0025)

102 FirstPort (CPR0013)

103 Q13 (Rituparna Saha, UK Cladding Action Group)

104 Q12 (Alex Di-Giuseppe, Manchester Cladiators)

105 Q31 (Lord Greenhalgh, Minister for Building Safety)

106 Q33 and Q34 (Lord Greenhalgh, Minister for Building Safety)

107 As noted by Wallace Partnership Group (CPR0016) and Islington Gates (CPR0004)

108 Q16 (Rituparna Saha, UK Cladding Action Group)

109 Birmingham Leaseholder Action Group (CPR0007)

110 Wallace Partnership Group (CPR0016) and Islington Gates (CPR0004)

111 Q17 (Rituparna Saha, UK Cladding Action Group)

112 How Flood RE works, (accessed: 25 May 2020)

113 Association of British Insurers (CPR0035)

114 Q61 (Lord Greenhalgh, Minister for Building Safety)

115 Q58 (Neil O’Connor, Director for Building Safety, MHCLG

116 Royal Institution of Chartered Surveyors (CPR0034), Building Societies Association (CPR0036) and Advice for Building Owners of Multi-storey, Multi-occupied Residential Buildings, Ministry of Housing, Communities and Local Government, January 2020

117 Q11 and Q16 (Rituparna Saha, UK Cladding Action Group)

118 Q58 (Lord Greenhalgh, Minister for Building Safety)

119 Hackney Council (CPR0012)

120 Royal Institution of Chartered Surveyors (CPR0034) and the Association of British Insurers (CPR0035)

121 Royal Institution of Chartered Surveyors (CPR0034)

122 Royal Institution of Chartered Surveyors (CPR0034)

123 Local Government Association (CPR005) and National Housing Federation (CPR0031)

124 Find a UK Fire Engineer, Institution of Fire Engineers, accessed: 28 May 2020

125 UK Cladding Action Group (CPR0010)

126 Association of Residential Managing Agents (CPR0019)

127 Q59 (Lord Greenhalgh, Minister for Building Safety)

128 G15 (CPR0030)

129 Association of Residential Managing Agents (CPR0019)

130 Q16 (Rituparna Saha, UK Cladding Action Group)

131 Association of Residential Managing Agents (CPR0019), National Housing Federation (CPR0031) and Q16 (Rituparna Saha, UK Cladding Action Group)

132 Advice for Building Owners of Multi-storey, Multi-occupied Residential Buildings, Ministry of Housing, Communities and Local Government, January 2020

133 UK Finance (CPR0035), Royal Institution of Chartered Surveyors (CPR0034) and Building Societies Association (CPR0036)

134 500,000 estimate from the Association of Residential Managing Agents (CPR0019)

135 Q2 (Alex Di-Giuseppe, Manchester Cladiators)

136 Q1 (Rituparna Saha, UK Cladding Action Group)

137 Combustible cladding survey highlights ongoing issues in residential buildings, Housing, Communities and Local Government Committee, 6 May 2020

138 Hackney Council (CPR0012)

139 Local Government Association (CPR005)

140 Q20 (Rituparna Saha, UK Cladding Action Group)

Published: 12 June 2020