2Issues beyond remediation
Emotional and financial impact on residents
13.The number of residents living in buildings with unsafe cladding is not clear. The Department estimates there are over 20,000 homes in around 240 high-rise buildings yet to be remediated with unsafe cladding similar to that used on the Grenfell Tower.42 However, this number does not cover all buildings with unsafe cladding. The Department estimates an additional 1,700 high-rise buildings with other forms of unsafe cladding, and an unknown number with unsafe cladding not classed as high-rise (below 18 metres).43 This puts the number of those homes affected in the many tens of thousands, and the number of residents into multiples more.
14.Living in unsafe buildings has clearly impacted residents’ mental well-being. According to a survey undertaken by UK Cladding Action Group, of the 550 residents that took part, nine out of ten leaseholders in flats with unsafe cladding say their mental health has deteriorated as a direct result.44 We received written evidence confidentially from residents of affected buildings which highlighted the feeling of being trapped and the daily emotional strain.
15.Private leaseholders’ emotional strain has been compounded by rising costs passed on to them by their building owners. These costs are often as a result of interim fire safety measures. The Department estimated a common interim measure, waking watches (overnight patrols to evacuate residents in case of fire), to range between £12,000 and £45,000 per week per building depending on the number of individuals and hours covered.45 We received written evidence confidentially for a block where the reserves built up by the leaseholders over 20 years were exhausted in around three months as a result of waking watch costs. The Department told us that building owners “would—or should—consult their leaseholders and explain to them what costs are being put in place and what they are being charged”.46 In response to the concerns we raised about such costs, the Department told us that it is not collecting information on waking watch costs. It told us that it is working with the National Fire Chiefs Council to update their guidance on interim measures, which includes promoting more cost-effective measures to ensure that private leaseholders are more informed consumers.47 We understand the government plans to publish data on the costs of waking watch to ensure greater transparency, which we welcome.48 However, as the Department accepts, these are temporary measures which should never have become permanent fixtures.49
16.Additional costs may also arrive through wider fire safety issues discovered during remediation works and need correction. The National Audit Office found that cladding inspection has revealed other significant flaws in construction and fire safety in many cases.50 Any additional costs beyond the work to remove and replace dangerous cladding are not covered by the £1.6 billion funding schemes. The Department was clear to us that remediating buildings is its priority, and that this would in turn remove the need and costs of interim measures.51 The funds do not take account of buildings below 18 metres with unsafe cladding. The Department told us it is not running a specific remediation programme for these buildings, but it has strengthened the obligations on building owners, and it is strengthening enforcement as well: “It is for building owners to take action on those buildings”.52
17.We asked the Department if it knew of any impact to social sector rents as a result of cladding replacement. It told us that it does not collect the information currently, but it has received information from social landlords, and is considering what further programme monitoring it can do.53
Insurance and lending
18.Leaseholders in blocks with dangerous cladding have had their properties valued nil, making it impossible for them to sell or remortgage. This issue was raised with us many times in written evidence from across the sector and confidentially from residents.54 It is unacceptable that leaseholders are in effect ‘mortgage prisoners’, through no fault of their own. The Department told us that lenders and surveyors have been more diligent in considering mortgage valuations, because of the risks identified since the Grenfell tragedy.55 The introduction of the External Wall Fire Review process in December 2019 was brought in to sort this issue. It was designed to provide assurances to lenders that the cladding system is safe or is in need of remediation, which should allow for an informed lending decision. Identifying what work is required, when it will be carried out and how it will be funded should be considered in the valuation process, and certified by a professional with an EWS1 form.56
19.However, the process has not been working as intended. The process can be expensive and lasts for only five years, with costs often passed onto leaseholders.57 The process has been slow; the demand for the work to inspect external walls has outweighed the supply of the professionals with the skills to do so. This has been compounded by the difficulties these professionals have had in acquiring indemnity insurance to undertake the work.58 The Association of British Insurers wrote to us saying that the EWS1 form had been created without any consultation with the insurance industry.59 The scope has also drifted; we received written evidence to suggest that the process may be being used on buildings below 18 metres, beyond its intended remit of 18 metres and above.60 This has been acknowledged by the Minister for Housing.61 The uncertainty by the sector is reflective of changes to departmental guidance in January 2020, which now includes the need to assess and manage the risk of external fire spread to buildings of any height.62
20.In response to our concern that leaseholders are receiving nil valuations, the Department told us that this is an “industry issue” but it is engaging with lenders and involving the Treasury on this.63 UK Finance wrote to us to say that it has been working with the sector to resolve valuation issues of high-rise buildings, which includes the creation of a sector-wide database of completed EWS1 forms.64 The government has committed to providing necessary funding for this.65 The Department told us that the process is not intended to be used for all properties, i.e. those under 18 metres. It told us that it and RICS are working to clarify the role and purpose of the form.66
21.We made it clear to the Department that professional indemnity insurance has been regularly brought to our attention by the industry and needs sorting as a priority.67 The Department told us that it is working with the Fire Industry Association and the Institution of Fire Engineers to look at the insurance barriers that prevent the existing fire engineers from conducting this work. It told us that Lord Greenhalgh, Minister for Building Safety, has been engaging with the insurance sector and has asked them to establish a solution the inability of professionals accessing insurance. The Department was positive on the progress of the work but told us that there are no clear solutions yet.68
22.While leaseholders have been unable to move or remortgage, some have seen their insurances premiums rise significantly. For those in buildings with serious fire safety defects, there are examples of premiums rising by over 400%.69 This is on top of other additional costs faced by leaseholders. In response to the concerns that we raised with the Department with insurance premiums, it told us that it does not collect insurance data systematically. It told us that this is a challenging area but it is “working closely with the sector to see what further solutions are available that could mitigate some of the costs on leaseholders”.70 The Association of British Insurers wrote to us saying that it has been engaging with Department officials on interim solutions to premiums.71
Lack of skills
23.The National Audit Office found that there has been a shortage of skills or personnel needed to complete remediation work.72 However, shortages are not restricted to the removal and replacement of cladding. The Local Government Association wrote to us outlining the “chronic shortage of fire engineering and safety expertise, both in the enforcement and inspection field and in the private sector”.73 The supply has also impacted on the External Wall Fire Reviews process for valuations, which requires sign-off by a fire safety expert. The difficulties experienced in acquiring professional indemnity insurance have slowed the pace of the valuation process, which is compounded further by a backlog of cases to address. We raised our concerns with the Department that it can take 12 months or more for the valuation process. The Department told us that this is part of the cross-body work on the External Wall Fire Reviews process.74 We asked the Department to clarify in writing the professional bodies that are qualified to issue the statements of compliance, as this was unclear during the session.75 In a follow-up written response, the Department confirmed that this has been superseded by the External Wall Fire Review and EWS1 form, which requires RICS surveyors and appropriately qualified fire engineers.76
24.We raised concerns with the Department about the ability to complete remediation work by the end of 2021 with the current skills capacity. The Department told us that it believes there is sufficient capacity, but recognised the timescale as “challenging”.77 The Department told us that the additional construction and consultancy expertise that it has brought in this year will support the process of plans, and that it has begun to look at supply chain issues through its project management contractor. It also told us that it is working with the Fire Industry Association and the Institution of Fire Engineers on the future strategies at increasing the number of qualified fire engineers.78
25.The demand for resources to inspect and remediate buildings with safety concerns is already high and set to increase with the new £1 billion Building Safety Fund. The Department estimates there to be around 1,700 buildings with unsafe non-ACM cladding within scope of the Building Safety Fund; this is in addition to the 455 buildings with unsafe Grenfell-style ACM cladding. The Department told us that it had already received hundreds of applications for the Building Safety Fund in the first month, all of which it is aiming to assess and approve by April 2021.79 The Department told us it was surprised at the lack expertise and competence among building owners to conduct the projects with the previous two funding schemes, and that the introduction of technical support is a big difference with the Building Safety Fund.80
42 Ministry of Housing, Communities & Local Government, Building Safety Programme: Monthly Data Release – June 2020, 16 July 2020.
43 C&AG’s Report, paras 2.5, 2.7
44 UK Cladding Action Group, UKCAG Mental Health Report, June 2020.
45 C&AG’s report, para 2.13
46 Q 54
47 Qq 48–54
48 Hansard HC, 14 July 2020, vol 678, col 1492
49 Q 72
50 C&AG’s report, para 1.21
51 Q 49
52 Q 144
53 Qq 125–126
54 Building Societies Association (RDC0009), Local Government Association (RDC0003), Greater Manchester High Rise Task Force (RDC0014)
55 Q 138
56 Royal Institution of Chartered Surveyors, Form EWS1: External Wall Fire Review, December 2019.
57 Housing, Communities and Local Government Committee, Cladding: progress of remediation, Session 2019–21, HC 172, 18 May 2020 [12 June 2020].
58 Q 58; Housing, Communities and Local Government Committee, Cladding: progress of remediation, Session 2019–21, HC 172, 18 May 2020 [12 June 2020].
61 Hansard HC, Written Question 71711, 09 July 2020
62 Ministry of Housing, Communities & Local Government, Advice for Building Owners of Multi-storey,
Multi-occupied Residential Buildings, January 2020, para 1.5.
63 Qq 134, 138
65 Secretary of State for Housing, Communities and Local Government, Updates on Building Safety Reforms, 02 April 2020.
66 Q 134
67 Q 107
68 Qq 104–105, 119
70 Qq 56, 106
72 C&AG’s report, para 1.16
74 Q 138
75 Qq 135–137
77 Q 122
78 Q 104
79 Q 63
80 Q 64
Published: 16 September 2020