Feb 10, 2021

UK Government to spend £3.5 billion tackling unsafe cladding

Cladding
funding
UK
Dominic Ellis
3 min
New £3.5 billion funding package will replace unsafe cladding in residential buildings over 18 metres high
New £3.5 billion funding package will replace unsafe cladding in residential buildings over 18 metres high...

The UK Government has announced £3.5 billion in new funding to replace unsafe cladding for all leaseholders in residential buildings 18 metres (6 storeys) and over in England.

To pay for cladding remediation costs, a new tax, earmarked for the UK residential property development sector, will raise at least £2 billion over a decade, along with a ‘Gateway 2’ developer levy on certain high-rise buildings.

In a statement, the government said funding is targeted at the highest risk buildings in line with longstanding independent expert advice and evidence, with Home Office analysis of fire and rescue showing buildings between 18-30 metres are four times as likely to suffer a fire with fatalities or serious casualties than apartment buildings.

Lower-rise buildings, with less safety risk, will gain new protection from the costs of cladding removal with a new scheme offered to buildings between 11 and 18 metres. This will pay for cladding removal – where it is needed – through a long-term, low interest, government-backed financing arrangement.

Under the scheme, no leaseholder will ever pay more than £50 a month towards the removal of unsafe cladding. "This will provide reassurance and security to leaseholders, and mortgage providers can be confident that where cladding removal is needed, properties will be worth lending against," it states.

A five-point plan has been unveiled to bring an end to unsafe cladding:

  • Government will pay for the removal of unsafe cladding for leaseholders in all residential buildings 18 metres (6 storeys) and over in England
  • "Generous" finance scheme to provide reassurance for leaseholders in buildings between 11 and 18 metres (4 to 6 storeys), ensuring they never pay more than £50 a month for cladding removal
  • An industry levy and tax to ensure developers play their part
  • A "world-class new safety regime" to ensure a tragedy like Grenfell never happens again
  • Providing confidence to this part of the housing market including lenders and surveyors

Mark Hayward, Chief Policy Adviser, Propertymark, said following the disaster of the 2017 Grenfell fire, it is welcome that the Government is finally increasing funding for residents stuck in buildings with unsafe cladding in England. The fire quickly swept through the 67.30m tower, claiming 72 lives.

"We hope that extra funds announced today will make the process quick, efficient and cover the work needed to resolve any safety concerns residents face. Today’s announcement is just a start and the Government must now also commit to completely eradicating this type of cladding to ensure the safety of all properties and residents, not just in England but across the United Kingdom," he said.

"Supporting and challenging our industry to deliver change is more vital now than ever, and it is encouraging to be one step closer to ensuring that people are safe within the confines of their own homes, as standard."

The government aims to protect future generations from similar mistakes by bringing forward legislation this year to tighten the regulation of building safety and to review the construction products regime to prevent malpractice arising again. 

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Jun 20, 2021

Contractor issues head disputes list in 2020: Arcadis report

construction
contractors
Disputes
surveys
Dominic Ellis
2 min
The average value of disputes globally rose to $54.26 million in 2020 - but the numbers were much the same as 2019, according to an Arcadis report

The average value of disputes globally rose from $30.7 million in 2019 to $54.26 million in 2020, while the length of disputes fell from 15 months in 2019 to 13.4 months, according to an Arcadis report.

The data, featured in Arcadis' 11th annual report, illustrates industry-wide ripple effects of the COVID-19 pandemic although interestingly the overall volume of disputes stayed relatively the same in 2020 as in 2019.

While trends in the value and length of disputes varied from region to region, all regions surveyed saw an increase in "mega disputes" related to bigger capital programs and private projects. Notably, more than 60% of survey respondents encountered project impacts due to COVID-19.

Owners, contractors, or subcontractors failing to understand and/or comply with their contractual obligations became the leading cause of construction disputes in 2020 (jumping from 3rd place in 2019), followed by owner-directed changes and third-party or force-majeure changes as the second and third-leading causes, respectively.

Highlights from the report include:

  • Proper contract administration was a theme across the globe for the successful and early resolution of disputes
  • Most disputes were settled through party-to-party negotiation, and a willingness to compromise played a key role in early resolution
  • Among regions surveyed, the buildings (education, healthcare, retail/commercial, government) sector saw the most disputes
  • In North America, construction dispute value rose from $18.8 million in 2019 to $37.9 million in 2020, while the length of disputes shortened from 17.6 to 14.2 months.

While cost and length have changed since 2019, risk management was still seen as the most effective claims avoidance tactic, while owner/contractor willingness to compromise was once again the top-ranked factor for the mitigation/early resolution of disputes.

"COVID-19 irrevocably changed every industry," said Roy Cooper, head of contract solutions for Arcadis North America. "Construction disputes experts will have to continue to adapt, even post-pandemic, as workforce expectations, climate events and government infrastructure funding change how projects are designed and contracted in the future."

The research presented in the report was compiled by Arcadis based on survey responses, global construction disputes the team handled in 2020 and contributions from industry experts.

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