On 10 January 2022 the Government announced an intention to provide a “fully funded plan of action including remediating unsafe cladding on 11 – 18m buildings”.
Since this announcement, the Building Safety Act 2022 and subsequent Regulations have been enacted which have completely changed the way in which cladding and non-cladding remedial costs are to be recovered and from whom. Despite this and a great deal of interest for more information from leaseholders, management companies and freeholders alike, there was a distinct lack of any update regarding this proposed 11 – 18 meter fund. This has now changed with the Government’s announcement on 30 November 2022 of the “Medium Rise Scheme” (“MRS”). A summary of the MRS is as follows:
1. At present the Government is only running a pilot of the MRS. This applies to a pre-selected number of buildings across England (namely 60 in number) where the developer “cannot be traced or held responsible – for instance because they have gone out of business”;
2. The full MRS will come into force during 2023, although the exact date, eligibility criteria and application process has yet to be announced. Nevertheless:
a. The announcement does say that once the pilot has concluded, the Responsible Person (i.e. the entity with the contractual obligation to undertake remedial works) can make an application to the MRS;
b. The MRS appears to be targeted at buildings where there are unsafe external wall systems only. This means it will not apply to internal compartmentation issues within a building; and
c. As stated for the pilot, the MRS only covers costs where the Developer cannot be traced or held responsible;
3. The value of the MRS appears to be £3 billion; and
4. The Government is encouraging leaseholders and Responsible Person’s persons to complete this form to help determine how many buildings may be eligible for the scheme – https://www.gov.uk/guidance/tell-us-about-life-safety-fire-risks-on-the-external-wall-system-of-your-building.
Whilst this is positive news, uncertainty remains. For example, would the MRS apply if a Developer can be traced but is unwilling to pay? Would the MRS apply if the Developer can be traced but the freeholder (who has the statutory obligation to pay for remedial costs but not to undertake the remedial works) cannot afford to do so and is unwilling or unable to bring proceedings against the non-associated Developer? Finally will any Government fund be made available for the equally as common internal compartmentation defects found within high rise buildings?
For a full summary of the MRS, the Government has provided the following leaseholder fact sheet – https://www.gov.uk/guidance/medium-rise-scheme-mrs-pilot-opening-leaseholder-factsheet.
Colman Coyle has and continues to act for and advise leaseholders, management companies, freeholders and developers in respect of cladding and other fire safety defects.