Q&A: Who Pays For Fire-Safe Cladding?

Co authored by David Peachey (Enterprise Chambers).

I am the tenant of a flat in a block which is around 10 years old. The landlord has informed the tenants that, because of safety concerns following the Grenfell Tower fire, the cladding needs to be replaced and the tenants must pay for this through their service charge. Surely it isn't reasonable or moral for the tenants to pay for these works?

Answer

Whether or not the cost of replacing the cladding is recoverable through the service charge will depend on the construction of the leases. The tribunal will not concern itself with questions of morality.

Explanation

In E&J Ground Rents No 11 LLP v Various leaseholders (First-tier Tribunal (FTT), unreported, 24 January 2018) a landlord provided a "waking watch" service - trained officers patrolling a block of flats - as a means of complying with guidance issued by the Department for Communities and Local Government following the Grenfell Tower fire.

The guidance outlined interim measures to ensure residents' safety pending the removal of cladding and required landlords to provide a reliable fire detection and warning system. The local fire service had also directed the landlord to comply with the Regulatory Reform (Fire Safety) Order 2005 and an agreed action plan.

The leases required the landlord to ensure compliance with the requirements and directions of any competent authority or with all statutory provisions relating to the building and also to insure the block. Failing to provide a waking watch put the landlord at risk of breaching the policy.

The FTT decided the landlord's actions complied with its obligations and the costs of the waking watch were reasonable so the costs were recoverable through the service charge.

In Pemberton Reversions (5) Ltd v Various leaseholders (FTT, unreported, 18 July 2018), the landlord replaced cladding that did not comply with fire safety requirements. It sought to recover through the service charge the cost of the works of around £3m - which equated to £10,000 for each leaseholder - together with the costs of a waking watch charge until the cladding was replaced.

The leaseholders claimed the charges were not recoverable under the leases, were unreasonable, and it would be morally wrong to require them to pay. The leases required the landlord to repair and maintain the structure of the blocks and permitted the recovery of the cost of works necessary for the sake of good estate management and for the...