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The largely unexpected fire-safety risks identified following the Grenfell Tower disaster have exerted significant pressure on social housing budgets.
Providers now face an increasing list of fire-safety issues, as investigations into further products and systems continue.
Put simply, the need for innovative support to address these issues has never been greater.
Poor fire compartmentation, defective sprinkler systems, faulty fire doors, use of combustible material in balconies and risks around cladding materials (both Aluminium Composite Material (ACM) and High-Pressure Laminates); these represent a number of key issues.
A sector-wide concern is how to balance safety with financial stability?
The G15 group of social housing providers already estimate costs of up to £6.87bn to make their buildings fire safe.
The Ministry of Housing, Communities and Local Government provided £400m to help eligible registered providers replace ACM cladding, but no funding has yet been made available for addressing wider fire-safety issues.
There are, however, strategies available for providers wishing to avoid lengthy litigation processes and instead focus on the delivery of remedial works, prioritising resident safety.
Contractors frequently deny responsibility for fire-safety defects, stalling remedial works.
To address this, providers can adopt a ‘piecemeal’ approach by adjudicating only the question of liability.
Adjudication takes about four to six weeks to complete, rather than the extended timetable for litigation, which can take up to 18 months to reach trial – allowing providers to avoid incurring heavy legal costs.
If the contractor is found liable by the adjudicator, housing providers have a strong negotiating position from which to secure the delivery of a remedial solution by the original contractor.
This is likely to be more cost-effective than paying the costs of engaging an alternative contractor.
Another strategy available to providers is the ‘work-now-argue-later’ approach.
In this strategy, the housing provider and original contractor enter into a binding contract for the delivery of remedial works, at no initial cost to the housing provider.
The question of liability and which party bears the costs is then resolved at the end, either by agreement or through adjudication.
As well as prioritising resident safety, this approach allows both parties to agree the cost of the remedial works at the outset, providing cost certainty.
This is in sharp contrast to many defects claims, where an alternative contractor is appointed to carry out remedial works while the provider attempts to recoup costs from the original contractor.
While less common, in practice, the ‘work-now-argue-later’ approach means that a remedial solution can commence swiftly and both parties can accurately forecast and pre-empt the financial implications of being found liable.
These two strategies can help to reduce the legal costs of pursuing a claim and any delays in implementing a remedial scheme – outcomes that fundamentally benefit social housing providers and their residents.
For more information
Please contact Kieran Binnie.
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