The Building Safety Fund: 31 December 2020 Deadline
Key Contact: Jennifer Butcher
Author: Abby Stephens
In the March 2020 budget, chancellor Rishi Sunak announced that the UK government would provide £1 billion in 2020-2021 to support the remediation of unsafe non-ACM (aluminium composite material) cladding systems on residential buildings 18 metres and over in both the private and public sectors in England, known as the Building Safety Fund (“the BSF”). This is separate to the ACM cladding remediation fund (“the ACM Fund”), which assists with the replacement of ACM cladding systems on private and social residential buildings, the type of cladding used on Grenfell Tower.
The registration process for the BSF opened in June and closed at the end of July 2020, with the application process opening on 1 August 2020, on a “first come, first served” basis and the deadline of 31 December 2020 for such applications is fast approaching.
The BSF is intended to support leaseholders, rather than building owners, with the costs of remediation and can be applied for by private sector building owners where the costs of the works would be recoverable from leaseholders through service charge arrangements, and social sector housing providers who have demonstrated, during the registration process, that the costs of remediation are unaffordable or are a threat to financial viability. Controversially and despite being challenged, the works must not have been committed to at the time the BSF was announced. From the outset, the BSF has been criticised as not being enough to meet the demands upon it, with the true costs of remediation works expected to be significantly higher than this.
The validation process for applications under the BSF, which involves legal and project related due diligence, is being administered by Homes England and the Greater London Authority (for London properties) who then pass the applications onto the Ministry of Housing, Communities and Local Government to make the ultimate decision based on the validation information provided.
The application process has been slow to date and this is largely due to the lack of preparations made by applicants, combined with detailed information requests and the sheer volume of applications that have been submitted. As of 25 September 2020, the most recent statistics available on the BSF, 2,784 applications had been made, with only 65 of those allowed to proceed to a formal application. However, progress has been made since this time with many buildings being allocated funding in the last few weeks.
Despite progress being made, there are still difficulties with the BSF, for example, where some properties have a mixture of ACM and non-ACM cladding systems, in which case two separate applications need to be made in relation to both the BSF and the ACM Fund. There is also the requirement for contractors to be onsite and for works to have commenced by 31 March 2021, which can be difficult where funding has not been confirmed and/or is insufficient and there is limited contractor availability.
Looking ahead, the government has suggested the BSF will not be extended and it seems that many developments will not be funded. However, it is possible that an alternative scheme will be introduced, but we await confirmation of this.