6. Annex B: Funding remediation
All multi-occupied residential buildings above 11 metres in England have a funding pathway to address unsafe cladding through a government programme.
Regulators should have regard for how remediation is funded and by whom in their enforcement decisions. For example, where remediation is delayed due to a lack of funding, regulators may wish to focus action on parties who are not providing the amount they are liable for, or who are failing to apply for government schemes they are eligible for.
Five remediation schemes are underway:
- The ACM Cladding Remediation fund: which has been open since 2018 and covers buildings with the most dangerous Grenfell type cladding (see 6.2 for more information).
- The Building Safety Fund: first opened in 2020 for buildings over 18 metres (see 6.3 for more information).
- The Cladding Safety Scheme: which was fully opened in 2023 for buildings between 11 and 18 metres and is also open to new applications for 18m+ buildings outside of London (see 6.4 for more information).
- A number of developers have now assumed direct responsibility for remediating all life-critical fire safety defects in more than 1,500 buildings (see 6.5 for more information), and;
- Social housing providers are working to remediate buildings in their portfolios that require remediation.
Funding for any remaining defects not met by a developer or government grant are dealt with in accordance with the Building Safety Act 2022’s leaseholder protections (see 6.6 for more information). All costs not recoverable from leaseholders must be met by landlords.
Funding for remediation may be provided through one or more routes at any given building. The table below provides an indication of where money for remediation may come from in different scenarios.
This information is provided to help regulators identify which party may be responsible for providing funding remediation costs at certain buildings, and to support effective enforcement decisions in scenarios where funding is blocking remediation. These scenarios are indicative, and regulators will need to consider the facts of each case to confirm the exact delineation of cost liabilities at specific buildings.
| Scenario | Cladding costs | Non-cladding costs |
|---|---|---|
| Buildings above 18 metres where the developer has signed the developer remediation contract. The landlord previously applied for the Building Safety Fund and signed the grant funding agreement. |
Cladding remedial work should go ahead under the Building Safety Fund process. The developer must reimburse all costs when work is complete. | Developer should pay for the remediation of all life-critical fire-safety defects, and re-imburse amounts spent on non-cladding work undertaken through the Building Safety Fund process. |
| Buildings above 18 metres where developer has signed the developer remediation contract. There is no existing application for the Building Safety Fund, or the grant funding agreement has not been signed. |
Developer should pay for and carry out work to remediate the unsafe cladding themselves. | Developer should pay for and carry out work to remediate all life-critical fire-safety defects themselves. |
| Buildings above 18 metres or with at least 7 storeys, where the developer has not signed the developer remediation contract. | Cladding remediation costs should be provided by the Building Safety Fund if the building is located in Greater London, or the Cladding Safety Scheme if located elsewhere. | Reasonable eligible costs for non-cladding remediation recommended by the FRAEW will be met by the Building Safety Fund or Cladding Safety Scheme. All other costs, including leaseholder contributions, are determined according to the leaseholder protections. |
| Buildings between 11 and 18 metres, where the developer has not signed the contract. | Cladding remediation costs should be provided by the Cladding Safety Scheme. | Reasonable eligible costs for non-cladding remediation recommended by the FRAEW will be met by the Cladding Safety Scheme. All other costs, including leaseholder contributions, are determined according to the leaseholder protections. |
| Buildings above 11 metres that have a waking watch in place. | Not applicable. | If there is a waking watch in place, the funding is determined according to the leaseholder protections. |
After the Grenfell Tower fire, the Government prioritised protecting residents who were facing the most serious fire safety risks and lived in high-rise buildings (18m+) with dangerous Aluminium Composite Material (ACM) cladding. In 2019, the government established the Private Sector ACM Cladding Remediation Fund to cover the cost of replacing unsafe ACM cladding on private residential buildings in England over 18m in height. Applications for the Private Sector ACM cladding remediation fund closed on 31 December 2019.
The Building Safety Fund opened in June 2020 to provide funding to fix fire safety problems with non-ACM external cladding in buildings over 18 metres in height. Parties with a legal responsibility for the safety of a building can apply to the Building Safety Fund. The Building Safety Fund is still open to new applications for eligible buildings in London. High-rise buildings outside of London should now apply to the Cladding Safety Scheme instead (see 6.4).
All applications to the Building Safety Fund must include a Fire Risk Appraisal of External Walls (FRAEW) assessment, conducted to the PAS 9980 standard by a suitably competent professional. The PAS 9980 code of practice was introduced to make sure a proportionate and risk-based approach to building safety is adopted. The FRAEW describes the fire risks associated with the building’s external walls system, including any cladding present, and details recommended work to make the building safe. The Building Safety Fund uses the FRAEW to decide if an application is eligible and will fund the work recommended by a FRAEW to address life safety fire risks presented by the external wall system. The Building Safety Fund will scrutinise whether the FRAEW has been conclusive about the level of risk posed by all the external wall systems present and, crucially, that proportionate remedial measures to address these risks have been recommended.
Qualifying leaseholders are protected from the costs of legal or other professional services relating to the liability (or potential liability) incurred as a result of a relevant defect. This means that, where the leaseholder meets the criteria to qualify for the Acts’ protections, they cannot be charged for any costs relating to the FRAEWs.
The Cladding Safety Scheme was launched in July 2023 and expands the government’s funding remediation programme to meet the cost of addressing life safety fire risks associated with cladding on residential buildings over 11 metres in height in England. The Cladding Safety Scheme also covers new applications for buildings over 18 metres in height outside of London. As with the Building Safety Fund, the Cladding Safety Scheme will fund the work recommended by a FRAEW to reduce fire safety risks related to external cladding.
A number of major housebuilders and other large developers have entered into a developer remediation contract with the department, which requires them to:
- Take responsibility for all necessary work to address life-critical fire-safety defects – cladding and non-cladding related - arising from the design and construction of buildings over 11 metres in height that they developed or refurbished in England over the 30 years prior to 5 April 2022.
- Keep residents in those buildings informed about progress towards meeting this commitment.
- Reimburse government for taxpayer-funded remediation work on those buildings.
The government has also implemented regulations made under powers in sections 126-129 of the Building Safety Act 2022 to establish the Responsible Actors Scheme (RAS) for residential developers. Developers who sign up to the scheme must enter into the developer remediation contract and comply with its requirements and are added to the Responsible Actors Scheme members list. Any eligible developer who is invited to join but does not, or joins but has their membership revoked because they do not comply with the membership conditions, will be added to the Responsible Actors Scheme prohibitions list and be subject to planning and building control prohibitions.
If a building was previously in the Building Safety Fund, the action to be taken by a developer will depend on the stage an application has reached in the Building Safety Fund process:
- If the Grant Funding Agreement has been signed by the applicant, remedial work should go ahead under the Building Safety Fund process. The original building developer must then reimburse any costs when work is complete.
- If the Grant Funding Agreement hasn’t been signed, the developer should fix the problem themselves and cover the cost. The work to fix the building will then continue outside the Building Safety Fund process.
The leaseholder protections introduced under Schedule 8 to the Building Safety Act 2022 and accompanying regulations provide financial protections for leaseholders in residential buildings above 11 metres or five storeys in height with historical safety defects.
Qualifying leaseholders are protected from all cladding system remediation costs. Any contribution required from qualifying leaseholders for non-cladding defects and interim measures (including waking watch costs) is capped at £15,000 in Greater London (or £10,000 elsewhere in England) and spread over ten years.
The leaseholder protections came into force on 28 June 2022. After that point, landlords and managing agents cannot issue further bills for remediation costs and must only recover remediation costs in accordance with the protections. The leaseholder protections also apply retrospectively and limit the amount leaseholders are liable to pay for remediation work irrespective of when the service charge was issued.
Should a landlord have knowingly attempted to recover remediation costs in breach of the protections after 28 June 2022, they may have been acting unlawfully. Relevant remediation costs demanded from leaseholders through a service charge can be recovered using a remediation contribution order under section 124 of the Building Safety Act 2022.
To pass on any historical safety remediation costs to leaseholders, in accordance with the Building Safety Act 2022’s leaseholder protections, the current landlord (defined as a person who is the landlord under a lease of premises in a relevant building) must complete the landlord’s certificate. A landlord must provide a landlord’s certificate in the circumstances set out in The Building Safety (Leaseholder Protections) (England) Regulations 2022 (SI 2022/711). This includes providing a landlord’s certificate within four weeks of a leaseholder requesting one or a notification of a leasehold interest to be sold. If the landlord does not provide a valid landlord’s certificate which complies with the requirements of the regulation within four weeks, the landlord will, by law, be liable for all remediation costs and will be unable to pass on any costs to leaseholders.
Leaseholders can also complete a deed of certificate to confirm that they qualify for protections under the Building Safety Act 2022 and submit this to their landlord. Leaseholders can choose to do this at any time, but must complete and submit a certificate if their landlord notifies them that they require one, either because the leaseholder is selling their property or there is a relevant defect in the building. If the leaseholder fails to complete the deed of certificate, they will not benefit from the protections for qualifying leases.
For information on how the leaseholder protections work at leaseholder- managed buildings (i.e., where there is a right to manage company or a resident management company in place) see 9.1.
6.7 Proportionality in remediation
Proportionality is one of the key principles of the government’s approach to building safety and it is being embedded in the assessment of the external wall systems and cladding of existing multi storey, multi-occupied buildings. PAS 9980 provides guidance for the proportionate and consistent assessment of the risk of fire spread via external wall construction, and it is the methodology by which competent fire engineers and other competent building safety professionals should carry out a FRAEW.
For more information about the PAS 9980 Methodology, please see Annex A: Technical guidance for applicants of building safety funding applying for funding via PAS 9980:2022
Under Article 9 of the Fire Safety Order, a Fire Risk Assessment (FRA) must be carried out to identify any fire safety work that is needed at a building. The FRA will include consideration of the external walls of a building and advise whether a more detailed assessment of the external walls is necessary. The main way to do this is for a FRAEW to be undertaken to the PAS 9980 methodology which will assess whether any work is needed to the external walls, -if one has not already been done
There may also be non-cladding related defects identified by the FRA or FRAEW that require remediation, which government is not funding. Regulators will decide when a defect requires remediation, and the work that is required to make it safe, in line with their own legislation and enforcement policies.
Alongside their own guidance, regulators may wish to draw on guidance from an expert assessor to evaluate building safety risks and to decide when a building has been made sustainably safe.