There are currently two government funds open to housing associations to fund the remediation and replacement of unsafe cladding systems, summarised below. A third fund, the Medium-Rise Scheme, was opened in pilot form in November 2022 and is also summarised below.
Following the tragedy at Grenfell Tower, housing associations have undertaken significant remediation and mitigation works to buildings that need them. However, money spent on remediation means less to spend on building much needed new affordable homes or providing services to existing communities.
Our research shows that more than 1 in 10 (11%) new affordable homes to rent and buy in England can no longer be built due to the costs of making buildings safe following the Grenfell Tower fire.
That’s why we’ve been calling on the government to negotiate with contractors in the way they have with developers, so that all those responsible for building defective properties pay to fix them. While developers have committed to remediating properties they constructed in the last 30 years, contractors commissioned by housing associations to build residential properties are not always taking responsibility. This means housing associations have to pick up the costs themselves, or pursue a contractor through lengthy and costly court proceedings. Ultimately, social housing residents and those that need affordable housing indirectly bear the cost.
In February 2021, the government increased the Building Safety Fund to £3.5bn from the initial £1bn announced in March 2020. The Fund exists for the removal of and replacement of unsafe non-ACM cladding systems on buildings 17.7m and over, where leaseholders would otherwise have faced large bills for this work. Having opened for applications in 2021, the Fund reopened in July 2022. On applying for the Fund, applicants must ensure a building has been reviewed under the PAS 9980 guidance, as only works recommended following an PAS 9980 assessment will be funded. However, this means the Fund will now also consider funding mitigation measures as well as remedial works to the external wall. The government has published guidance to support applications.
The NHF has been raising housing associations’ challenges in securing PAS 9980 assessments due to limited capacity among the sectors we need to work with. We know that DLUHC is considering how the government could increase capacity and we will continue to engage with this work on behalf of the sector.
In January 2022, Michael Gove announced his intention to establish a new £4bn fund for the remediation of unsafe cladding on buildings of 11m to 18m. This fund was announced as the Medium-Rise Scheme in November 2022 and will provide funding for buildings 11-18m where the original developer cannot be traced. The fund has been opened in pilot form and is due to open in full for applications sometime in 2023. For other buildings 11-18m, the government expects the original developer to remediate defective buildings they constructed.
We are seeking further clarity on housing associations’ eligibility for the Medium-Rise Scheme. As with other government funding, we understand that the Medium-Rise Scheme will not be available for housing association buildings without leaseholders. The Secretary of State has acknowledged the sector’s unique social purpose and the impact that building safety costs have on its wider work – and has promised to work closely with us to mitigate this impact.
In 2018, the government announced a £400m Social Sector ACM Cladding Remediation Fund to pay for the removal and replacement of unsafe ACM cladding on social residential buildings of 18m or over.
100% of buildings in the social housing sector that are eligible for the fund have either started or completed remediation. However, the government has kept the fund open, as it reduced the height threshold for eligible buildings to 17.7m to bring it in line with the Building Safety Fund.