ACM Cladding Remediation Fund

The Government has published guidance on how local authorities and housing associations can apply for funding for the removal and replacement of unsafe ACM cladding on buildings 18m or over. Here is everything you need to know:-

1. Who can apply?

• Housing associations and local authorities.

2. Which buildings are covered?

• Social housing buildings which:-
  • are owned by housing associations and local authorities;
  • are 18m and over;
  • incorporate ACM cladding systems which failed large scale fire performance tests.

3. What will the fund cover?

• Removal and replacement of unsafe ACM cladding systems.
• ‘Unsafe’ means ACM cladding systems that:
  • have been identified as containing combustible materials; and
  • failed the series of BS8414 tests commissioned by the Government in 2017.

4. What costs will be included?

• Reasonable costs which are capable of being capitalised, e.g.:-
  • ACM cladding – removal, replacement and disposal;
  • Insulation – removal, replacement and disposal;
  • Access – scaffolding and mast climbers;
  • Labour and reasonable on-costs;
  • VAT – where the building owner is unable to claim this back; and
  • Essential extraordinary technical requirements.

5. What costs are not included?

• Non-cladding system related costs, e.g.:-
  • Internal works;
  • Replacement of windows;
  • Interim fire safety measures;
  • Structural works (not related to the ACM cladding system); and
• Revenue costs.

6. Is there any other eligibility criteria?

• Building owners are required to:-
  • notify the Ministry of Housing, Communities and Local Government (MHCLG) that their buildings (18m and over) contain unsafe ACM cladding systems (if they have not already done so);
  • confirm that they are replacing ACM cladding systems with materials that have been classed as European Class A1 or A2[1]; and
  • actively pursue all reasonable claims against those involved in the original cladding installations and (where applicable) insurance and warranty claims.

7. What is the payment mechanism?

• Payments will be made as cash grants in two stages.
• Stage 1 (payment of 80% of eligible costs):-
  • Building owners should submit one application per building which should:-
    • include initial information and cost estimates signed off by:-
      • a section 151 Officer, or
      • Chief Finance Officer of a Housing Association.
    • confirm that the proposed replacement materials are European Class A1 or A2;
    • either:-
      • confirm they are taking all reasonable steps to pursue legal action, warranties and insurance claims, or
      • deduct from the application any amounts already recovered by way of legal action, warranties and/or insurance claims.
  • MHCLG shall:-
    • ensure that:-
      • applicants are eligible for the fund;
      • costs requested are in the scope of the fund; and
      • all costs represent value for money;
    • ask follow up questions where necessary;
    • compare application costs with other cost information held by MHCLG.
  • Payment shall be made when building owners confirm that the remedial work has:-
    • been tendered; and
    • started on site.

• Stage 2 (payment of 20% balance of eligible costs):-
  • Building owners should submit evidence of:-
    • final costs; and
    • any supporting evidence.
  • MHCLG shall ensure that:-
    • costs requested remain in the scope of the fund;
    • any increases from the Stage 1 application are fully justified; and
    • building owners are taking reasonable steps to pursue legal action, warranties and insurance claims.

• MHCLG intends to recoup successfully recovered costs less legal costs from the funding.
• A sample of building owners will be selected for a financial compliance audit.

8. How and when to apply?

• Buildings outside Greater London – Applications should be submitted via Homes England using their Investment Management System (IMS).
• Buildings in Greater London – Applications should be submitted via The Greater London Authority using their Open Project System (OPS).
• IMS and OPS are expected to go ‘live’ in mid-July 2018 in order to upload the information for Stage 1.
• MHCLG have requested that applications are submitted by the end of August 2018.
• Building owners unable to meet the August 2018 deadline should advise MHCLG.

9. How can Devonshires support your application(s)?

• There is a clear expectation that building owners will attempt to pursue claims.
• We can prepare advice notes on the pursuit of claims to support your application.
• We can advise you on your legal rights if you have not yet pursued a claim.
• We can negotiate and draft any remedial works contract that you require.

10. Why Devonshires?

• We are legal experts on all issues in relation to non-compliant cladding systems.
• We are working with the country’s leading technical experts.
• We are advising numerous building owners with non-compliant cladding systems as to:-
  • merits of claims against contractors and designers;
  • claims under warranties and insurance policies;
  • routes to recovery of damages from contractors and designers; and
  • health and safety obligations.
• We are pursuing claims for damages in relation to non-compliant cladding systems.
• We are negotiating and drafting contracts for remedial works.

For more information please contact Mark London or Matthew Cocklin.

[1] MHCLG guidance provides: Class A1 – Products are described as having no contribution to fire at any stage. BS EN 13501 sets several thresholds for combustion performance when tested to both EN ISO 1716 and EN ISO 1182. One of these thresholds is a maximum heat of combustion of 2MJ/kg. Typical products meeting this classification include most inorganic materials such as metal, stone, and glass.

Class A2, s3, d2 – Products are described as having no significant contribution to fire at any stage. BS EN 13501 sets several thresholds for combustion when tested to EN ISO 1182, or both EN ISO 1716 and EN 13823. One of these thresholds is a maximum heat of combustion of 3MJ/kg. A typical product meeting this classification is plasterboard.