Government ban of materials rated less fire resistant than A2-s1, d0 in external wall build-ups - what is the likely impact on the construction industry?

Following its consultation proposing a ban on the use of materials that do not meet class A1 or A2 from use in external walls that are 18 meters or over, on 29 November 2018 the Government issued its response. The majority of respondents to the consultation (69%) submitted that combustible materials in cladding systems should be banned. Our review comments on the impact of the proposed ban on the construction industry.

Introduction - what is being banned?

Combustible materials on the external walls of new high-rise residential buildings have now been banned by the Government.

The key components to the ban are as follows:

  • The ban applies to all new properties over 18 meters tall which contain a flat (ie residential properties). Student accommodation, hospitals and dormitories are also included.

  • Specifically the ban will only allow materials that are A2-s1, d0 rated and above under the European classification system to be installed in the external wall build-up.

  • The ban applies to new buildings and buildings where there are material changes in use or material alterations to the building as defined by the Building Regulations.

  • All elements of the external wall will be covered, including specified attachments such as balconies and solar panels.

  • The key purpose of the ban is to make it clear what materials can and cannot be used in buildings over 18 meters.

The Background: the lead up to the ban

The ban follows the Government’s consultation on banning materials of limited combustibility which was announced by Rt Hon James Brokenshire MP on 18 June 2018.

It also follows Rt Hon James Brokenshire MP’s 5 November 2018 letter to the House of Commons referring to the House of Commons’ support in principle to the ban and Dame Judith Hackitt’s independent review of the building regulations and fire safety which was widely criticised for its failure to recommend outlawing of ACM panels that are not of limited combustibility (please see here for Simmons & Simmons LLP’s review of Dame Judith Hackitt’s final report).

Government commentary regarding funding of remedial works - existing properties

In respect of existing properties with “unsafe ACM cladding”, the Government has given full support (including financial support where necessary) to local authorities to carry out emergency remedial work. It is not clear whether the definition of “unsafe ACM cladding” includes materials rated less fire resistant than A2-s1, d0, as now banned by the government in new properties over 18 meters tall.

According to a Government press release, while local authorities will initially foot the cost of the emergency remedial works, it is fully expected that the local authorities will “recover the costs from building owners”. This signals the government’s focus on continuing to apply pressure on private building owners to take responsibility for carrying out remedial works.

Interestingly, Rt Hon James Brokenshire MP is quoted as saying that building owners’ and developers’ costs for replacing dangerous ACM cladding “must not be passed to leaseholders”. This is contrary to the First-Tier Tribunal, Property Chamber - Residential Property decision in respect of the FirstPort Property Services Limited v various Citiscape long leaseholders matter (please see here for Simmons & Simmons LLP’s blog post on this case). Here the Tribunal concluded that the property owner’s costs of replacing cladding that posed a fire risk was recoverable from the tenants via the service charge. Broadly, the Tribunal reached this decision as it concluded that the property owner’s remedial works costs were “reasonably incurred” by virtue of the leasehold agreements and the Landlord and Tenant Act 1985. While this decision is fact specific, in light of this, it remains to be seen how the Government considers it will be able to prevent property owners from passing the cladding replacement costs down to the leaseholders.

In respect of estimated remedial works costs, helpfully the government has provided rough costs estimates per building for using A2-s1,d0 as opposed to non A rated material. This is set out below:

Low building  Mid building High building 

New build - Brick

£39,359 £102,308 £150,453
New build - Cladding system £30,247 £78,623 £115,622
Refurbishment - Cladding system £70,205 £74,150 £103,996

Table 5. Source: Adroit Economics Consortium

What is the likely impact of the ban on the construction industry?

The Government has also published its final impact assessment which assessed the impact of the proposed changes to the Building (Amendment) Regulations 2018 (S.I 2018/1230) and Approved Document B and Approved Document 7 Guidance (please see here for Simmons & Simmons LLP’s previous blog post considering the proposed changes).

In respect of the construction industry, the likely consequences of the ban include the following:

  • The Government has estimated that the equivalent annual direct cost to developers and owners as the industry acclimatises itself to the changes to be £24.9m - £33.7m.
     
  • By explicitly banning materials that are not A2 or better rated, it is anticipated that there will be clearer guidance in respect of the type of materials to be installed on a property. This will likely lead to a more cost-efficient design process for design and build contractors/architects/cladding subcontractors, in respect of selecting the appropriate type of panel to be installed on a property.

  • There is likely to be a reduction in instances of inadvertent non-compliance by virtue of greater clarity in respect of what is and what is not allowed to be installed on a property.

  • Costs savings for workmanship contractors in determining which type of cladding panel to install on the property because the range of available cladding panels that comply will be reduced.

  • It may become less likely for there to be a discrepancy between what is specified by the architect/design and build contractor and the material that is ultimately selected by the workmanship contractor to be installed on the property.

  • Potential minor cost savings during the design stage because less time will be spent considering which materials/combinations of materials will comply. This is because there will be less available options for compliance.

  • Significantly the Government does not anticipate that a ban will have a significant impact on housing supply. This is because “a significant proportion of new projects are already using materials which would meet the new requirements” (see here). In addition, for those builds where the wall build-up materials will need to be changed in compliance with the ban, it is anticipated that the addition costs for installing A2 or above rated materials will be “small in proportion to the total build cost”.

  • There is a risk that installing A2 and above rated ACM panels and/or insulation will increase the thickness of the wall build-up. This can lead to an increase of the weight of the wall which can impact on the foundation depth and size. However, the Government considers that significant costs will only be incurred where buildings suffer from space constraints and planning permission has already been obtained.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.