Insurer to replace Greenwich cladding

Insurer to replace Greenwich cladding

THE NATIONAL House Building Council (NHBC) has decided to pay the costs for removing and replacing cladding on the New Capital Quay complex in Greenwich.

Earlier this year, the complex, found to have ‘multiple’ fire safety issues, saw residents concerned they would have to pay an estimated £20m to £40m bill, or around £20,000 to £40,000 per flat to resolve issues and remove cladding. Developers Galliard Homes planned to sue the NHBC over payment, while a resident discovered her flat’s value had fallen from £475,000 to £50,000 as a result.

It later transpired that government body Homes England ‘agreed to virtually wipe out’ her loan, which ‘raises the prospect of multimillion-pound losses for the government scheme on any flat that goes into negative equity’. Residents of New Capital Quay are also considering legal action against Galliard Homes over combustible cladding replacement costs.

Recently, local councillor Mehboob Khan called for the government to fund the removal of the complex’s ‘potentially lethal’ cladding, with this particular issue illuminated by original developer of Croydon site Citiscape – Barratt Homes – stepping in to fund cladding replacement after a tribunal had found against tenants, who might have had to pay £31,000 each.

The most recent development had seen resident Nerisa Ahmed consider suing government agency Target HCA, which administers the help to buy scheme that she used to help buy her flat. However, The Guardian has now reported that the NHBC’s ‘landmark decision’ means that the residents will no longer have to ‘foot the bill’, with its move one that ‘could have repercussions for other apartment blocks’.

The NHBC had provided a 10 year warranty for homeowners in the complex, and stated that it would pay for the works, adding that ‘this has been a highly complex process and residents have understandably been concerned. We have made every effort to ensure they have been kept informed throughout the process and residents can now be assured that they will not have to bear the costs of the work’.

It added in turn that it would accept the insurance claim after concluding ‘there was a failure to comply with building regulations at the time of construction’, having sought ‘expert input and a review of the individual circumstances at this site’. As a building control organisation, it had signed off the development, though it pointed out that the developer was ‘legally responsible for ensuring compliance with building regulations’.

In this case, it stated, its role as the building control body ‘does not confirm, guarantee or approve that buildings comply with building regulations’. All leaseholders received a letter from the NHBC saying it would settle with Galliard ‘by making a payment equal to the cost of the remedial scheme, in accordance with the terms of the applicable policies’. While this would ‘include the replacement of the ACM cladding’, no mention was made of the cost of the fire wardens that have been on site.

Mrs Ahmed stated that ‘I think it is amazing. It’s the most pertinent thing that we all wanted. We just wanted to live somewhere that was safe. I was genuinely getting worried about living there’. In turn, resident Chris Bright added that ‘this is great news. NHBC has stepped up and accepted liability. The question now is whether Galliard [the developer] will also do the right thing and get on with the work without more delay. They are responsible for the problem and best placed to make it right’.

The Guardian expanded on its view that the decision ‘could have implications for other private apartment blocks around the country’ by noting that the NHBC is ‘responsible for warranties on 90% of new buildings and is currently covering around 1.5m homes’. As a result, the decision will ‘be followed closely by the construction industry’, as developers and freeholders are ‘locked in disputes over who is liable’ to replace combustible cladding.

NHBC responded that ‘as the warranty insurance provider at New Capital Quay, NHBC has investigated a claim under our policy and we can confirm that we have accepted this claim’, and that this move would ‘not set a precedent for other similar claims and it would assess future claims on their merits’. In turn, Galliard ‘declined to comment’.