Remediation contract a missed opportunity

Making developers and their suppliers pay for their role in creating buildings of such a dangerous quality that inhabitants die when fire spreads too easily within them, which is what happened at Grenfell Tower, is proving to be a difficult job. And it looks unlikely to get any easier.

As well as the lives of the 72 people who died at Grenfell and the hundreds of displaced tenants, the lives of thousands of others have been disrupted by the uncertainties created in the wake of the tragedy, with many unable to sell flats and move on with their lives.

You might think that all of those involved would be falling over themselves to show remorse and willingness to pay their share of remediation. There has been little sign of it however, or that a clear path forward to ensure that remedial safety works that could prevent another Grenfell tragedy has been established.

The legally binding Developer Remediation Contract (DRC) has been offered to developers to sign by the government, committing them to reimburse money spent from public funds to make some of their buildings safe. Signing it and wholeheartedly supporting the remedial works that are needed should be the minimum expected of any company in the supply chain that has any care for justice or, for the more self centred among them, reputation.

Some 50 developers have done so. The consequences for developers who do not sign the DRC could include being banned from future developments, as Levelling Up, Housing and Communities Secretary Michael Gove has threatened. The government intends to make good on its threat through a responsible actors scheme to be brought into law under Sections 126-129 of the Building Safety Act 2022.

There is much that is lacking with the DRC however. Developers have to pay to remediate buildings whether or not they will be able to recover costs from others. So one consequence is that it might be simply setting the scene for a round of claims against designers, contractors and potentially manufacturers, as developers look to the supply chain to recover a contribution to the remediation costs that they have committed to under the DRC.

Issues that will arise will concern limitation, liability caps, insurance and insolvent parties. It isn’t clear that developers will be able to recoup the costs of pursuing recovery of this money. Much else also remains unclear. For example, will there even be enough fire assessment specialists able to carry out the assessments of the need for remediation of buildings?

Developers are being given plenty of wriggle room by the DRC with the use of terms like “reasonable endeavours” and “as soon as reasonably practicable”. And what level of risk is to be regarded as acceptable is unclearly defined.

Some freeholders and leaseholders may have no right of recourse under the DRC against developers, so could be stuck in potentially dangerous buildings with no realistic chance of making developers undertake remedial works in a timely manner.

At least some of the affected buildings, perhaps many, remain dangerous and in need of critical safety works.
It looks increasingly like the DRC is a missed opportunity to create greater certainty regarding who is responsible for what remediation, and when they should act by.

Nick Barrett