Cladding regulations are a step forward, but worry and uncertainty remains - Lauren Miller

The most recent regulatory changes to the use of cladding in Scotland came into force on 1 June, in terms of the Building (Scotland) Amendment Regulations 2022. This has introduced a ban on the use of highly combustible metal composite cladding on any buildings. The regulations also prohibit the use of combustible cladding on buildings of 11 metres or more in height and which fall into one of the following categories:

Lauren Miller is a real estate partner with Shoosmiths.

- residential dwellings – including a sheltered housing complex or a shared multi-occupancy residential building

- buildings used as a place of assembly

- a place of entertainment or recreation

- hospitals or residential care buildings

Notably, as the legislation applies to new and existing buildings, owners of buildings that were originally constructed in full compliance with building regulations at the relevant time may now unfortunately find themselves in breach of the latest rules.

In addition to obvious safety concerns posed by non-compliant cladding, affected homeowners have faced obstacles in buying, selling, insuring and mortgaging affected properties. This has left some homeowners anxiously wondering what knock-on effect the issue of cladding might have on their investment in bricks and mortar and ability to move homes.

In the absence of a UK-wide approach, the Scottish Government established the Ministerial Working Group on Mortgage Lending and Cladding in 2020. One of its key recommendations was the Single Building Assessment, designed to ensure a consistent approach in identifying remediation required to an affected building. A pilot scheme was launched in 2021, with a plan to see all privately owned blocks invited to take part by 2023.

Currently, it’s unclear whether local authorities plan to undertake a similar programme for publicly owned buildings. Consequently, the process of identifying those buildings to which remediation works are required looks set to be lengthy.

Undoubtedly, the new regulations are welcomed from a safety perspective. However, this latest legislation won’t alleviate the worry of owners because both the UK and Scottish Governments have lagged behind in addressing who is to pay for any remediation works required.

The UK Government has introduced measures (expected to total £3 billion-plus) in the form of both government grants and the “building safety levy” chargeable on all new residential buildings constructed in England. However, these measures only apply in England.

The Scottish Government has expressed disappointment that the UK Government declined to implement a four nations approach. It has committed to ensuring any funding received from the UK Government for remediating cladding is made available for such works. However, there’s no suggestion that Scotland will introduce its own standalone funding initiative.

Rather, it’s clear the Scottish Government expects developers to “play their part in making unsafe buildings safe”. This industry-focused approach is potentially workable in the short term whilst the original developers of an affected building are still trading. However, it’s crucial the Scottish Government leads the way in taking decisive action to find a longer-term solution.

Notably, to date the spotlight has been on domestic buildings but the impact of the regulations on commercial buildings is arguably equally significant, but as yet the effects on property value and the ability to obtain funding have not been put under the microscope to the same extent.

As we continue to emerge from the pandemic, businesses are facing unprecedented economic circumstances, including rising inflation and supply chain issues, further compounding the ongoing effects of two years of suppressed footfall.

Against that backdrop, there’s no doubt that landlords and tenants will be carefully considering the terms of any existing (and new) leases, to assess where liability for any remediation works might lie.

It’s welcomed that the most recent regulations around cladding offer a decisive step towards improving the safety of buildings.

However, by failing to properly address the question of where liability for such works lies and how remediation works will be funded on a consistent, holistic UK-wide basis, uncertainty and worry for homeowners, building owners and occupiers remains.

It would appear that an opportunity has been missed to frame a more comprehensive set of regulations, one that addresses all the issues and creates a framework and pathway to address the cladding issue once and for all.

Lauren Miller is a real estate partner with Shoosmiths.