A tribunal ruling that ordered Stratford Village Development Partnership and Get Living to pay £18m towards replacing dangerous cladding might put off investors in the UK housing sector, said a lawyer involved in the case.
Richard Gerstein, a dispute resolution partner at Mishcon de Reya who is acting for SVDP, the developer, and Get Living, SVDP’s parent company said the case, brought by housing association Triathlon Homes under the Building Safety Act 2022, might have serious implications for UK’s residential sector.
The work to replace the cladding is currently being funded by the government’s Building Safety Fund.
“This was never a dispute about whether work should be undertaken,” said Gerstein. “This is a dispute between two commercial bodies, because Triathlon is a commercial housing association.
“It is about the short-term funding of the works, pending recovery from the contractors or designers who were actually responsible for the problem.”
Gerstein said Get Living now had to pay for work that had already been funded.
The Building Safety Act 2022 covers fire safety and structural safety and is intended to make developers, not residents, pay for works. It has a limitation period of 30 years. The judges found that the Act made no distinction between funded work, completed work and work that needed to be done.
This means that “if [a company] bought a tower block that was built 20 years ago, and 10 years ago the leaseholders funded and rectified a structural defect, they would now have the right to bring a claim against the developer, or anyone associated with the developer.
“This puts at risk all of those developers who have developed buildings in the 30 years prior to the 2022 Act.
“New investors are going to have to risk stumping up the cost of remedial works for which they had no responsibility at all. This is what happened in this case because Get Living bought the corporate vehicle behind the Olympic development project after the work had been completed.
“Our concern is that, at a time when there is a real shortage of housing in the UK, this decision is going to put investors off investing in UK residential real estate.”
The parties have a month to decide whether they plan to appeal the ruling on a point of law. Gerstein declined to comment on whether his clients intended to appeal.
