There is currently significant concern and public interest surrounding the fire safety of high-rise residential buildings and the associated costs of remediating these building defects. Here we set out Aviva’s position on this important area.
Page updated 3 May 2022
Aviva’s asset management business, Aviva Investors, manages the Aviva Investors Ground Rent Fund which owns around 1,000 residential apartment buildings across England and Wales (‘the Fund’), some of which are affected by cladding and other fire safety issues.
Neither Aviva Plc nor Aviva Investors own the Fund or its buildings which are instead owned by UK company pension schemes for the ultimate benefit of some 350,000 individual retirees and pension savers.
The Fund closely follows the government’s programme for building safety remediation, including the passage of the Building Safety Act 2022, which received Royal Assent on 28 April.
On 13 April the Department for Levelling Up, Housing and Communities (DLUHC) announced that 36 of the UK’s largest residential developers (the Participating Developers) had signed a ‘developer pledge’ to take responsibility for carrying out or otherwise funding all necessary remediation and/or mitigation work required to address life-critical fire safety issues in buildings of 11m or above in England which they developed or refurbished over the past 30 years.
The Fund welcomes the acknowledgement of the Participating Developers that they have a responsibility in respect of the buildings that they have developed and/or refurbished.
Many of the Fund’s buildings were developed by one or other of the Participating Developers.
The Fund awaits further details on the precise terms and operation of the ‘developer pledge’ which is promised in the coming months with the signing of legally binding agreements by the Participating Developers.
This will provide greater detail on how building owners are expected to work with Participating Developers and DLUHC - including how this affects ongoing Building Safety Fund registrations and costs incurred to date before those developers accepted that they had a responsibility.
As stated above the ‘developer pledge’ applies to buildings of over 11m in height in England. The remediation or mitigation work to address life-safety fire-critical issues will be assessed by developers to the standard articulated in the PAS9980 methodology and other industry standards. Each developer will work with DLUHC to meet this standard.
Prior to this announcement the Fund had carried out fire safety assessments taking account of the Government’s January 2020 Consolidated Advice Note for its higher-rise buildings (18m and above) where it (rather than a Right to Manage company or a Residents’ Management company) has responsibility for overseeing fire safety. This Advice Note was withdrawn on 10 January 2022 prior to the introduction of the PAS9980 methodology on 12 January 2022.
Where fire safety assessments identified fire safety issues with these higher-rise buildings the Fund had (as applicable):
- registered with the Building Safety Fund for grant funding to meet remediation costs
- reviewed the potential for claims against the original developer and
- checked the availability of leaseholder latent defects insurances and, where still current, made a notification
These steps will continue for all higher-rise buildings, including those covered by the ‘developer pledge’ while the legally binding agreements of DLUHC and Participating Developers are finalised, and matters become more certain.
While this takes place the Fund will engage constructively with Participating Developers to, for example, provide access to its higher rise buildings so Participating Developers can inspect and make their assessment of the extent of remediation and/or mitigation required. Having done so, the Fund would seek to agree a scheme and timing for remediation and/or mitigation with Participating Developers.
For the Fund’s mid-rise buildings (between 11-18m) that are covered by the ‘developer pledge’ a similar approach will be adopted with Participating Developers pending the finalisation of their legal binding agreements.
For the Fund’s mid-rise buildings that were not constructed by one of the 36 Participating Developers and so are not covered by the ‘developer pledge’, DLUHC’s recent announcement confirmed the creation of a new scheme to fund remediation where those responsible cannot be identified or otherwise be legally forced to and the Fund is currently awaiting further details on this to be shared by DLUHC.
For the Fund’s lower rise buildings (under 11m), Government has indicated that these must be looked at on a case-by-case basis and the Fund awaits further information on what this will entail and how it will be applied in practice.
The Fund wishes to see the satisfactory and timely resolution of all outstanding fire safety issues affecting its buildings. In the case of leaseholders of buildings where the Fund is responsible for overseeing fire safety, updates will continue to be provided by the Fund’s asset manager, Mainstay Residential, and those updates will also address any practical matters arising from the passing of the Building Safety Act 2022.
Please continue to visit this web page which will be updated periodically to reflect future developments.
The DLUHC announcement of 13 April, which includes links to a copy of the ‘developer pledge’ letter and a list of Participating Developers, can be viewed here.