Which Extra-Curriculars Will Help You Find Your Path in a Legal Career?
March 14, 2025
Written by Maryam Ali
Introduction
In 2017, 72 people perished in the Grenfell Tower Fire, caused by dangerous and highly combustible cladding, exposing the deep flaws in the UK’s building safety regulations. The cladding was used because it was cheap, highlighting the dangers of cost-cutting practices in construction and prompting widespread calls for reform. However, despite regulatory reforms following the Grenfell tragedy, hazardous cladding materials continue to pose a risk, raising concerns about the effectiveness of these measures.
This article examines why unsafe cladding remains an unresolved issue despite legal and regulatory changes and considers the implications for commercial and legal accountability within the UK’s construction industry.
The Legal Legacy of Grenfell
As safety standards continue to evolve, the ongoing cladding crisis prompts a critical question: Are we any safer? The tragedy prompted an immediate legal response through the establishment of a public inquiry and the introduction of the Building Safety Act which became law on 28th April 2022. These legal responses were introduced to prevent another tragedy. The Act ensures: the safety of residents; building structural safety, including the integrity of materials, design standards, and maintenance requirements to prevent structural failures; comprehensive fire safety measures; the introduction of a building regulator, responsible for overseeing the safety and performance system of all buildings; and a new regulatory regime. This is known as the gateway regime for all new higher-risk buildings.
The Act
The inquiry published its final report on Wednesday 4th September in which the panel concluded that the choice of combustible materials for the tower’s cladding “resulted from a series of errors caused by the incompetence of the organisations and individuals involved in the refurbishment” – this extended to architects, engineers, and contractors, all of whom thought safety was someone else’s responsibility, as the report stated.
Since Grenfell, The Ministry of Housing, Communities & Local Government (MHCLG) has estimated 9,000 to 12,000 buildings over 11 metres need remediating. This has led to significant commercial consequences, particularly for affected property owners and leaseholders as properties with unsafe cladding have seen their values plummet. Leaseholders, in particular, have faced financial strain due to higher service charges, difficulties in selling or remortgaging, and potential costs for remediation work. Many have experienced delays and disruption caused by necessary renovations, with some even forced to relocate temporarily, adding further to their financial and emotional burden. Borrowers are also being refused mortgages on properties with cladding, leaving them unable to sell or fix their properties due to the financial costs of remediation. Leaseholders in 2020-2021 were made to pay between £20,000-40,000 to replace cladding as buildings under 18 metres did not qualify for government funding.
The cladding crisis and subsequent building safety reforms have significantly impacted the insurance market (particularly professional indemnity insurance and residential building insurance). Although The Building Safety Act 2022 introduced new liability measures, the volume of construction claims remains at record levels, with many developers’ claims still unresolved. Residential building insurance for leaseholders had followed a similar trend as insurance brokers and freeholders have frequently been found to secretly split hidden commission fees on building insurance policies. This meant that leaseholders who were legally required to contribute to the building’s insurance were unknowingly paying inflated costs. Many are still being charged significantly more than they should for insurance, without any transparency about where their money is going. Factors such as rising reinsurance costs, inflation-driven rebuild expenses, fire safety concerns, and extreme weather events have contributed to market hardening. Modern methods of construction present additional challenges, as a lack of historical claims data makes risk assessment difficult, often leading to higher premiums. Insurance company Marsh has recommended engaging with brokers early in the design process to address fire safety and construction concerns.
The Financial Conduct Authority in a 2023 report concluded: “One of our key findings in the broker market was evidence of some high commission rates and poor practices which were not consistent with driving fair value to the customer. We noted that our rules require that the prices paid represent fair value and that we were concerned that the levels of commission and practices of commission sharing did not always represent fair value for those bearing the costs of this insurance.”
The law firm Velitor has also said that secret commissions are unlawful and the FCA reported in February 2024 that the estimated ‘hidden’ commission charge was 30 per cent of the premium. Fortunately, the Leasehold and Freehold Reform Act 2024 received royal assent on 24th May 2024. Although it is now law, the Act is set to come into effect between 2025 to 2026. The aim of this reform is to make things cheaper, easier, and more transparent for leaseholders preventing ‘secret’ and ‘hidden’ commissions.
While these reforms aim to address transparency and reduce financial burdens for leaseholders, construction and real estate companies have faced escalating legal risks due to ongoing safety concerns. These risks include potential liability for non-compliance with updated safety standards, lawsuits from affected leaseholders, and reputational damage stemming from their involvement in buildings with unresolved cladding issues.
The legal and financial consequences of cladding disputes were underscored in the landmark Martlet Homes v Mulalley & Co Ltd [2022] EWHC 1813 (TCC) case. This was the first major judgment post-Grenfell to address liability for the installation of defective cladding under the Building Safety Act. The High Court ruled in favour of Martlet Homes, finding that Mulalley, the contractor, had breached its duty by failing to ensure the suitability of the cladding materials. The court awarded Martlet Homes substantial damages to cover the costs of replacing the cladding and additional fire safety measures, such as waking watches. The judgment set a critical precedent, holding contractors liable for safety failures even if materials were verified at installation. Beyond financial penalties, the case highlights the reputational damage contractors face, risking future projects and client trust.
Barriers to Legal and Regulatory Progress
Over the years, several government initiatives have been introduced to address the cladding crisis, including the ACM Programme, Building Safety Fund, Cladding Safety Scheme, Developer Remediation Programme, and Social Housing Programme. While these measures represent progress, they have been criticised for limited funding, delayed implementation, and restricted eligibility, leaving many buildings and leaseholders without sufficient support.
These funding restrictions have created barriers to full remediation, leaving many buildings still unsafe. However, the cladding safety scheme launched on 25 July 2023 now ensures the removal of unsafe cladding and remediating of fire safety defects in mid-rise buildings from 11-18 metres, which were previously excluded. Despite the scheme, there are still issues to consider as it still does not cover everyone. In January 2023, the government wrote to major housebuilders and other large developers to sign the Developer Pledge, committing to remediate life-critical fire safety works. As of 1 November 2023, 52 developers have signed but many developers did not sign, leading Michael Gove to declare that:
“They will not be able to commence new developments in England or receive building control approval for work that is already underway.”
Despite these measures, many properties remain unsafe, highlighting ongoing gaps in accountability and enforcement. Accountability in the cladding crisis is fragmented, with the responsibility shared among developers, contractors, building owners, and insurers. This complicates enforcement, as each party can deflect liability onto others. For instance, while rulings like Martlet Homes v Mulalley establish that contractors can be held liable, some contractors argue they complied with the standards in place at the time of installation. This legal grey area undermines efforts to secure timely remediation and creates reluctance among stakeholders to take full responsibility.
Furthermore, developer liability for unsafe cladding could affect their relationships with contractors, architects, and suppliers. Despite the Building Safety Act 2022 establishing new regulators, it has not resolved the fragmented approach to regulation. Whilst regulators ensure compliance with safety standards, enforcement depends on cooperation of several different parties. In addition, developers need to reassess their supply chains to ensure materials comply with safety standards otherwise they risk being sued for failing to meet their contractual obligations and for negligence.
Sources
https://www.blakemorgan.co.uk/cladding-remediation-progress-why-so-slow/
https://www.knightfrank.com/research/article/2021-01-06-the-cladding-issue-what-you-need-to-know
https://www.constructionenquirer.com/2024/10/24/facade-firm-m-price-felled-by-cladding-claim/
https://www.gov.uk/government/publications/cladding-safety-scheme/cladding-safety-scheme-overview
https://barnetpost.co.uk/2021/03/01/colindale-residents-frustrated-by-cladding-announcement/
https://dwfgroup.com/en/news-and-insights/insights/2023/6/how-has-the-cladding-crisis-happened
https://www.theconstructionindex.co.uk/news/view/assets-of-failed-cladding-firm-go-to-auction
https://www.farrer.co.uk/news-and-insights/the-building-safety-act-a-brief-introduction/
