Our Meeting with Galliard Homes – December 2023
On 13th December, we met with Galliard Homes to discuss the company’s building safety remediation programme. Galliard is the largest privately-owned residential developer in London and describes itself as a “mid-sized, family-run company.” In terms of the total number of relevant buildings (over 11 metres in height) in scope of the Developer Remediation Contract, it is the 11th largest company in the scheme.
We spoke with Gary Conway, Executive Director and Chief Marketing Officer; Lauren Taylor, Head of Litigation & Building Safety; Sukie Dhillon, Technical Manager; and Julian Harper-Brown, Director of the Group’s in-house managing agent, PMM Limited.
Galliard was very quick to respond to our request for a meeting and acknowledged the urgency of remediation for leaseholders and residents. They told us that, “once the legislation was clear, [they] got on as quickly as possible.” We also heard that various specialists had been hired to focus on the building safety programme; for example, a new member of the team who had previously worked on the Grenfell Inquiry.
£31m has been set aside for remediation works
Galliard originally set aside £6.8m for remediation works in the year ending March 2022, when it signed the government’s developer pledge. As a result of signing the subsequent developer contract, the balance sheet provision was increased to £30.7m in the accounts for the year ending March 2023, which were recently published in November.
Remediation costs are not easily comparable between different developers, as they will vary depending on the mix of building heights in the portfolio, materials used, workmanship issues and other factors that may be unique to each site. But for context, the average set aside by other developers with a similar volume of relevant buildings is £70m (an average of Ballymore, Hill, Lendlease and Morgan Sindall Group, based on their most recent published accounts).
When we noted that the £31m set aside by Galliard appears relatively low compared to the size of the portfolio, we were told that the provision is actually based on total remediation costs estimated to be “closer to £100m.” However, a significant proportion of development has been undertaken through joint ventures (JV), in which they said the Group has an average 40-45% share, and therefore £31m is Galliard’s expected share of the remediation costs.
This isn’t apparent from the Group’s annual report – even though there is an alternative version of the financials presented on a “look through basis,” showing the Group’s line-by-line share of JV interests. However, this was useful to learn as it highlighted an important point to bear in mind for any participant developer in the self-remediation scheme that has buildings developed through JVs, as this could potentially be a cause of delay to the pace at which some homes are made safe.
Clause 18 of the developer contract states (as noted in plain English in this article) that if a developer is able to confirm it was entitled to less than 50% of the “Economic Return” from a building, it does not have to commence remediation works while it uses “reasonable endeavours” to recover costs from other JV partners. Our reading of clause 18.2(B) is that this can last for up to 6 months (although we are seeking clarification on this from DLUHC), at which point there are options available to the developer: if the building may be eligible for government remediation funding, it may inform the responsible entity to apply for this and reimburse its share of the cost; otherwise, it may carry out works, subject to the Department of Levelling Up, Housing and Communities (DLUHC) paying the remaining share of costs; or, it may carry out works at its own cost.
5 buildings confirmed to require remediation and 55 awaiting assessment
Data recently published by DLUHC shows that Galliard is responsible for 96 relevant buildings. There appears to be no instances of work taking place under a government remediation scheme, which is unusual for a portfolio of this size, but not unique; therefore any buildings where works are required are currently expected to be directly remediated by Galliard.
Leaving aside the 11 buildings at New Capital Quay (NCQ) in Greenwich (where ACM cladding was remediated under an NHBC warranty back in 2018-21, prior to the developer pledge or contract), DLUHC’s data appears to show that Galliard has assessed a further 64 buildings, 21 buildings have not yet been assessed, and only 5 buildings have been identified as requiring remediation so far. That would suggest a very low proportion of the assessed buildings require remediation (8%), the lowest rate of any developer in the scheme.
However, Galliard said that although 64 buildings have had an assessment, that doesn’t mean the assessment of these buildings has been completed. Many are still waiting for a detailed Fire Risk Assessment of the External Walls (PAS 9980 FRAEW) to make a final determination about what work, if any, is required. We think it’s essential that DLUHC’s reporting gives visibility to the number of buildings where assessment is completed in order to draw useful conclusions, and we have given this feedback to DLUHC’s data team.
We were informed that 39 Galliard buildings (including NCQ) currently have an EWS1 rating of A1 to B1. A detailed FRAEW had been undertaken in 10 buildings, with remediation required in 5 of these (a remediation rate of 50%), and FRAEW were due to be completed on 2 further buildings during December. As many as 55 buildings were still awaiting FRAEW investigations, with 14 scheduled before the end of Q1 2024.
Building assessments may take another 18 months
Galliard explained that their assessment process is taking around 12 weeks from initial survey through to completion of the PAS 9980 report and, with two teams on-site simultaneously, they expect to carry out 3-4 assessments per month. With 55 assessments still to do, this implies that it could take another 14-18 months until the assessment programme is complete, by June 2025. This will be 8 years after Grenfell, but some people will only just be learning if work is needed on their building, let alone any work starting.
Uncertainty over whether remediation is required or not can prevent leaseholders and residents from making life plans – such as starting a family, renewing a tenant’s contract or selling their home at an unaffected valuation – so it is concerning that some people will remain in limbo for this long.
Galliard informed us that they are potentially looking at hiring a third engineer/team which would shorten this timeframe. If a third team were operating at the same pace, by our calculation it could take 9-12 months to complete all assessments, by December 2024.
Building owners preventing access to at least 13 buildings
We were made aware of ongoing difficulties with a large institutional landlord, which we understand will not authorise access to 12 buildings for assessments – in communications with affected leaseholders at one building in Essex, Galliard have referred to this as a “stalemate.” We also heard that one of the UK’s largest housing providers is denying access to one other building. In Galliard’s view, “no credible legal or other practical reason has been provided” by either of these building owners, and they have asked DLUHC to use their powers under the Self-Remediation Terms to seek a resolution to these disputes.
In addition, there are 6 buildings where Galliard reports that it has reached out to the freeholder but not yet had a response.
On a more positive note, we heard that managing agents have been quite helpful in most cases – including in some of the 12 buildings where access is being denied.
Galliard declined to name the freeholders that are blocking access; however, several other developers have alerted us to similar issues and one particular company, Estates & Management Limited, has been named on multiple occasions. We suspect that the same entity may be involved here, based on several cases where leaseholders have raised issues to our attention – but that was not confirmed. We are seeking a meeting with E&M.
In one of the affected buildings, leaseholders have independently started legal action. We are aware that the delays in this building have been long-running, as the freeholder had also previously refused to sign the Grant Funding Agreement for remediation under the Building Safety Fund. While we hope that the leaseholders’ application for a remediation order will help to break the deadlock, it is far from ideal that they are the party that feels forced to take on the burden and costs of legal action – particularly as any non-qualifying leaseholders could also be liable for their landlord’s legal costs in such cases.
Regarding the lack of access to a building owned by a large housing association, we understand that the freeholder is Southern Housing; this was not confirmed to us but had been stated in social media posts. Southern previously commissioned a FRAEW which indicated that works are required – and leaseholders have been informed these works are scheduled to start in 2024/25. It apparently wants the developer to get on with works on the basis of the existing assessment, rather than commissioning a new FRAEW.
We assume that concerns exist – on both the freeholder’s and the developer’s side – that two FRAEW reports commissioned separately by the two parties would result in different conclusions about what remediation work is required. This is very troubling, because theoretically all external wall assessors should be independent and objective professionals and therefore no more likely to subjectively specify a greater or lesser amount of work – regardless of which party commissioned the assessment.
There is a history of other recurring issues (not related to fire safety) in this building, therefore this is not the first instance where leaseholders have felt caught in the middle of a dispute between the two parties. It is our understanding that due to this dispute, the freeholder has not passed communications from the developer to the leaseholders, which would have confirmed that this building is covered by the developer remediation contract. This is an essential letter for anyone who wants to try to sell their home. Some leaseholders have already been waiting for years to do this – but they are likely to remain stuck, through no fault of their own, until the developer and freeholder can agree on a clear remediation plan which future buyers and mortgage lenders can have confidence in.
Although these access issues clearly have significant consequences for individual buildings, they do not appear to be delaying the overall pace of Galliard’s programme because, so far, the team has been able to move on to one of the many other sites awaiting an assessment. However, the programme is intended to be prioritised in order of risk and we heard that access issues have led to some of the highest-priority buildings in the portfolio losing their spot in the schedule. This is clearly not an outcome that leaseholders and residents in those buildings deserve, and it needs and warrants swift and decisive intervention from DLUHC.
A shortage of suitably experienced and competent assessors
Galliard also highlighted the shortage of appropriately skilled and experienced fire engineers to undertake building assessments, which they feel is a key factor that will affect the pace of remediation. It’s three years since the Government announced they would invest in training for 2,000 new assessors to address the shortage – but this initiative does not seem to have gone far enough to bring needed capacity into the sector.
We were also advised that some engineers and surveying firms are prevented from taking on the work due to a lack of personal indemnity insurance (PII) cover. The Government recently withdrew its PII scheme for building fire safety assessors after just one year, having decided that the market was now working – but Galliard’s experience suggests this is not entirely the case.
Despite wanting the supply of assessors to increase, Galliard’s team also expressed concerns – several times – about the risk of selecting new engineers who might not have a depth of experience they can rely upon. They were concerned about the influx of individuals, or offshoots of property companies, that may have started up companies to “cash in” on the high demand for their services, but are lacking a track record they can trust. We have previously highlighted our concerns to DLUHC about a small number of potentially “rogue” firms, where a significant number of leaseholders had highlighted poor quality assessments being churned out quickly with B2 ratings – with a suspicion that this may have been designed to benefit “friendly” remediation companies. However, we do not know how widespread the issue of rogue firms is, and we remain unaware of any action being taken by DLUHC or other bodies to try to manage this problem.
Interestingly, since November, the Cladding Safety Scheme (CSS) will only accept a FRAEW carried out by a firm on their panel of approved experts. The list of firms is not publicly available and only provided after an application has been made to the scheme, but we understand there are “around 37” firms on the panel. In our opinion, the existence of the panel suggests the Government is aware of quality issues with FRAEW assessments and this is effectively a quality control measure. When we raised this with Galliard, they were in agreement that access to a panel or a list of recommended engineers would give them confidence when selecting an assessor who they have no prior experience of working with.
Every developer that we have spoken with has cited the shortage of skilled and experienced engineers as an issue, although larger developers seem to have block-booked reputable engineers up to 18 months ahead. We wonder if this may be having an effect on the supply available for smaller and mid-sized developers, who may have fewer established relationships or resources to secure the volume of engineers needed. A centralised system of allocating appropriately skilled engineers to developer remediation projects – rather like the new approach to Building Control inspectors for high-risk buildings – might have levelled the playing field in this regard. As we meet with more mid-sized developers in the coming weeks, we will probe whether this issue is having a more acute effect for them than for the largest developers.
Commissioning multiple FRAEW appraisals for a single building
Given the shortage of assessors, we remain concerned that many developers – including Galliard – appear to be commissioning new FRAEW assessments even when an existing FRAEW is available from an appropriately qualified professional. In some cases, there may be a specific concern or reason to do so, but if this is the default approach it will inevitably, and unnecessarily, slow down the pace at which homes are made safe.
The government contract states (at clause 5.3) that the obligation to “obtain” an assessment does not require the participant developer to undertake a physical inspection in every case and it is acceptable to acquire a previous report from a responsible entity or relevant person. Even if developers are simply seeking a “second opinion” for reassurance, it was noted by the authors of the PAS 9980 standard in their recent article that it isn’t desirable or necessary to commission multiple FRAEW appraisals for a single building.
On page 72 of the contract, it also states: “For the avoidance of doubt, any fire-safety risk (either alone or in conjunction with any other fire-safety risk) that any Fire Safety Assessment or FRAEW determines is not tolerable, irrespective of how this is expressed, will be deemed to be a life-critical fire-safety risk” (emphasis added). This implies a second FRAEW should not be considered as a route to potentially minimising the scope of work, because a developer is obliged to address all life-critical fire-safety risks identified in any FRAEW.
Galliard shared an example where cladding on the top floor of a building was judged to be a tolerable risk in a PAS 9980 report, but they had chosen to send samples for testing before making a final decision. They advised us that even if a building had a B1, they wouldn’t automatically assume no work is required, they might still decide to carry out some work if they had any concerns. They described their approach to assessments as being “thorough” and “cautious,” to ensure their work “could not be challenged or be said to be cutting corners in any way” – and if so, that would align with the principle of not carrying out a second FRAEW on buildings in an attempt to minimise the scope of work.
However, we believe DLUHC should be challenging developers – including Galliard – about whether it is proportionate for so many buildings to undergo multiple assessments, as that is clearly contributing to the delay in making homes safe. We will be asking DLUHC what process they have to monitor and manage this.
Concerns about the independence of developer-commissioned assessments
The PAS 9980 standard for FRAEW assessments, brought in two years ago, was intended to be “more proportionate” than past assessments. However, leaseholders who have had a “B2” rating on their building for years – and who have often been paying for that verdict through increased insurance premiums and / or interim measures in the meantime – are quite reasonably concerned about new assessments which result in a reduced scope of work or a decision that no work is required because defects are now deemed “tolerable.” Such an outcome would clearly be in the financial interest of the developer commissioning the report.
As we highlighted to Galliard, this is not just a question of how safe people feel in their homes; there can also be financial consequences if other stakeholders do not accept the verdict that no more remediation is required. For example, we noted a building in North London, which previously had a B2 rating and insurance costs have already risen +525% (from £80k to £500k per year). Insurance cover was provided by AXA on the understanding that remediation work would be carried out on the known defects, but leaseholders have recently been told by Galliard that no work will be undertaken. They now have no route to reducing premiums to “normal” levels if the defects will remain, and ramifications could be more serious if the insurer will not continue to provide cover in the new circumstances. Galliard’s team looked surprised to hear this but did not respond to this point. We would have liked to hear that they are engaging with other stakeholders, such as insurers, to address their concerns either on a specific building basis or more widely.
Where developers are directly hiring assessors with whom they have a long-standing relationship, this can also cause concerns about whether they are truly “independent” (the terms of the developer remediation contract state that building assessors must be “suitably experienced, qualified, independent and competent”). Leaseholders in multiple Galliard buildings have raised specific concerns with us about the independence and quality of work by an engineer who has a long history of working with the company, as they fear that remediation may be “watered down,” with potential repercussions for the building and its leaseholders. Galliard insisted that the two engineers it is currently working with, including Fire & Risk Solutions Limited, are “independent to our company” and that they trust their work based on prior experience.
We asked Galliard if they have processes in place to provide assurance about the independence and quality of building assessments; for example, some other developers require a second engineer to peer review all their building assessments (although this may slow down the pace of work). Others have told us that they give the building owner or resident management company (RMC) the opportunity to check the credentials of the proposed engineer in advance and may make a change or jointly appoint an engineer if reasonable concerns are raised. However, Galliard advised us that their two teams work independently with no peer review. They pointed out that DLUHC has the right to audit their assessments and advised us that Galliard’s first audit is happening now.
When we continued to probe the question about what further measures could provide quality assurance, this appeared to elicit an offended reaction. They felt that anyone questioning the independence or competence of their choice of engineer should be proposing alternative evidence from another suitably qualified professional. However, the team reiterated that they are open to hearing specific concerns and that anyone is entitled to raise a formal dispute with DLUHC.
We remain convinced that there is a need for a more robust, visible and independent dispute resolution process for leaseholders, and other stakeholders, to escalate their concerns at any point in the process. This was promised in the original developer pledge and we were told directly by senior officials that it would have leaseholder representation built into the process. Another developer, Berkeley Group, previously suggested a panel comprised of Technology and Construction Court judges to us. Galliard disagreed with us to some extent as from their perspective, a dispute process does exist – and they have already referred disputes to DLUHC. However, they agreed that they would welcome a more formal process with a clear outcome, perhaps more akin to an arbitration process, as so far DLUHC had only offered tripartite meetings which may not be sufficient to authoritatively settle a dispute.
We also heard that some of the issues under dispute (regarding access being denied to certain buildings) had been reported to DLUHC for up to two years already, with little progress. The Government needs to ensure there are further measures available in its toolkit, which it is prepared to use to guarantee a resolution – because it is unacceptable for this to delay homes being made safe over such a prolonged period.
Remediation may take another 8 years
Our most significant concern is that Galliard anticipates it could take another 5-8 years until remediation is complete (see page 55 in their latest annual report; also estimated as 5-7 years on page 9). We heard that this is based on a target pace of 5 buildings per year which implies that at this stage, the estimated number of buildings requiring remediation is in the region of 25-40 buildings.
This is a longer time frame than any other developer has declared in their published accounts so far, and we remain concerned that this is a significantly slower pace than is planned by any of the larger developers that we have spoken with so far. For comparison, Barratt estimates remediation may be required in up to 278 buildings, which is between 7-11 times greater in scale than Galliard’s programme – but in a similar or shorter time frame of 5 years.
The terms of the Developer Remediation Contract state only that building assessment and remediation should both be undertaken “as soon as reasonably practicable” (at clause 5.2 and 6.1 respectively). It is also evident from the contract that DLUHC must already be aware of Galliard’s expected time frames, because developers are obliged to report their target dates for each building to DLUHC in their quarterly data returns (noted in clause 5, 6 and 9).
We will continue to ask the Department why they have chosen not to publish the data that they have collected on each developer’s “target dates” in their publicly available reporting, in order to be honest with people about what to expect or be able to challenge it.
It is already more than 6 years since Grenfell and people’s lives have already been on hold for far too long – another 8 years, or even 5 years, is an impossible wait for some people at the back of the queue. We do not accept that a remediation pace of 5 buildings per year is “as soon as reasonably practicable” when compared against the pace of new development – and this is an outlier compared with the pace other developers are planning. Unfortunately, we couldn’t get any real clarity on why this should be the case. We urgently need all stakeholders to work together to find ways to accelerate the pace at which homes are made safe and, in our view, it is incumbent on DLUHC to work with any developer in this situation to find a solution.
Galliard pointed out the financial scale of the largest developers in comparison to mid-sized private developers. When we asked if mid-sized companies might be constrained in their ability to scale up remediation activity quickly due to more limited resources, Galliard insisted this was not an issue for their company. However, we can imagine that resources and cashflow could potentially be an issue for some participant developers that only narrowly meet the profits condition of the scheme. If this does emerge as an issue for any smaller developers, we will be asking DLUHC what consideration has been given to allowing developer buildings to be remediated more quickly under the management of the government’s CSS and then reimbursed; or to potentially offering developer remediation loans, similar to the scheme launched in Wales. The latter concept has not been popular with some Welsh leaseholders, who feel the government is offering a helping hand to the wrong party in the crisis – but it would certainly ensure that cashflow cannot be a justification for delaying essential work to make homes safe at pace.
Communication: 1.5 out of 10
EOCS had carried out a snap survey to get leaseholders’ feedback about communication issues in their buildings at the end of October and received responses from four Galliard buildings (in Ilford, Highbury and Bermondsey). Although this was a relatively small sample size, on average they rated communication timeliness 0.75 out of 10 and communication quality 1.5 out of 10. The average score in our survey was 1.5 for both measures, so while the scores aren’t positive, the quality score is at least in line with the average.
Every respondent said that their Galliard building had no remediation plan or start date, and there were some concerning comments about a lack of communication. For example,
• “Lack of communication and no regular updates. No idea after 3 years when the work will even start to rectify defects.”
• “The developer, managing agent and freeholder have all been ignoring us… [Without] a timeline for the remedial plan, everyone in the block is stuck in limbo with no sale or remortgage.”
• “Since [2022] we have heard very little and are basically in the dark. Freeholder and developer… have provided contradictory accounts of the issues… It is hard for us to know who is more to blame… Generally, leaseholders have zero trust in both parties.”
• “Galliard fails to respond meaningfully to leaseholders. Our freeholder is trying to push for remediation, but Galliard refused to conduct works based on existing PAS reports…”
In addition, leaseholders from a high-rise building in Southeast London responded to our survey – but despite the developer (now dissolved) being named “Galliard Docklands Ltd,” both DLUHC and Galliard had advised that it is not being classed as a Galliard building under the developer remediation terms. The building is being remediated under the Building Safety Fund but now needs to apply for another tranche of funding for further defects, otherwise it will not pass a PAS 9980 or EWS1 assessment – and meanwhile the RTM directors “continue to live under the threat of imprisonment or fines for non-compliance with the [London Fire Brigade’s] Enforcement Notice.” Despite the huge impact this is having on leaseholders, we heard that Galliard “had the cheek to ask us to stop remediation works.”Communication from all parties, including DLUHC, is described as being unclear and unsupportive, and has left them “angry and feeling helpless.” Their overall feedback is that “the Developer Contract appears to be a mockery of window dressing,” and “5 years after our first intrusive survey, we remain no clearer about when or how our homes will be made safe, and when we will be able to begin to rebuild our lives and our mental health.”
Galliard told us that “[they] acknowledge the importance of effective communication and transparency throughout the remediation process” and that they have taken “a proactive approach to communications by reaching out to the majority of Responsible Entities.”
Their in-house managing agent, PMM Limited, manages 37 schemes which of course makes communication more straightforward on those sites. On other sites, we heard that agents had been asked to distribute what are known as “letters of comfort” to leaseholders and residents, containing the company’s commitment to the terms of the self-remediation contract and outlining the process and projected timelines. However, in some cases Galliard feels “blocked” from communicating by other parties. Where they have become aware that building owners are not passing on communications, they suggested they could consider other ways to reach leaseholders and residents – for example, getting contact details from the Land Registry if necessary.
Galliard is also communicating directly with any individuals that contact them – including any MPs that escalate issues on behalf of their constituents. They have set up a general email address, [email protected], which is signposted on their website, and DLUHC and EOCS can share this with any leaseholder or resident who is having difficulty getting communication via their managing agent.
Within a few days of our meeting, we put some leaseholders from a building with access issues directly in touch with Galliard. The building’s freeholder had not passed on the intended communication from Galliard three months earlier and was not answering questions. We were impressed that within a matter of hours, leaseholders had received a clear response from Galliard, outlining the current status and what actions were being taken to try to resolve the issues with DLUHC’s assistance. The leaseholders felt they had learned much more about why they were stuck, having struggled “for years” to get any information.
In closing the meeting, Galliard’s team emphasised that they are always available to discuss leaseholder and resident concerns and are very happy to meet with EOCS again. We look forward to continuing to engage with the company as their remediation programme progresses, to raise concerns and seek more support for those affected.
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