19 December 202319 December 2023 derek

Our Meeting with Redrow – December 2023

Politics

After recently attending Redrow’s 2023 AGM, we arranged a follow-up meeting on 5^th December to discuss the company’s building safety remediation programme in more depth. We met with Tim Stone, Regional Chief Executive with accountability for building safety, and Richard Keogh, Special Projects Director with day-to-day responsibility for the remediation programme.

In recent weeks, we have been meeting with several developers that have committed to remediating life-critical fire safety defects under the government’s Developer Remediation Contract. As Michael Gove noted in his recent tweet, we will be sharing our feedback with the Secretary of State and his Department, including any examples where companies are delaying making homes safe or where there are any other significant concerns for leaseholders and residents. 

We will also be raising the many industry-wide issues that are affecting the pace of remediation – where we believe the Department of Levelling Up, Housing and Communities (DLUHC) must take a more active role to ensure progress. We also intend to highlight good practice that should be shared to benefit everyone. 

England: 43 buildings confirmed to require remediation (so far)

Three weeks prior to our meeting, DLUHC had published data on developer remediation progress for the first time, for England only, which will be updated quarterly going forward. This reported that out of 120 relevant buildings in Redrow’s portfolio (over 11 metres in height), 100% have already been assessed and 43 buildings (36%) have been confirmed to require remediation. 

However, Redrow explained to us that although 100% of buildings have had some kind of assessment, this doesn’t necessarily mean assessments for these buildings have been completed. We think it’s essential that DLUHC reporting gives visibility of the number of buildings where assessment has been completed, so we will give this feedback to their data team.

All Redrow buildings have at least had a visual inspection, which we were advised was undertaken by an independent party with Expert Witness competence. This initial inspection allowed buildings to be categorised according to level of risk, creating a priority order for the remediation programme based on the Government’s Risk Prioritisation guidance. But many of these buildings still require intrusive assessments, to produce a Fire Risk Appraisal of External Walls (FRAEW) report to PAS 9980 standard, which will fully assess what works, if any, are required. 

The reported number of buildings requiring remediation will therefore continue to increase. As stated in Redrow’s recent annual report, at the year-end on 2^nd July 2023, a total of 51 buildings were expected to require external remediation and a total of 109 buildings were expected to require internal works (note, these figures will include buildings in Wales, discussed below). DLUHC’s figures are currently dominated by the buildings that require external remediation works, or both external and internal works. Buildings that are expected to require only internal works have generally been given a lower risk prioritisation and therefore are more likely to be addressed later in the remediation programme.

Wales: At least 9 ‘very high priority’ buildings require remediation

Although the work programme in Wales is less substantial than in England, there clearly has been a staggered start with work in England moving ahead at a faster pace so far. The 2022 pledge was signed seven months later and the 2023 contract was signed one month later in Wales than in England, so this will have been a partial factor.

In July this year, the Welsh Government confirmed that all developers that had signed the Deed of Bilateral Contract, including Redrow, had submitted work plans and last month the Minister with responsibility for housing indicated that all remediation work in Wales is expected to be complete within three years – whether undertaken by the larger developers that have signed the contract, such as Redrow, or by government funding (for buildings with smaller developers or so-called “orphan” buildings). 

Redrow confirmed to us that they have not yet started work on site at any buildings in Wales, but 9 buildings have been identified as Tier 1 (very high priority). This includes two buildings in Newport, where a PAS9980 assessment has confirmed works are required; the project will go out to tender early next year. It also includes 7 buildings at the Celestia development in Cardiff, where there are ongoing discussions regarding access and a works licence for undertaking intrusive assessments. We agreed that it would not be appropriate for us to discuss any details that may relate to the ongoing legal action at this site.

There are further buildings across Wales where the risk is classed as Tier 2 (high priority) or below, but it has not yet been confirmed how many of these buildings will require remediation work. 

Separate phases for external and internal works in some buildings

Around two-thirds of the buildings identified for remediation to date (29 buildings) will be directly remediated by Redrow for all life-critical fire safety defects – both external and internal, if necessary. DLUHC’s recent data shows that 2 such buildings had completed remediation so far, 5 more had started work, 15 were due to start within a year, and 7 buildings would not start for more than a year. 

When we asked about Redrow’s experience on its first self-managed remediation projects, we heard that despite comprehensive assessments in advance, sometimes additional defects were being discovered after works started, such as defective workmanship, balcony fixing issues or incorrect waterproofing of windows. 

For the other one-third of buildings identified for remediation so far (14 buildings), work has been carried out, or is underway, via one of the government remediation schemes – at least in relation to cladding and external wall defects, which are under the remit of those schemes. This will be reimbursed by Redrow. 

During our brief discussion about some of the buildings remediated under the government’s Building Safety Fund, Redrow and leaseholders from the buildings in question sometimes differed in their interpretation of events, so we had to agree to disagree, whilst acknowledging that it wouldn’t be appropriate to discuss any details relating to pending legal action.

It is worth noting that any buildings where cladding remediation is undertaken by a government scheme may then need to go through a separate phase of work, carried out by Redrow at a later date, to address internal defects. Two potential examples were noted in Eastbourne and Barking, where Redrow will now undertake Type 2 Fire Risk Assessments (FRA) on internal common areas, early next year, to assess what works are required. Currently there isn’t an intention to carry out Type 4 assessments in any buildings (which would incorporate intrusive investigations in individual dwellings). 

It is far from ideal that work on many buildings across the country – not just Redrow buildings – may be carried out in two separate phases due to the narrow scope of work being addressed by government remediation schemes. We have repeatedly highlighted to DLUHC that the scope of government schemes must be widened because, in our view, both external and internal building defects should be remediated in a single comprehensive project for each building, wherever possible. Even in cases where there is a responsible developer to take over the “second half” of the remediation project, this means that work could drag on for years in separate phases, causing extended disruption to leaseholders’ and residents’ lives. We hope that Redrow, and other developers, will take this into consideration wherever possible when scheduling a second phase of work and that DLUHC reconsiders the current narrow approach.

Factors affecting the pace and order of remediation work

A constraint that Redrow highlighted, like several other developers, is the limited availability of suitably experienced fire professionals to carry out FRAEW assessments. However, we heard that they have forward booked selected fire experts across the country, up to 18 months ahead, so it did not appear that this is having a significant effect on the pace of work currently. 

Redrow also highlighted that they have had difficulties securing consent to work on some buildings and that at least one freeholder had taken what they described as an “unacceptable approach.” Redrow is not the first developer to inform us of particular difficulties with buildings where E&M is the freeholder’s appointed agent, and it has a history of being “named and shamed” by the Government. Where freeholders or their agents are causing access issues in buildings across the country which is delaying remediation of unsafe homes, we need and expect the Government to help break the deadlock. 

It seems that Redrow’s exposure to this issue may be more limited than some other developers and they have found a workaround in most cases. Although they would ideally enter into a works licence with the freeholder, in some buildings there will be a Resident Management Company (RMC) or Right to Manage (RTM) with a repairing obligation; this is therefore a potential route for an agreement to be struck that enables access to the building for assessments and remediation work. A few days earlier, we had heard a positive update from a Redrow building in Bristol, where E&M acts on behalf of a ground rent fund (both are members of the Consensus Business Group), and there is a leaseholder RTM in place. Although work had been delayed for several months, we understand they are now on the verge of signing the agreement.

We were told by Redrow that another “drag” on the remediation programme has been the requirements of building insurers when they are advised of remedial work, and that freeholders are sometimes concerned that a building’s no claims record could be undermined. This has required a subrogation waiver and for Redrow and the contractor to be named on the All Risk policy.

Redrow did not consider any of these constraints to be causing much delay to the overall remediation timeline at the moment – but the schedule of work is originally determined based on risk prioritisation, and they said these issues are sometimes causing them to switch the order of projects. This is clearly not an outcome that residents in those buildings deserve, nor is it one that they can influence without support from the Government.

Overall, the message Redrow gave us was that their programme is progressing at a slightly faster pace than originally anticipated, which they mainly ascribe to putting standardised and methodical processes in place. They estimated that the programme may be completed within 3-4 years. This is slightly ahead of the timeline communicated to us by most other developers, which is positive, relatively speaking. However, for those leaseholders and residents at the back of the queue, this is still an incredibly long wait – and therefore there must be more focus on how to allow people in this situation to reduce their related costs and be able to remortgage or sell their home, if they desire, before remediation work is completed. 

Concerns about reduced scope of work under developer-commissioned assessments

The terms of the Developer Remediation Contract stipulate that developers must use “a suitably experienced, qualified, independent and competent fire risk assessor (in the case of a Fire Safety Assessment) or external wall assessor (in the case of a FRAEW),” but leaseholders are naturally concerned about the “independence” of assessors that are directly hired by a developer – particularly as it would be in their financial interest for the scope of work to be reduced or for no work to be deemed required at all. 

Redrow outlined a number of ways they believe there is quality assurance built into their processes, saying “We want leaseholders to feel secure.” However, they acknowledged our point that the need goes beyond how safe leaseholders feel. There can also be financial consequences if other stakeholders do not accept the verdict that no more remediation is required in a building – from freeholders ordering more work at leaseholders’ expense, to building insurers pulling their cover or raising premiums if further remediation works are not carried out (examples of this were mentioned in our recent articles, here and here). 

Redrow noted that they have developed very simple explainers for insurers to try to reduce the risk of those stakeholders continuing to raise concerns about the level of remediation needed, although it was not clear how significant this engagement has been or whether it has yielded any positive outcomes.

We were advised that Redrow uses five or six reputable fire engineers whose quality of work they trust. Interestingly, they referred to DLUHC having a list of recommended fire engineers, plus a second list of engineers who are not deemed to carry out high quality work and should be avoided. But they told us this information is not proactively made available to ensure all developers are accessing the most competent engineers. It seems to us that it should be straightforward, and vital, for DLUHC to provide this information to all developers under the self-remediation contract as a stamp of quality assurance. 

Redrow informed us that they would typically give details of their selected fire engineer to the responsible entity (freeholder or management company), so that they can check the engineer’s credentials for themselves and feed back any concerns. If the responsible entity is unhappy with the choice of assessor, Redrow says they could make a change – and we were given an example of this at a building in Barking. At face value, this seems a good approach that would help to address the (very reasonable) concerns that are often raised with us about whether fire engineers chosen by developers are truly “independent”.

Redrow’s fire expert will stay on board while works are done by the contractor, which appoints its own expert; therefore, there tends to be two engineers involved during the process, which provides the equivalent of a peer review. Redrow also noted that the contract creates a legal obligation to achieve required standards, assessors have a duty of care, and they will be covered by a collateral warranty. 

An example was given where two engineers agreed on 90% of the work but disagreed on the need for a further 10% of work. Redrow claimed they would err on the side of doing the extra work, saying “We want to go worst-case.” It wasn’t clear whether they would be as comfortable, or how they would proceed, if the two engineers were not quite so close in their assessments. In our view, “going worst-case” when there is more than one valid assessment available is actually a requirement written into the Developer Contract. It says on page 72: “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). However, we do not believe all developers are adopting this in practice, which is something we have raised with DLUHC.

Aside from potential disputes about the scope of work, Redrow also gave an example of a disagreement about the level of legal costs that could be charged back by an RMC – and said that in cases like this, they would allow independent advice to be sought.

DLUHC has the right to audit the Qualifying Assessments that are produced after works are completed, and this is another step which should give assurance – however, neither developers or leaseholders have visibility about what proportion of assessments are being audited, when those audits will take place, how robust they will be, and what actions will result if the audit is not deemed satisfactory. 

Finally, Redrow noted that they employ an independent company, Multivista, to photograph specific locations on the building on a weekly basis. This creates a comprehensive photographic record, with tens of thousands of photos, which will form part of the golden thread. We think the fact this includes photos during remediation (as well as before and after) will give some comfort to concerned leaseholders.

The need for an independent dispute resolution process

Despite the many processes adopted by Redrow which give some level of quality assurance, we remain convinced that there is a need for a robust, independent dispute resolution process so that leaseholders and other stakeholders have a formal process for escalating concerns, which would be settled by an independent arbitration process with an authoritative outcome. This was promised in the original developer pledge but is less clear in the final contract.

When asked about this, Tim Stone said that Redrow “did push the government on the need for [an independent dispute resolution process].” He added that they “think it is integral,” and are “amazed that [the Government] don’t want one.” 

Instead, when the final version of the Developer Remediation Contract was published, Clause 16 suggested that developers should “use all reasonable endeavours” (not even “best endeavours”) to resolve disputes with third parties. Rather than DLUHC encouraging a consistent model form agreement, the contract advises they should write their own dispute resolution procedure into their Works Contract. 

In our view, this clause implies that no formal route is being envisaged for leaseholders and residents – who are not party to a Works Contract – to formally raise any matters in dispute. This is very different from the discussions we had with DLUHC officials and ministers in Summer 2022, when we were advised that not only would there be a formal process for leaseholders to raise disputes but that there would be leaseholder representation built into the process. We will continue to press DLUHC to bring a robust, independent dispute resolution process into force as swiftly as possible, and we recommend that concerned leaseholders call on their MPs to raise parliamentary questions about this too. 

Communication and engagement has improved

In general, the feedback we have received is that prior to the Building Safety Act being passed, Redrow “refused to engage” and resisted communication with affected leaseholders. However, recent feedback suggests there has been a positive shift in the last 18 months. 

At the end of October, we launched a survey to get a quick view from leaseholders about communication issues in their buildings. There was a very limited number of respondents from Redrow buildings, and these only included buildings where remediation is underway, where results would be expected to be more positive. However, the average communication score was 5.5 out of 10, which is significantly above the average score on our survey (1.5 out of 10).

Although this score suggests there’s still room for improvement, qualitative feedback from an RMC Director in Manchester noted that, in relative comparison to the difficulties encountered with other parties, “[out of] the list of companies or groups we have had to deal with… it is Redrow that would top that list in terms of their professionalism, support and engagement since the developers pledge was signed.” On their site, they said Redrow had “focused on getting the job done, not cutting corners” and “rightly questioned and challenged other players.”

Support needed for leaseholders and residents in unremediated buildings

The main counterpoint to the positive feedback from the site in Manchester was the lack of acknowledgment from Redrow that the presence of cladding and other defects has directly led to higher insurance costs for several years, which they say Redrow “will not contribute to.” When we asked Redrow about incremental insurance costs, they told us this would be considered on a case-by-case basis depending on the circumstances. Unfortunately, when we hear this answer from developers, we find it tends to mean a refusal to cover these costs in most cases.

We also asked what their position is regarding other costs such as waking watch, but were told that there is no waking watch on any of their sites currently. 

In relation to “comfort letters,” which can improve the ability of leaseholders to sell or remortgage an affected property, Redrow’s team estimates that the company receives only a handful of requests per month. Despite the industry statement by major mortgage lenders a year ago, it seems the volume of affected flats that are achieving a sale before remediation is completed is still low. We were informed that comfort letters are provided on a request basis, so that letters can be bespoke to an individual dwelling – because the postcode of an individual property may not always match the single postcode provided on an EWS1 form. This bespoke approach does seem very useful for specific cases with this problem – although we think a proactive mailout of a generic letter for all dwellings should also be offered in the first instance, and wonder how many leaseholders will know that the bespoke service is available. 

No known issues in buildings under 11 metres

At the end of our meeting, we asked about the company’s approach to buildings under 11 metres, which are currently out of scope of the self-remediation contract. In most cases, remediation may not be required – but the risk of uncapped costs for leaseholders in buildings of this height means that if mortgage lenders have any reason for concern about the construction, they will not lend without an EWS1. Earlier this year, Michael Gove also acknowledged in Parliament that fire safety defects in buildings of this height will “sometimes” be “life-critical” and we are aware of some cases where a FRAEW has concluded that remediation work is required, and these have sometimes been reconfirmed by a DLUHC audit. 

Redrow said that any concerns about buildings under 11 metres would need to go through their Legal Department, but none had come to their attention so far. They also noted that shareholders might be concerned if their fire safety remediation activity were to extend beyond the scope of their legal liability, which seemed slightly at odds with earlier comments about wanting to go the extra distance to ensure all leaseholders are safe in their homes.

In our view, all remediation that is confirmed to be required by professional risk assessments must be equally eligible for funding, regardless of building height – otherwise we face the prospect that some homes will never be made safe, sellable or insurable. If only a small number of buildings under 11 metres need remediation, it doesn’t make sense to exclude them from support, as this has a negative ripple effect on the market for all buildings of this height. We will be continuing to campaign for all leaseholders to be protected, regardless of building height, and we hope to see a responsible developer lead the way on this.

In closing the meeting, Redrow’s team emphasised that they were very open to hearing feedback from leaseholders and where more action is needed. Our thanks to Redrow for meeting with us and for the open invitation to continue our engagement as their remediation programme progresses. 

CALL TO ACTION! 

If remediation work is still delayed at your building or you are at an impasse with your developer, freeholder or managing agent, please make sure you are escalating your concerns to DLUHC by emailing [email protected] To speed things up, please include the topic in the email header, name your building, be specific about your circumstances, summarise the actions that you have taken to date, and attach written evidence if you have it (e.g., letters or reports). Please copy our team at [email protected] so that we can follow up where necessary.

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