Wednesday, September 22, 2021
Real EstateUK

Council unlikely to claw back £10m cladding costs

Slough Council

The council’s cabinet approved a £7m loan in 2019, with an option for an additional £3m, to GRE5 Limited, to remove the cladding in Buckingham Gardens

Slough Council is ‘extremely unlikely’ to be able to claw back the £10m costs of making a building covered in Grenfell Tower-esque cladding safe.

The council’s cabinet approved a £7m loan in 2019, with an option for an additional £3m, to Ground Rental Estates 5 (GRE5) Limited, to remove the dangerous cladding from Nova House in Buckingham Gardens.

GRE5 owns the freehold of the former seven-storey office building, which was converted into 68 flats in 2015.

But after the cladding failed two flammability tests with “significant defects” found in the compartmentation, Slough Borough Council bought shares from GRE5 as well as appointing directors to the company board in 2017 to fix the problems themselves.

At a full council meeting on Thursday, July 22, councillors had to re-approve their £10m loan to the company after it was unearthed the 2019 loan was “inappropriately authorised” as cabinet did not have the powers to approve this loan.

All loans require full council approval.

Speaking at the meeting, the borough’s new chief financial officer, Steven Mair, said the financial risks were not fully explained to cabinet members at the time and it is extremely unlikely the costs will be fully recovered from the insurers.

It has been reported the costs to do the work have spiralled to £18.8 million. But Mr Mair warned costs could escalate further.

The situation has been made more complicated after Slough Borough Council issued a section 114 notice and froze all non-essential spending due to its fragile finances.

But councillor Dexter Smith said the council should seek the developer of Nova House, Timeless property services limited, to gain back compensation for the council and leaseholders.

He said: It seems SBC has misunderstood what it means to be responsible for local enforcement on these post-Grenfell cladding issues under the housing act. That is our legal responsibility.

He added: We are supposed to go after the owner/developer that put the cladding on the building and their insurer and not let them off the hook.

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