Could adding value to HRRBs through additional storeys help cover shortfall?
In response to a recent government report published in June 2020 by Housing Communities Local Government (HCLG) which concluded that there are over 2,000 buildings still clad with dangerous materials with limited government funding, Peter Watkins at HDR | Bradbrook Consulting explores the opportunities and challenges faced by developers to add value to these buildings to help fund the costly upgrades.
It has been 3 years since the tragic events of Grenfell, where 72 people sadly lost their lives. The report by Housing Communities Local Government investigated the progress of remediation of high-rise and high-risk buildings, the direct and indirect costs for residents, and wider fire safety concerns that are emerging.
It concluded that there are still over 300 buildings with ACM cladding awaiting remediation and a further 1,700 buildings with other forms of high-risk combustible cladding that are likely to require urgent remediation.
The Chancellor announced a £1 billion Building Safety Fund in March to help cover the costs to remediate HRRB’s, however as stated in HCLG report, the Government’s own estimate is that the total cost is likely to be between £3 billion and £3.5 billion.
Whilst developers may not currently have a legal obligation to help fund the remediation works, there is arguably a moral obligation to assist funding these necessary upgrades to ensure the safety of the occupants of their buildings.
Funding
The introduction of new government planning reforms in September 2020 may offer the opportunity for developers to explore adding value to their existing buildings to help fund these critical upgrades.
In March 2020, the Minister of Housing Robert Jenrick announced planning reforms for new Permitted Development rights for building upwards on existing buildings, including residential apartment blocks by two storeys without the need for formal planning consent.
However, there will clearly be Limitations to the Permitted Development proposals.
This relaxation in planning requirements is a potential opportunity for developers that are currently assessing ways to minimize the economic impact of upgrading old building stock, adding value to offset some of the costs to ensure compliance with the latest fire regulations.
However, there are many challenges in the refurbishment of existing buildings, and each building would need to be assessed independently.
What are the key challenges?
Structural viability
Assessing structural viability is possibly the biggest challenge, this will require a technical load assessment to determine whether there is sufficient redundancy in the existing structure to incorporate additional floors.
Architectural
Architects face the challenge of ensuring that the aesthetics of the proposed additional storeys are in keeping with the rest of the building and surrounding properties, the opportunity exists to blend and co-ordinate this with the upgraded cladding proposals.
In addition to building aesthetics, spatial planning and the consolidation of spaces will be a key challenge to maximize property value.
Legal
Legal challenges include obtaining permissions and consents from unwilling tenants to carry out works to their apartments.
‘Rights to light’ of neighbouring properties will have to be assessed to determine if the additional height obstructs any natural light to the properties.
Safety
Safety will be a key challenge as the works would need to be undertaken safely whilst tenants are living within their properties.
Logistical
Construction logistics will be a significant challenge, finding space to locate welfare facilities, cranes and hoists to safely transfer materials and site personnel on to the roof will have to be carefully planned, alongside space for the storage of materials and to accept material deliveries.
Contractors need to work within restricted hours and greater controls would be required to limit noise and vibration to within acceptable and tolerable levels.
Rooftop plant such as water tanks would have to be relocated, and a services strategy in place to ensure tenants are not without water and power during the construction works.
Conclusions
Clearly the cost of upgrading HRRBs appears to have been a significant factor in the slow progress of their remediation.
The cost of cladding a high-risk residential building is likely to be significant, and the addition of extra storeys will not necessarily cover the costs of recladding a high-risk building in its entirety, though the potential to minimize the economic impact may be worth considering.
Adding extra storeys will not be viable to all high-risk residential buildings as there are many different challenges to overcome. These challenges can be assessed in detail at an early stage with a feasibility/viability assessment.
The challenges and risks associated with redeveloping existing high risk residential buildings may put most building owners and developers off, though with limited land availability in cities, this is a unique opportunity for landowners to consolidate their property assets to maximize value and fulfil their moral obligation.