Insight to the New ‘Cladding’ Regulations and Impact on Property Value

According to a 2020 Scottish Government survey, there are approximately 46,500 flats in high-rise buildings in Scotland.  Of the 774 high-rise buildings across 15 local authorities, 48% are in Glasgow while Aberdeen, Dundee, and Edinburgh are among other notable locations.  All of these buildings will have some form of exterior wall cladding, the construction of which must now comply with the latest stringent regulations.

So if you plan to sell your home and are resident in a high-rise or live in a shared multi-occupancy residential building, you may find this article particularly relevant.

Before delving into how from a home report valuation perspective your property may be affected, let’s start with an overview of the new laws around cladding on buildings in Scotland.  Note too that there are important differences between the regulations in Scotland and England. This article only considers the implications for you as a homeowner in Scotland.

New regulations

On 1 June 2022, the most recent regulatory changes to the use of cladding in Scotland came into force. The Building (Scotland) Amendment Regulations 2022 has introduced a ban on the use of highly combustible metal composite cladding on any building. The updated regulations also forbid the use of combustible cladding on buildings of 11 metres or more in height. While this includes various categories of build, for the purposes of this article it’s important to note that combustible cladding cannot be used on residential dwellings – including a sheltered housing complex or a shared multi-occupancy residential building.

As has been widely reported, the catalyst for these strengthened regulations has been the tragedy at Grenfell Tower in London in 2017, when a huge fire enveloped the building. Investigators believe combustible cladding accelerated the spread of the fire.  Since that major incident and subsequent inquiry, authorities have sought to replace the cladding on affected buildings north and south of the border.

Of course, you may be one of the fortunate homeowners whose building has already been subject to a survey with remedial work subsequently undertaken to conform with the new rules.

However, in The Scotsman (6 June 2022), Lauren Miller, a real estate partner with Shoosmiths in Scotland, noted that ‘as the (new) legislation applies to new and existing buildings, owners of buildings that were originally constructed in full compliance with building regulations at the relevant time may now unfortunately find themselves in breach of the latest rules.’

As you can imagine, the implications of the new regulations are immense for the many thousands of other homeowners who live in a potentially affected property. In addition to the obvious safety concerns about the presence of non-compliant construction materials on your residence, replacing cladding on countless buildings is a huge (and costly) task. It’s a challenging process for all concerned.

Is my property affected by the new rules?

Unfortunately, there are thousands of properties likely affected by the new tighter legislation.  The first step to identify if your home is affected and requires remedial work is to consult your factor or the owner of the building. In turn, they should be aware of not only the new (exterior cladding) regulations but also the latest changes announced by the Scottish Government around Single Building Assessments (SBA’s) in May 2022.  These SBA’s are undertaken to assess cladding risk and to identify what needs to be mitigated or remedied to satisfy building standards.

Is my property value affected if found to have incompatible cladding?

In terms of your individual property within the building and if you plan to sell, you will wish to know the status of any Single Building Assessment.  Be proactive. Consult with other residents and if applicable, collectively approach your housing association for support to push through any required changes.

Of course, if you wish to sell your property you will also need to commission a home report. Obviously, I’d recommend the likes of Home Report Company who are completely independent and use fully insured RICS qualified surveyors. We understand the complex issues around cladding and the key steps required to help you realise your investment in bricks and mortar.

While not a legal requirement, in some circumstances, including to gain an insurance valuation it’s worth considering a property valuation report (also known as a private valuation report).  At the very least, the above steps will quickly help you to identify, as an individual homeowner, the extent to which your specific flat or property is affected by a cladding issue. It will give you key information about your flat or shared residence that may be requested by a potential buyer, your bank, or a mortgage lender.

Unfortunately, as it’s a legal requirement for all new and existing buildings in Scotland to comply with the latest regulations around exterior wall cladding, a homeowner whose building has been identified as requiring remedial work is likely to have difficulty selling or at least realising its full market value until the cladding situation is rectified.

Who will pay for remedial works?

This is currently a thorny question.  While all interested parties, including the local authorities, building owners/developers and homeowners like you want the reassurance of building(s) being 100% safe, it remains to be seen exactly who will foot the bill for the removal of unsuitable cladding and its replacement with external wall claddings that conform to the latest regulations.

By way of a response, consider the statement to the Scottish Parliament by Cabinet Secretary for Social Justice, Housing and Local Government Shona Robison.  In her statement of 12 May 2022 (here: https://www.gov.scot/publications/update-cladding-remediation-programme-cabinet-secretarys-statement/ she noted: ‘It is my clear expectation that developers linked to buildings with problematic cladding will fund remediation where this is identified. That will ensure that when public funds are needed to be spent, we can use them to focus on buildings and works where a developer cannot be identified or no parent developer exists.

‘The creation of our Accord with the housebuilding sector and homeowners will form the basis of a way to address each building’s needs. However I want to also make clear that if required, I will make full use of the powers available to us to bring parties to the table, including if necessary, using legislation to do so.’