Fire safety ruling impacts investment in UK residential market

Investors in the ownership group of London’s Olympic Village have raised concerns about the potential deterrence of international funds from the UK residential sector due to fire safety liability risks.

This issue came to light after a tribunal ordered the property owner, Get Living, to contribute £18mn towards rectifying fire safety deficiencies in some apartment blocks within the Olympic estate.

According to a report by the Financial Times, the decision has prompted Get Living to initiate an appeal against the ruling made in January.

The appeal against tribunal’s decision

Damien Webb, Head of International at Aware Super, an Australian superannuation fund and an investor in Get Living, expressed concerns about the ruling’s impact on the attractiveness of the UK’s build to rent housing market, Financial Times reported.

“We believe this ruling has the potential to make a considerable impact on attracting investment into the UK’s housing market at a time of great need,” Webb stated.

Echoing this sentiment, Abby Shapiro, senior vice-president Europe at Oxford Properties, highlighted the apprehension among international investors regarding unexpected fire safety expenses.

She noted that the ruling places “the financial burden on the current owners to fund repairs that arise from construction flaws made by the original developers.”

Government’s role and investors’ perspective

The Financial Times noted that the UK government has shown a keen interest in attracting international capital to support the construction of new housing.

Get Living, backed by investors including Dutch pension fund APG and led by Jamie Ritblat’s property advisory company Delancey, faces challenges in the wake of this tribunal ruling.

The case, initiated by Triathlon Homes, the leaseholder and management company for the affordable apartments on the Olympic estate, underscores the ongoing debate over financial responsibilities for fire safety remediation post-Grenfell Tower disaster.

Implications of the tribunal ruling

The funds ordered for Get Living to pay aim to alleviate the financial load on the Building Safety Fund, established by the government to address fire safety remediation efforts following the Grenfell tragedy.

The Financial Times reported that Triathlon Homes has warned that overturning the tribunal’s decision could severely affect many leaseholders awaiting action from their freeholders.

“Investment in people’s homes comes with responsibilities to keep the people who live in them safe and to meet the legislation that governs the housing,” Triathlon added.

Get Living, which acquired the buildings post-2012 London Olympic Games, argues against the payment obligation, citing its non-involvement in the construction phase.

Rick de Blaby, Get Living’s chief executive, suggested that the government and the contractors involved in the original development should be responsible for the costs.

He emphasised the company’s commitment to not passing the financial burden onto the residents and assured that remediation work would proceed without delay.

IFSJ Comment

The situation surrounding the London Olympic Village and the tribunal’s ruling on fire safety liabilities sheds light on the broader implications for investment in the UK’s residential sector.

This case highlights the ongoing challenges in ensuring fire safety in residential buildings and the complexities of financial responsibilities associated with past construction flaws.

As the industry navigates these challenges, the emphasis remains on ensuring the safety of residents while maintaining the UK as an attractive destination for international investment in housing.