Govt v Urban Splash £48m lawsuit begins
The Ministry of Housing, Communities, and Local Government has taken the developer to court in an effort to recoup public money spent on building safety improvements in Manchester.
The court case centres on seven buildings: Burton Place, the Chips Building, Moho Building, The Box Works, and the Three Towers – Emmeline House, Cristabel, and Sylvia.
The government argued on Monday that Urban Splash should have undertaken a series of remediation actions on seven Manchester buildings itself. Urban Splash has maintained that it was unable to do so because of financial reasons.
Instead, the work was supported by the publicly financed Building Safety Fund and overseen by the government rather than the developer.
In the lawsuit, the government is retroactively seeking the money spent on the buildings, which totals £48m.
An MHCLG spokesperson said: “This case forms part of the government’s efforts to recover taxpayer funds spent on remediating unsafe buildings from those responsible.”
Urban Splash has argued that it was a responsible developer who worked within the existing Building Regulations regime at the time of each of the buildings’ construction programme.
What is more, the developer has contended, the £48m bill represented more work done than was necessary and was much higher than it would have been should Urban Splash have led the project.
“The government’s approach to recovering its costs of implementing those improvements, in this case, is neither fair nor proportionate and if successful, will lead to SME developers funding much higher remediation costs than major developers after taxpayer money has been wasted through uncontrolled spending,” an Urban Splash spokesperson said.
Burton Place was highlighted as a prime example of this. The government spent £23m on remediating the seven-storey, 90-apartment building. Some of the money was used to decant residents, which Urban Splash argued in court documents would not have been necessary if the government had explored an encapsulation solution.
“The remediation at Burton Place is, on any basis, a ‘Rolls Royce’ solution to a problem, the scope of which was not adequately recorded at the time and remains to be established,” the developer argued in court documents, noting that the £23m spent exceeds the market value of the apartments.
Here is how much was spent on the buildings at the heart of the lawsuit:
- Burton Place – £23m
- Chips Building in New Islington – £3.2m
- Christabel at Three Towers on Dalton Street – £1.5m
- Emmeline House on Dalton Street – £2m
- Moho Building on Ellesmere Street – £15.9m
- Sylvia on Dalton Street – £585,900
- The Box Works on Worsley Street – £1.9m
The government’s case hinges on Section 124 of the Building Safety Act, which gives the secretary of state the power to recoup public money spent on fixing buildings with fire safety issues.
Urban Splash is not the only developer being held to account. MHCLG is also seeking to recoup money spent on projects developed by Hollybrook Homes and Yianis Holdings. In total, the buildings involved in these cases represented more than 1,000 homes.
I’m no expert but that £23m to refurb Burton Place does look like an outlier when compared to the other schemes. Seems excessive for a 7 storey building. Other than that, Urban Splash should cough up the cash. It’s their problem and shouldn’t be burdened on the average taxpayer!
By Anonymous
Trying to remain balanced here but is there not a point of view that Urban Splash are being punished for trying to push the envelope on MMC etc. in response to previous Governments exhortations that the industry should embrace this?
By UnaPlanner
If anything sums up the farce of the freehold/leasehold model and why it has to be abolished as soon as possible then this is it. Happy taking money off residents every year through ground rent but absolutely nothing in return. How have successive governments allowed such scenario to arise?
By Anonymous
Does Splash have cash reserves of £48m to hand over or assets of a similar value to liquidate ? I suspect not, so this could potentially see them go to the wall and the Govt. be left holding a sizeable Legal bill !
By Just saying....
The government writes the building regs. Government-appointed inspectors approve the designs. Government inspectors check compliance during and after construction. Urban Splash built to those rules and had every stage signed off. Now the same government wants the developer to foot the bill? If the regulatory regime was inadequate, that’s a government failure — not a developer one.
By Anonymous
If he still has it, perhaps a gentleman with a fondness for hats could sell his vintage Bentley to contribute to the alleged Rolls Royce solution at Burton Place?
By Top Gear
The reality is many of these retrofits would never have been delivered by the original developers, they’d likely have gone bust, if not already.
Buyers purchased in good faith, on the basis that buildings had been approved and signed off by the relevant regulatory bodies at the time.
As a taxpayer, I’d rather see the cost addressed collectively than risk destabilising the housing market, with large volumes of homes left unsafe and effectively un-mortgageable.
Fixing a bespoke job is inherently expensive, particularly where schemes involve unique, bespoke façades like Chips and Burton Place. Many of which would not work in modern new builds.
By Anonymous
For once I’m with the government. Urban Splash are absolutely culpable
By Heritage Action
I mean call me naive but if Splash wanted tight cost controls on how the remedial works were undertaken maybe they could have just undertaken the works themselves instead of trying to abdicate their responsibilities.
By Mis-manager
Urban Splash had the opportunity to grasp the issue and make good. It appears not to have taken that opportunity. The public sector steps in and does “a Rolls Royce” job.
So the question is why did Urban Splash not do the necessary works before the public sector intervened.
You reap what you sow!!
By Anonymous
Nobody can feel anything other than sorrow and empathy for the victims of the Grenfell fire. However, all developers built within the guidelines that were set at the time. It’s a complete farce for the government to change the rules after these apartments were built and then try to recoup costs from developers. It’s also a massive abdication of government duty to spend far in excess of what was required to put remediation in place.
By Anonymous
@Anon 1:02pm – actually government inspectors do not check compliance. In many cases – including Grenfell – developer-appointed contractors carried out the building control function. And as has been seen from the Inquiry, a whole cornucopia of different bodies from the contractors, suppliers, designers, client bodies, certification bodies and government officials were all culpable to varying degrees.
By Anonymous
The government should not be the insurer of last resort for a construction industry that has manifestly failed to hold itself to account. The article never even identifies what the actual technical failure is (I could guess), yet leaps straight to the assumption that the state should pick up the tab. That is indefensible. Fault lies where fault lies: if it’s the developer, make the developer fix it; if it’s the builder, make the builder fix it; if it’s poor design, inadequate detailing, or a defective product, then designers and suppliers must carry the cost. What we see time and again is a predictable outcome of a race to the bottom on fees and build cost, compounded by weak detailing and abysmal site supervision, all conveniently ignored once the bill arrives. Every party, including builders and their SPVs, must remain firmly in the risk and PI matrix, not quietly escorted out after practical completion.
Perhaps that would be a better use of public funds and throwing in making directors more accountable.
By Steve5839
whoever wrote comment below is spot on !!!
The government writes the building regs. Government-appointed inspectors approve the designs. Government inspectors check compliance during and after construction. Urban Splash built to those rules and had every stage signed off. Now the same government wants the developer to foot the bill? If the regulatory regime was inadequate, that’s a government failure — not a developer one.
By anon
I think that many problems occur after developments have been completed is because LA Planning and Building Control officers just rely on external Building Control from the private sector signing off and accepting buildings that have not been constructed adequately and fail to accept the Architects and Building Services completion certificates.Private contractors often go into liquidation but they should have full Indemnity insurance cover.Ultimately it is the responsibility of the LA Council Planning and Building Control that must accept full responsibility.
By Paul Griffiths
@anon 10:01 – talk about creating a moral hazard. It can’t be the case and in fact is NOT the case that developers and contractors can build any old defective rubbish and expect the government to effectively indemnify them in the event any of any and all defects. Moreover as others have pointed out, since the Building Control function was deregulated (at the behest of industry it must be said), developers and contractors can use a private sector building control contractor to certify.
By Anonymous
About time US was held to account!!
By Al Courtney
I know nothing about these building, but I assume the remediation contractor undertaking the works saw it as a “Cash Cow” as the government was footing the bill, and from my experience, nobody would have been adequately qualified to query the costs from the Government…and would have had a “just get on with it attitude”. Also Urban Splash may have fully complied with Building Regulations at the time of build, not now, they don’t have a crystal ball for future requirements. That said, if they didn’t they should have…maybe the government should look at other areas to recoup money, maybe revisiting writing off £1.40 Billion in PPE order mainly to their mates or offshore companies.
By Anonymous