Occupiers must be alert to changes to lending and insurance requirements as a result of the Grenfell Tower tragedy.  The fire initiated the largest review of health and safety legislation in the UK since 1945.  Two inquiries are currently underway which are expected to lead to substantial changes to building regulations and fire safety, with a public inquiry investigating the causes of the fire.

Following the tragedy, focus quickly turned to the cladding type used at Grenfell Tower which comprised aluminium composite material (ACM).  Other panel types are also feared to be at risk.

Some lenders now require surveyors to carry out additional building safety checks on cladding on the outside of a building.  Furthermore, there is a concern that some lenders may not lend without satisfactory reports confirming that the cladding does not comprise flammable materials.

In addition, some insurers are considering raising premiums for tall buildings with ACM or flammable panels or those without sprinklers.  There is concern that insurance cover could be excluded entirely for some at risk buildings.  Whilst the terms of existing cover should not change, policy exclusions could be introduced at the time of renewal, generally in January or April.

It is important to have foresight regarding the impact of any new exclusions.  Terms excluding cover for cladding not complying with building regulations must be understood in the context of regulations subject to change upon conclusion of the current review.  Any new insurance provisions must be carefully considered and properly understood as the consequences of the exclusion may not initially be clear.