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Flammable façades: Who foots the bill?

dubai - Owners' associations will have to create a special levy over and above normal service charges

In response to a handful of blazes in Dubai skyscrapers, the Real Estate Regulatory Agency (Rera) is encouraging all building owners to replace non-fire-resistant building facades in collaboration with developers.

Taking the lead, the agency said it has already implemented these measures with a number of companies, including Dubai Properties in its projects: Executive Towers, Vision Tower and Bay Square in Business Bay.
"We hope this process will be implemented with a healthy level of collaboration and communication with the industry. That collaboration element will be an important aspect," says Andy Dean, head of facades, Middle East at WSP.

All new buildings are required to comply with the recently updated version of the UAE Fire and Life Safety Code of practice. "This requires a variety of appropriate performance characteristics, depending on multiple factors, including type and nature of occupancy," adds Dean.

The problem arises when it comes to replacing combustible facades in older buildings in Dubai which predate the updated Fire Safety Code. The onus of replacing combustible cladding is most likely to be on unit owners, although the developer could be expected to contribute if they retain partial ownership.

Liability
Once property buyers take over ownership of their units from the developer, they form an owners' association (OA) which has a mandate to operate and maintain the building, assuming liability for costs of the same.

"If the building has been completed and handed over after obtaining all approvals from authorities, then the building OA should be liable to do the necessary changes in compliance with authority requirements," says Naveed Faridi, general manager of Prescott Real Estate Development, which recently launched a G+4 storey residential building in Meydan.

"Before the changes in regulations, cladding systems of poorer fire rating were permitted and assuming that the relevant local authority approvals and completion certificates were gained at that time, developers and architectural consultants were not at fault for specifying them. It is unlikely that retrospective legislation could reasonably force developers to shoulder the cost of replacement, nor is it likely that insurance policies will cover such replacements," observes Craig Ross, partner, head of project and building consultancy, Cavendish Maxwell.

"Projects in Dubai are all subject to approvals from authorities prior to completion and handover, so it can be expected that developers may have been compliant with existing codes at the time of completion. While projects under construction may need revision by developers, projects that have already been handed over may need to be re-clad at the cost of the owners' association," says Anel-Carline Beukes, head of compliance and communication, Kingfield Owner Association Management Services.

However, this may pose problems in the case of a jointly owned property. "For example, a voluntary replacement would mean all owners having to agree on the replacement and contribute to the cost. Given the inherent variations in owner occupation patterns, financial backing and intended length of ownership for this type of property, this is not likely to be a straightforward task," warns Ross.

The replacement costs are also likely to be substantial. According to Cavendish Maxwell, a 20-storey building could easily require in excess of Dh6 million to replace the cladding.

"Each building should be treated individually to consider items such as area of cladding, cladding detailing issues [for example, fixings around existing windows and balconies, etc.], other factors affecting economies of scale and the practicalities of replacement such as building height and confined site access, which will all affect the total removal and replacement cost," informs Ross.

Costs to replace cladding will have to be determined on a case-by-case basis. "The solutions will vary widely depending on the particulars of the buildings. It is also likely that there will be a range of solutions for each building, rather than just one," adds WSP's Dean.

The cost to replace cladding is likely to be taken from the 'reserve fund' where money is collected in an account over the long term to pay for the replacement of commonly owned assets in the future.

"The cost of cladding replacement would be considered in this fund, but given the service lifespan of cladding can be in excess of 40 years [not including the sealants at joints, etc.], it is unlikely there will be enough to cover the cost in reserve. The remaining option would be a special levy, where the owners are requested to pay for the replacement in addition to their normal service charge," concludes Ross.

- deepthi@khaleejtimes.com