Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Solutions. Read the original article for full details.

High Court Ruling Exposes Cladding Liabilities for Commercial Landlords

A recent High Court judgment in the Essendi case has clarified that commercial landlords may be responsible for removing and replacing combustible cladding, even if the building is not in physical disrepair. The ruling highlights that liabilities can extend beyond the requirements of the Building Safety Act (BSA).

The case involved Essendi UK Hotels 2, the claimant and hotel operator, and London Property Company (LPC), the defendant and landlord. The Technology and Construction Court found that the landlord’s obligation to “put and keep” the building in “good and substantial repair and condition” included the removal and replacement of aluminium composite material (ACM) cladding panels, which were found to be highly combustible.

Investigations by Essendi in 2024 revealed the presence of the combustible cladding, which had been installed in 2005 when Essendi was the freeholder. The 12-year leaseback arrangement expired in May 2017, transferring repair responsibilities to LPC. Following fire safety advice, Essendi closed the hotel.

The court rejected arguments that the absence of physical disrepair or the estimated £5m to £7m cost of the works should exempt the landlord from responsibility. It ruled that the costs associated with the closure and the removal and replacement of the cladding were ultimately the responsibility of LPC.

This judgment indicates that commercial buildings not covered by the BSA may still carry significant remediation liabilities under standard lease clauses requiring “good condition.”

This development is relevant for UK letting agents and inventory clerks, as it underscores the importance of understanding lease obligations and potential hidden liabilities related to building safety and cladding.