Is dangerous cladding a commercial landlord's responsibility?

The Building Safety Act 2022 (“the Act”) was introduced in response to the 2017 Grenfell Tower disaster, and it aims to prevent future building safety crises and protect tenants from having to pay unfair remediation costs for historical safety defects. Defects include the removal of unsafe cladding, and the Act forces developers and freeholders to cover the remediation costs.

There have not been many cases addressing commercial landlords’ liabilities for dangerous cladding because many of the buildings affected by unsafe cladding are residential properties, which can now benefit from the protections introduced by the Act. The decision in Essendi UK Hotels 2 Limited v London Property Company, which has just been made, is an interesting one, because it has grappled with the question of whether or not a commercial landlord is responsible for remediating dangerous cladding.

The building involved was a hotel, not a residential building, which meant that the Act was not applicable. The tenant of the building, therefore, had to rely on the terms of the commercial lease to convince the court that the landlord was responsible for remediating the unsafe cladding.

Facts

The hotel was originally built by Essendi in 2002. In 2005, replacement cladding was installed after problems arose with the building's original facade. At that time, there was no evidence that the developer or any of its advisers understood the fire risk that was associated with the cladding that was being applied, and the Court found that there was no basis or finding that Essendi knew or ought to have known that the cladding was a fire safety risk when it was installed.

In 2007, Essendi entered into a sale-and-leaseback arrangement, under which they took a 12-year lease with options to renew, effectively becoming the tenant. Under the original lease, the landlord retained responsibility for the building's structure and exterior, but bespoke provisions regarding the cladding made Essendi responsible until 22 May 2017. The landlord argued that these provisions meant that Essendi remained responsible for the cladding defects or had to indemnify the landlord. The Judge rejected that argument because the tenant could not establish that Essendi knew or ought to have known of the cladding's dangerous nature prior to 22 May 2017.

In 2018, LPC acquired the freehold interest and became the landlord. A new lease was then granted to Essendi in 2019. By 2024, investigations confirmed that the hotel cladding was dangerous from a fire safety perspective. Essendi notified the landlord and relevant authorities. Essendi then obtained further fire safety advice and suggested that the hotel should close until the unsafe cladding was removed. The hotel was in fact closed on 29 July 2025.

The landlord declined to remove and replace the cladding, and the tenant therefore brought a claim against the landlord seeking an order that they be required to put and keep the exterior of the building in good condition and to comply with all legal obligations.

The High Court found that the landlord was in breach of both of those obligations.

The Judge found that the covenant by the landlord to put and keep the building in good condition did include an obligation to remove and replace cladding, and to address any other inherent defect which created a significant fire safety risk and required remediation to make the building reasonably safe for occupation, and to comply with the obligations imposed on the responsible person under the Regulatory Reform (Fire Safety) Order 2005.

The Court ordered specific performance by the landlord, requiring removal of the cladding within six months and replacement with suitable cladding within 18 months overall. The Court also held that the decision to close the hotel was reasonable and caused by the landlord's breaches. That meant the tenant could pursue a damages claim arising from the hotel's closure.

What does this mean for landlords, tenants and property owners?

This is the first clear decision we have had that building safety risks in a commercial property cannot simply be viewed as a matter of repair versus an inherent defect. If the lease requires the landlord to keep parts of the building in good condition and the building has a serious fire safety defect, the landlord may be obliged to remediate even if the problem originated many years ago and was not specifically addressed in the current lease.

The judgment also indicates that the Courts are willing to interpret legal compliance covenants very broadly where fire safety legislation indicates that remediation is needed.

The case is also a useful precedent for tenants to compel their landlords to remediate safety defects in non-residential buildings. For any property owner or asset manager, the decision underscores the importance of investigating and maintaining complete, up-to-date records regarding any fire safety concerns. In this case, the Court was very critical of the lack of meaningful progress once the issue was clearly known.