After fire safety regulations in Britain were tightened following the 2017 blaze in Grenfell Tower, west London, Get Living had to set aside £337.5mn to pay for fire safety remediation works at the East Village.

“The developers[the ODA] got the development profit; we got all the remediation,”

That’s Deanne Stewart, CEO of Aware Super, an Australian mega-pension scheme. Tenants of blocks bought by her “Super” pension are now protected (not all tenants are) and it looks likely that due diligence on purchasing of the freeholds of such blocks as Alan Livsey and the FT team have pictured, will not be repeated.

Not only did the developers who cut corners get off scott-free but the pension fund took a big hit. The investment is complicated. A quarter of Get Living is owned by Aware Super and the ODA stands for the Olympic Development Association which was tax-payer owned. The flats in question started life housing athletes in Stratford East London.

You can see why the Super is frustrated.

New rules brought in after Grenfell, where 72 people died, include banning the use of combustible cladding and other materials on the outside walls of high-rise flats. In 2024, Britain’s National Audit Office spending watchdog estimated it would cost £16.6bn to fix all the cladding on buildings higher than 11 metres in England, just over half of which would be funded by the government.

It’s a case of the tax-payer paying up because the tax-payer’s development company created the problem. This is not an easy problem from a financial perspective, but it is much worse for tenants. Those who lived and died in Grenfell were living with a fire hazard from cladding common in our residential tower blocks. Cladding was a  way to make blocks look more attractive to those who lived in them.

The problem is for UK property companies like Get Living ongoing. The time it takes to get urgent works on blocks is too long as local authorities care too slow  -says the Super

“..repair works following a burst pipe at one of its property developments in Lewisham, south London, required permits that could take up to six months to secure. “These are examples of where planning or permitting is just too slow and we don’t have the time, our money doesn’t have time to wait,”

We can hardly expect overseas pension funds to provide inward investment to UK infrastructure if they feel frustrated by what they have invested in so far. Here is a Canadian pension saying the same thing

Oxford Properties, the real estate arm of the C$145bn (US$105bn) Ontario Municipal Employees Retirement System (Omers), is also thinking twice about certain future investments. The division “would be very cautious about investing further in UK multi-family housing as a result of its experience”

This talks of two overseas pension funds who are injecting capital into British infrastructure. Not only does the British tax-payer get involved in this long-term investment but neither do its pension funds. This may be considered a good thing – if your consideration is fiduciary to the pensioner. But it suggests that if the money from overseas dries up, we have not have the capital to build new housing that is fit for purpose.

Last month, the FT’s Alan Livsey reported on the Government’s intention to attract precisely this kind of investment rather than revert to traditional Government bonds

On this blog, Tom Aubrey and Con Keating have called for the creation of new bonds , for the development of new towns that like overseas pension funds do not burden the tax-payer but do encourage easing of our acute housing shortage.

It seems that there is a lack of imagination within local authorities and in the Treasury of ways to raise the capital which is not being invested by property companies. This could and should be part of the wider aim of long term investment – a partnership between our Treasury and our Department of Work and Pensions. We need to  improve social productivity so that the people getting pensions have good places to live. Thanks to our commonwealth partners , their pensions need encouragement to invest  – so do ours!