High Court ruling on ACM cladding sets important precedent for commercial buildings

A landmark High Court decision has clarified the responsibilities of commercial landlords for combustible cladding remediation and may have significant implications for building owners, asset managers and fire safety professionals across the built environment sector.

In Essendi UK Hotels 2 Ltd v London Property Company Ltd [2026] EWHC 1354 (TCC), handed down on 5 June 2026, the Technology and Construction Court ruled that a landlord was required to remove and replace ACM cladding on a high-rise hotel in Wembley after finding breaches of both repair and compliance obligations contained within the building's lease.

The case arose after the tenant discovered in late 2024 that the hotel was clad with aluminium composite material (ACM) panels containing a polyethylene core – the same type of combustible cladding used on Grenfell Tower. When the landlord declined to undertake remediation works, the tenant commenced legal proceedings.

Although much of the post-Grenfell regulatory focus has centred on residential buildings, this case concerned a hotel and therefore fell outside the scope of the Building Safety Act 2022. Instead, the dispute focused on the interpretation of lease covenants and obligations under the Regulatory Reform (Fire Safety) Order 2005 (FSO).

Following a two-week trial in March 2026, His Honour Judge Stephen Davies found in favour of the tenant on two key grounds.

First, the court held that the landlord's covenant to "put and keep" the building exterior in good condition extended to the removal and replacement of cladding where it presents a significant fire safety risk. The judge concluded that, in the post-Grenfell context, maintaining a multi-storey building in good condition includes addressing inherent defects that compromise occupant safety and require remediation to satisfy fire safety obligations.

Second, the court determined that the landlord had failed to comply with legal obligations under the Fire Safety Order. In a potentially precedent-setting finding, the judge ruled that the polyethylene core within the ACM panels constituted a "dangerous substance" under Article 12 of the FSO, creating a legal requirement to remove and replace the cladding.

The court granted the tenant an order for specific performance, requiring the landlord to complete the cladding replacement programme within 18 months.

In addition, the tenant was awarded damages arising from the landlord's breaches of the lease. While the value of those damages has yet to be determined, they are expected to be substantial. The hotel ceased accepting guests in mid-2025 due to fire safety concerns, and the court accepted that the closure was a reasonable consequence of the landlord's failure to remediate the ACM cladding.

The landlord's counterclaim for an indemnity from the tenant was dismissed.

The judgment is likely to be closely scrutinised across the property and construction sectors. It appears to be the first reported decision directly examining obligations under the Fire Safety Order in relation to combustible cladding and provides important judicial guidance on how fire safety risks interact with traditional lease obligations.

For building engineers, fire safety specialists and asset managers, the ruling reinforces the growing expectation that significant fire safety defects cannot be treated as separate from building condition. The decision suggests that where combustible external wall systems present a material risk to occupants, remediation may form part of a landlord's wider duty to maintain a building in good condition, even in commercial settings.

The case also highlights the continuing legal and operational consequences of legacy ACM cladding across the UK's building stock, extending beyond residential developments to hotels and other accommodation buildings where people sleep.