Fleur has submitted evidence to the Housing, Communities and Local Government Pre-legislative scrutiny consultation on the drat Building Safety Bill. You can read her submission below:

Pre-legislative scrutiny of the Building Safety Bill 
Submission to the Housing, Communities and Local Government Select Committee 

1. In this submission, I would like to address the following questions:

• How well does the Bill, as drafted, meet the Government’s own policy intentions?
• Is the Government right to propose a new Building Safety Charge? Does the bill introduce sufficient protections to ensure that leaseholders do not face excessive charges and that their funds are properly managed?
• Does the Bill present an opportunity to address other building safety issues, such as requirements for sprinkler systems?

2. On Tuesday 14th July, in his response given during an Adjournment Debate on flammable cladding, the Minister for Housing, Christopher Pincher, said the following:

“Let me simply say that our intention is to make sure that leaseholders should not have to foot the bill; building owners and building managers and their agents should be looking after their buildings.”

Similarly, in their explanatory notes provided with the draft Bill, the Government have stated:

“it is the policy intention that as far as possible leaseholders should not have to face unaffordable costs”

3. Despite the Government’s intentions, in my constituency alone I have had leaseholders from 14 residential blocks contact me who are facing building safety related costs. One development, which contains 204 flats in 4 buildings, needs total recladding and render replacement after a survey discovered unsafe non-ACM cladding. Leaseholders are currently being told by the freeholder and developer that they will have to pay the total costs unless they are successful in their application to the Building Safety Fund. These costs could reach as high as £50,000 per leaseholder. In addition, they are currently being charged £150,000 per annum for the costs of waking watch.

4. At least 10 other blocks in my constituency have discovered they are rendered with combustible non-ACM cladding following surveys, and will need to be remediated in order to obtain an EWS1 form. This is causing an enormous amount of stress for these residents, who in addition to being burdened with enormous extra costs, now have their properties completely frozen on the market.

5. It would appear from the correspondence I have read and received that Freeholders are making very little effort to protect leaseholders from these costs, and they have made it clear that they are not legally responsible for funding the costs of building safety surveys or remediation. This is what one Freeholder said to me when I challenged them on their decision to charge leaseholders:

“We have taken legal advice on the whole issue of liability for unsuitable cladding and it is well documented that in circumstances such as described above (if at all) the Freeholder has no liability. With respect, we find the suggestions contained in your letter to be wholly disingenuous.”

Another Freeholder informed me that:

“The landlord is responsible, throughout the term, for remedying defects and keeping the buildings in good repair but the leaseholders are each responsible for the costs incurred, having regard to the floor area of their flats.”

6. The Bill in its current form, particularly clauses 88 and 89, does nothing to protect leaseholders from being subjected to these costs. Indeed, New Section 17G of the Bill provides that the landlord may demand in writing from the leaseholder a charge. The experience of my constituents to date is that unless leaseholders are legally protected from bearing the costs of building safety works, and legal responsibility for funding or sourcing funding for building safety remediation transferred to the Freeholder or landlord, then leaseholders will continue to face unaffordable costs. There is nothing in my communications with building owners so far to suggest that, unless legally obliged to do so, they will protect leaseholders from excessive costs.

7. Moreover, the introduction and very concept of a ‘building safety charge’ – far from protecting leaseholders from excessive costs – gives Freeholders and Landlords fresh justification to push building safety costs onto leaseholders.

8. While I welcomed the announcement of the £1 billion cladding remediation fund in March, many residents who have contacted me have expressed several concerns over the Fund, and doubts over whether it will alleviate the costs of remediation. Their concerns are threefold:

1. Size of the Fund: Residents are concerned that, given the costs being quoted for remediation and the current volume of applications, the Fund is not large enough to provide adequate financial support needed to prevent being burdened with excessive costs. For instance, I am informed that the cost of cladding remediation of the aforementioned 204-flat development alone is projected to be upwards of £10 million. With over 1,300 applications across the country having already been submitted to the fund, it is highly unlikely that this fund will provide any financial relief to affected leaseholders.I was therefore pleased to read in their explanatory notes to the Bill that the Government is “currently conducting further work to explore appropriate funding models that would mitigate unaffordable costs, if they were faced by leaseholders.” From the evidence I have seen, I believe increased funding and better funding models is essential.
2. Speed of applications: Several residents have expressed frustration at the haste in which applications to the Fund have been processed by the responsible agent. One resident in an affected development noted that the management company processing the application only has one person dealing with applications to the Fund – for every development in their portfolio. He was therefore concerned that the ‘First come, first served’ nature of the fund will see many developments miss out entirely. As the resident put it:“their [the leaseholder’s] whole future can now be destroyed simply because applying to the fund is not in their own hands and the incompetence and negligence of a Managing Agent could mean they miss out on funding through absolutely no fault of their own.”

    

3. Hesitancy in applying: I recently met with a Local Authority Housing team who are leading on building safety and leaseholder issues in the borough. During the meeting, they noted that some Freeholders are reticent to apply for the Fund owing to concerns that, should they not receive all the funding to cover remediation works, they will be liable to commit to funding the remaining costs.

9. A further issue that, as far as I am aware, is not covered by this Bill but is will within its scope and needs addressing is lending requirements vis-à-vis the EWS1 form.

10. An increasing number of lenders and mortgage providers will not lend on properties that do not possess an EWS1 form confirming there are no combustible materials present in the building’s structure. This is causing a significant amount of confusion and uncertainty for leaseholders and resulting in buildings that do not possess any combustible materials being deemed unsafe by lenders. This needs to be made extremely clear in the Bill and otherwise is a license to print money for private fire safety inspectors of whom there aren’t enough to fulfil this unnecessary demand. Two examples in my constituency demonstrate this.

11. In one development, the Management company is demanding leaseholders pay for a EWS1 form, despite the building not being applicable due to it being under the height requirement and having no cladding issues. As one resident put it:

“This block of flats is 16m high. 5 stories. No cladding issues as proved in tech specifications by architects, supplied by the management company in the past. This information alone has been enough to satisfy mortgage lenders requirements (even post Grenfell), so why do we need this form?”

12. In another development, timber discovered in the balcony has been raised by surveyors from both HSBC and Nationwide as a barrier to lending. As a result, he is unable to sell other than to a cash buyer. On this occasion, the managing agent and freeholder are refusing to apply for an EWS1 form for the development leaving the resident in limbo.

13. This Bill needs to provide much greater clarity as to what building features constitute a clear and obvious risk and when an EWS1 form is required by lenders. As it stands, most lenders are now asking for an EWS1 form for all multi-owner properties irrespective of height and fire risk, which is causing considerable confusion and stress to residents.

Conclusion

14. In summary, the Bill as drafted does not meet the Government’s own policy intentions, does not introduce sufficient protections to ensure that leaseholders do not face excessive charges and that their funds are properly managed and does not cover a number of other important areas. The evidence I have collected in my own constituency suggests that, unless major changes are made to this Bill, leaseholders will continue to have no legal protections from excessive building safety costs – for errors that were not their fault – being transferred by Freeholders and landlords and are very unlikely to have these costs curbed by the Government’s Building Safety Fund.