Monday 28th February 2022
(2 years, 1 month ago)
Grand CommitteeBuilding Safety Act 2022 View all Building Safety Act 2022 Debates Read Hansard Text Amendment Paper: HL Bill 98-IV Fourth marshalled list for Grand Committee - (28 Feb 2022)
The Minister of State, Home Office and Department for Levelling Up, Housing & Communities (Lord Greenhalgh) (Con)
My Lords, I can see that my noble friend is about to rise, but there is a crescendo in this group of amendments and I realise that it is very important to hold in reserve the speeches from my noble friend Lord Young—as well as the crescendo of the amendments to be introduced by the noble Lord, Lord Stunell, and by my noble friend Lady Neville-Rolfe. This is a veritable feast of amendments, so I will introduce the government amendments at this point, if I may, before I summarise the group.
As this is a feast of amendments, I have looked up my old grace, which I used to say when I was 18, 19, 20 years of age. It is very long—I hope I will not get it wrong, as I know the right reverend Prelate will know if I do. It goes as follows:
“Oculi omnium in te sperant Domine:
Et tu das escam illis in tempore.
Aperis tu manum tuam,
Et imples omne animal benedictione.
Benedic, Domine, nos et dona tua …
et concede, ut illis salubriter nutriti
tibi debitum obsequium praestare valeamus,
per Christum Dominum nostrum.”
That is roughly right. It is what we used to say before we could eat. This is a feast, and I appreciate that every amendment is laid with the interests of improving this Bill. If we cannot accept them, I want to say that I appreciate the intentions behind every one of them. I will summarise our position at the end.
I have tried to summarise each group in three words. This is the “residents and redress” group, and I have always been clear that residents should be at the heart of the new regime. Today’s debate demonstrates the continued importance of that commitment. I am pleased to start by speaking to a group of amendments that is focused on ensuring that residents and others have more access to redress.
Amendments 76 and 77 create a new power for the High Court to impose building liability orders in appropriate cases. These orders will allow civil claims to be made against the associated companies of a company involved in the development or refurbishment of a building in certain circumstances, including when the original company no longer exists. In this House and in the other place, we have discussed the lack of ongoing liability that large developers have due to their use of special purpose vehicles. These amendments directly address this issue and support the changes we have proposed to the Defective Premises Act. They rebalance the level of exposure that small and medium-sized businesses in the construction industry currently have compared with the larger players—and, most importantly, they unlock potential funding for those who have remediated or who need to remediate, if they bring a successful claim. I consider that these orders will be an important tool in holding “polluters” to account and making them pay for their past misdeeds—so I hope that noble Lords will join me in supporting these amendments.
Moving on, I have also tabled a series of amendments that will help to make sure that construction product companies pay to put right building safety issues that they have contributed to causing. I do not intend to move these amendments today but have laid them to invite the scrutiny of noble Lords. I will listen carefully to the debate and bring these measures back at a future stage. Briefly, they target construction product manufacturers and ensure that they take responsibility for their part in the creation of building safety defects. The new clauses in Amendments 107 to 109 and 144 introduce two new causes of action against construction product manufacturers. There are currently almost no routes which allow leaseholders to hold construction product manufacturers accountable for their role in the creation of serious building safety defects. The Government are clear that those who have been responsible and continue to be responsible for building safety defects have a responsibility to put them right.
These causes of action will enable claims to be brought against construction product manufacturers and sellers for their role in the creation of building safety defects. They will apply if a product has been mis-sold or is found to be inherently defective, or if there has been a breach of construction product regulations. If this contributes to or causes a dwelling to become “unfit for habitation”, a civil claim will be able to be brought through the courts under these causes of action.
The cause of action relating to cladding products in Amendment 107 will be subject to a 30-year retrospective limitation period. The broader cause of action relating to all construction products in Amendment 108 will be subject to a 15-year prospective limitation period. These limitation periods reflect the changes we are making to the limitation period under Section 1 of the Defective Premises Act. These causes of action will ensure that construction product manufacturers can be held responsible for the costs of rectifying their mistakes.
Amendments 110, 113, 114, 141 and 145 will create a power to make regulations to require construction products manufacturers and their authorised representatives, importers and distributors to contribute towards the cost of remediation works where they have caused or contributed to dwellings being unfit for habitation. Amendment 110 will enable the Secretary of State to serve a costs contribution notice on companies that have been successfully prosecuted under construction products regulations, where the relevant product has contributed to identified dwellings being unfit for habitation.
Amendment 114 introduces a new schedule that will give the Secretary of State the power to appoint an independent person to inspect buildings where the relevant product has been used. This assessment will consider whether the conditions for serving a costs contribution notice are met, and the remediation works required. Amendment 114 will enable the Secretary of State to make regulations setting out a process for establishing costs that a company should be required to pay, which will take account of its ability to pay, and to whom payment should be made. This amendment will also enable the Secretary of State to require a company to contribute towards the cost of building assessments carried out as part of this process. Setting out this scheme in secondary legislation will enable the necessary interaction between costs contribution notices and construction products regulations, including those that will be made using the powers in this Bill.
I will listen carefully to the remainder of the debate today, as I have to every speech given so far introducing various amendments, and I look forward to hearing from noble Lords. As I said earlier, I will be moving only Amendments 76 and 77 today. I will carefully consider what I have heard in relation to the other amendments, and I will bring these measures back at a future stage.
Lord Young of Cookham (Con)
My Lords, the instructions on the sheet of paper in front of me are not “crescendo” but “diminuendo”—some gentle accompaniment on the bass to the forte soprano that we heard from the noble Baroness, Lady Fox. But seriously, I want to add a brief footnote to the excellent speeches made by the noble Baroness, my noble friend and the right reverend Prelate.
I make the point that they all underline the need for the next stage of leasehold reform which the Government have promised, which does away with this feudal system of leasehold which exists nowhere else in the world. Once we have done that, all these problems that we have been talking about this afternoon will disappear: there will be an identity of interest between the freeholder and the leaseholder because they will be the same person. At some point, perhaps the Minister can shed some light on the next stage, confirming that that is indeed the Government’s objective and that they want to move in that direction as fast as possible.
I add a brief footnote to the excellent speech the right reverend Prelate made on Amendment 50A. In particular, I draw attention to the radical proposal in subsection (3)(a) of the new clause proposed in his amendment, which places an obligation on the landlord for
“where there is no recognised tenants’ association in existence before the coming into force of this section, creating a recognised tenants’ association and consulting with it about building safety”.
Because of the Long Title of the Bill, the right reverend Prelate had to confine it to building safety. However, it is a radical proposal. It places the obligation for establishing a tenants’ association not on the tenants, which is the position at the moment, but on the landlord, evening up the terms of trade. As I said, it is a very radical proposal indeed. An indifferent landlord does not want a residents’ association or a tenants’ association with whom he has a statutory obligation to consult, although I happen to believe that it is in his best interests to have such a dialogue. So the terms of trade are dramatically altered by the right reverend Prelate’s amendment.
In an earlier incarnation, I recall helping establish an organisation called Tpas—the Tenant Participation Advisory Service—I see the noble Lord, Lord Best, nodding sagely; he has a similar vintage to myself when it comes to housing legislation. That was focused primarily on tenants of social landlords, but I believe it has subsequently expanded into the private sector. It would be very well placed to advise landlords and tenants on how to set about establishing such an association, were the right reverend Prelate’s amendment to be accepted.
Finally, on this group of amendments, I reread chapter 4 of the Hackitt report last night, entitled “Residents’ voice”, and it has a whole series of recommendations about enfranchising the resident and the tenant in exactly the way that we have underlined. So, as I said at the beginning, I add a small a complement on the double bass to the excellent speeches that have been made on this group of amendments—or perhaps I am a tenor.
Lord Khan of Burnley (Lab)
Sometimes they are wise men and women. I hope that the Minister can take forward their wise suggestions on this group of amendments in particular.
We welcome many of the government amendments, tabled in good spirit to make sure that life gets better for residents of buildings across the country and that they are free from unsafe situations. Government Amendment 141 makes provision for regulations under the new clause relating to costs contribution notices to be subject to the draft affirmative procedure. I want to ask the Minister about the power given to government to make new legislation. What scrutiny will these new powers be subject to?
The noble Lord, Lord Young of Cookham, and the noble Earl, Lord Lytton, talked about the important issue of long leases. It is a fascinating debate, but perhaps it is not for now, because this Bill is about building safety. When the noble Lord, Lord Young, was a Minister in 1984, I was five—in fact, I was a safety hazard in my parents’ building at the time. His point about the future of long leases is important, and I am sure it will be discussed and debated in a future Bill. I also appreciate the experience brought by the noble Earl in discussing his points.
The noble Lord, Lord Stunell, made an interesting and very important point about product safety. It is difficult to digest. Even the Construction Products Association is confused about this area. There is a lack of clarity which I hope the Minister and the Government will address.
Finally, I will single out Amendment 147, in the name of the noble Baroness, Lady Neville-Rolfe, which looks at publishing assessments of the impacts on businesses, in particular, of remediation changes. It is an important amendment because there is a shortage of homes and we want to make sure that we look at how this impacts on everybody in the whole chain and that we do not move to a situation where we are building fewer homes. That is an important point, but today has to be about impact assessments on citizens of this country and every person living in an unsafe building.
The Minister in debate on a previous day mentioned that this is a landmark Bill and an opportunity. Unfortunately, at this moment it is not being taken forward with the really strong, meaningful, well-intentioned and well-purposed amendments that have been presented, so I hope that the Government will reflect, listen and make that impact.
Lord Thurlow (CB)
Before the Minister stands up, perhaps I can make two points. This is a large group of quite diverse amendments. My concern is over the accountable person role. Judging by the discussion today—I will not go through the list of different contributions—I think it is going to be a very difficult job indeed. That person is going to need help in creating a co-operative working relationship with tenant groups, and the situation could be exacerbated by bad and difficult freeholders or managing agents, often in league, and if the accountable person finds himself or herself in their pocket it will not be made any easier.
I do not overlook difficult leaseholders. There are some tenants who will not let anybody into their building. That is also a problem to be dealt with, but I have two suggestions. The accountable person should be prepared to prove reasonableness in all their behaviours and should also be prepared to prove value for money. An autocratic manager refusing to engage with a leaseholder makes life even more difficult. In the second case, concerning value for money, whether it is the fire extinguisher example given by the noble Lord, Lord Blencathra, or some captive insurance company or an arrangement with a very high commission-bearing insurer offering kickbacks to freeholders, that would be avoided.
Lord Greenhalgh (Con)
My Lords, I rise to say how amazed I am by how young the noble Lord, Lord Khan, is. I thought I was a whippersnapper as someone in my mid-50s, but the noble Lord must have been born in—what, the late 1970s?
Lord Greenhalgh (Con)
My maths is not that bad, but that is impressive.
I will start with the noble Lord, Lord Stunell, who focused on the government amendments. It is fair to say—he will know this as someone who played my role in the coalition Government—that we cannot possibly move amendments without considering A1P1 rights and the impact of the amendments. We would never get them through the legal system. Obviously, we are tabling the amendments but not moving them, but we have done all the checks, as you would expect, and taken legal opinion and so forth to make sure that they are all workable, and indeed lawful. Otherwise, we would just not be allowed to do it.
I also say that there has been considerable engagement with the organisations that the noble Lord mentioned, but we need to continue that engagement and that is something we can do. I reassure him that we have had representations from Build UK, the Association for Project Safety and the Construction Products Association, but we should continue to engage. My view is that there is never too much engagement with these organisations. However, I also said to him, and I put this now into Hansard—it was raised in a previous debate by the noble Baroness, Lady Hayman—that if you breach building regulations implemented in 1984 by the then young whippersnapper, my noble friend Lord Young, it is a criminal act.
The noble Lord will also know that if you commit a crime in this country, there is no statute of limitations for most crimes. In this case, we are saying that we have seen appalling practices over the previous 30 years, and there should not be a statute of limitations period that does not allow us to rectify that. That is why we are looking backwards 30 years and forwards 15 years. Of course, we have taken considerable legal advice about taking that position, but it is to ensure that there is no legal reason why someone who has broken building regulations is not open to face redress. I accept all the points he makes around the practicalities of doing that, but there should not be a small, narrow limitations period when we tackle this historically difficult problem that has crept up on us over not one decade, but three decades.
I turn to the noble Baroness, Lady Pinnock, who wanted to understand how we are regulating construction products. It is not straightforward, but it is pretty straightforward, so I will not take too long over this. We have created a national regulator. In the same way as we have a building safety regulator in shadow form until the Bill gets Royal Assent, the Bill will put into statute a national regulator for construction products in the Office for Product Safety and Standards. The CEO is a phenomenal chap called Graham Russell. He is there and it has already started to flex its muscles with a prohibition notice to Kingspan. This Bill formalises the national regulator for construction products and there are at the same time local regulators of products, as the noble Baroness will know, with her local government background within trading standards, that provide that local role. It is the national and local regulation of construction products that provides the regulatory environment for construction products.
The noble Baroness also raised construction products testing. This is something that the inquiry showed as an area of concern. The Building Research Establishment was a nationalised entity that it was privatised in the 1980s, I think—my noble friend Lord Young will know the exact date, I do not—but we also have the British Board of Agrément, which has always been in the private sector. Neither of those have come out as great, robust testing houses, which is why my predecessor as Secretary of State asked for a construction products testing review. I believe that report is nearly finalised. I will ask for a copy. There will be recommendations on how we improve the robustness of construction products testing. I hope that addresses the questions raised by the noble Baroness, Lady Pinnock.
One of the three wise men, the noble Earl, Lord Lytton, raised a very important point, but it is fair to say that, when we are talking about construction product manufacturers, we are talking not about all construction product manufacturers but about those that contributed to this crisis. Three of them have been raised, front and centre, as being responsible for the Grenfell Tower tragedy: Celotex, Arconic and Kingspan. These were all products that should never, frankly, have been able to have been put in that position. We can argue about why, but you cannot put flammable material that spreads like petrol up the side of a building and say that that adequately resists the spread of fire, which is what the regulations stated in Approved Document B. You cannot put flammable insulation behind it, et cetera. There are a number of product companies that contributed to this. Whether they were installed incorrectly or not is irrelevant: these products should never have been put on our buildings. We can look at the responsibility for that, but the responsibility also lies with the manufacturer, in large part, and in those cases, the polluter must pay. However, it is not all construction product manufacturers by any means, and I make that point absolutely clear.
Secondly, the way in which those products are installed is a matter for the construction company. The construction company, not the manufacturer, is responsible for following the instructions and installing the product correctly. We can see examples of perfectly good cladding systems that are installed incorrectly. In such cases, that falls on the developer in the first instance, or on whoever the developer got to install the system. We must be absolutely clear about that. If we start creating confusion around it, we avoid accountability and we do not move forward. It is pretty clear in my mind where culpability falls. I hope that that addresses some of the concerns raised by the noble Earl, Lord Lytton. This has been a fantastic debate. I have enjoyed every second of every minute of every hour. We have had one hour and 40 minutes on this group, and it has been absolutely tremendous. Thank you all for your contributions.
Lord Greenhalgh (Con)
My Lords, I was caught mid-sentence so I will go back to the beginning of that particular sentence. The noble Baroness suggests that we require detailed requirements on contravention notices to ensure the proper use of these powers, but that is better suited to regulations. Indeed, the balance between what is reasonable to expect of an accountable person, the urgency of building safety risks and protecting residents from potential misuse of powers is crucial. That is why we believe that this detail should be set out in regulations, developed in consultation with residents and accountable persons and subject to public consultation.
Amendment 52B would allow residents a reasonable time to remedy any alleged contravention before an application to the court; indeed, the Bill provides that the accountable person must specify the steps that the resident should take and a reasonable time for taking them. The court is very unlikely to issue an order before that time has expired.
Amendment 55C would require the building safety regulator to consult on and issue a statutory code of practice regarding powers of entry. Subsequently, Amendments 53B, 53C, 53D, 54B, 55A and 55B would require the accountable person to comply with a statutory code of practice and ensure that the right of entry into homes applies only in urgent cases or emergencies. In respect of Amendments 52A and 54A, the Government are closely listening to these points; however, the noble Baroness’s intention is already being achieved, as the resident would be notified of the application from the accountable person as part of the court process.
I would like to reassure the noble Baroness that there are already safeguards against misuse in this Bill. Under Clause 86, we will prescribe principles under which the accountable person must operate. These have been published in draft and include the requirement to consider the impacts on residents within the building.
In addition, the clause provides that accountable persons have a right of entry to a resident’s home with an order awarded by the court. The courts will apply established principles when considering any such application for entry and will grant access only when they consider it just to do so. This provides an effective safeguard against misuse. As noted in response to the points raised by my noble friend Lord Blencathra, we would expect the accountable person to seek to resolve issues directly with residents in the first instance to gain entry where it is needed.
The building safety regulator will issue guidance to accountable persons, which will set out the expectations for their system for handling residents’ duties and enforcing them. It is important to note that these powers are necessary for the accountable person to be able to discharge the legal duties we are placing on them. Although their use covers emergency cases, access may be needed where a resident refuses to allow the accountable person to discharge their duties. Indeed, the provision is designed for the discharge of day-to-day duties and not for emergency situations, which would require calling the emergency services.
As such, we must again strike a balance between protecting residents and affording the accountable person the tools needed to keep their building and residents safe. We believe that this balance is correctly achieved in the Bill. I understand the noble Baroness’s intentions with these amendments but, for the reasons I have given, I ask her not to press them.
I now turn to Amendment 107A in the name of the noble Lord, Lord Stunell, which seeks to probe whether the retrospective liability provisions in Amendment 107 apply only to higher-risk buildings. I reiterate the points I made earlier when outlining the intent of the Government’s amendments. This course of action will apply to all dwellings and all buildings containing dwellings. The Government’s position is that the ability to recover cost contributions from product manufacturers should not be restricted to those who live in multi-occupied high-rise buildings. While it is true to say that the amount of cladding on lower-rise buildings is likely to be lower, we do not think it appropriate to exclude these just because the building is not as tall. The crucial factor must be the safety risk.
We are not restricting this course of action to buildings over 18 metres because we intend to enable all individuals who have suffered a loss as a result of a dwelling being made unfit for habitation due to the mis-selling of a product, a product being inherently defective or a breach of existing building regulations to seek cost contributions for the losses they have incurred. This course of action protects leaseholders and home owners by ensuring that all construction product manufacturers are held liable for their part in the creation of building safety defects. The broad application of this course of action to include all dwellings reinforces this principle and delivers a proportionate approach. The scope of this course of action to apply to all dwellings will mirror the Defective Premises Act.
Finally, I turn to my noble friend Lady Neville-Rolfe’s Amendment 147. I assure her that the Government have considered the impact on business of the measures I tabled on 14 February. We are clear that the principle of protecting leaseholders is paramount. It is fundamentally unfair that innocent leaseholders should be landed with bills that they cannot afford to fix problems that they did not cause. These amendments will right this wrong, and the Government consider it critical that the provisions take effect as soon as possible. I must therefore ask my noble friend to withdraw her amendment.
Baroness Neville-Rolfe (Con)
Are the Government planning to produce an impact assessment on the new measures? My amendment was drafted the way it was on the advice of the Bill clerks, but obviously my main concern is to understand the detail of this promising package.
Lord Greenhalgh (Con)
I am sorry; with the sheer length of the debate, we are now approaching the two-hour mark, so I hope that my noble friend will forgive me if I did not address that specific point. However, I did address the point that the Valentine’s Day amendments, tabled on 14 February, were made in haste. The work around impact assessment was therefore not carried out at that time, but obviously we intend to update our impact assessment to reflect all the amendments that the Government have brought forward; that is the good practice my noble friend seeks, I think.
I thank noble Lords for this debate, which has been an important and necessary part of the scrutiny of this legislation. I hope that, with the reassurances given, noble Lords will be happy to withdraw or not press their amendments. This has been a feast of a debate so let us conclude it with the two words that we used to say in our formal hall: benedicto benedicatur.
Lord Blencathra (Con)
My Lords, we have spent two hours on this group of amendments. It is probably the second-most important group in the Bill, after the one we dealt with last week. There were more than 45 amendments down, so I make no apology that we have spent considerable time discussing them.
Lord Young of Cookham (Con)
My Lords, I recognise that the government amendments in this group may be of greater significance than mine. I think it would be in the interests of the Committee if I sat down and allowed the Minister to explain them, and perhaps responded later. I beg to move.
Lord Greenhalgh (Con)
My Lords, I rise to introduce the government amendments in this group. This is an important group—equally as important as the previous group—and is about leaseholder protections.
We have been clear that it is fundamentally unfair that innocent leaseholders, most of whom have worked hard and made sacrifices to get a foot on the property ladder, should be landed with bills they cannot afford for problems they did not cause. That is why I have laid a series of amendments to the Bill to right this wrong. I want to outline these important government amendments and highlight how they will provide much-needed protections to leaseholders from exorbitant costs for remediation of their buildings.
These leaseholder protection provisions will make landlords liable, partially or in full, for the costs of remediating historical building safety defects. Amendments 62 to 64 and Amendment 66 are definition clauses setting out the types of defects, buildings and leases that are in scope of the protections. The new clauses state that leaseholders living in their own home or subletting in a building over 11 metres will be entitled to protections from unjust and unaffordable remediation costs. It will not apply to buildings that have exercised the right to collective enfranchisement or are on commonhold land, as in those buildings the leaseholders together effectively are the freeholders.
Amendment 68 would insert a new schedule into the Bill before Schedule 9, which sets out the circumstances in which service charges relating to historical building safety issues cannot be passed on to leaseholders, and the circumstances where service charges can be passed on to leaseholders are limited. Paragraph 2 of the new schedule provides that, where the landlord is responsible or has links with the developer that is responsible for the defect, they will be required to pay in full for the historical building safety issues. This will ensure that, as far as possible, those who are responsible for creating the defects take on the burden of costs and remove all liabilities for the historical defects from innocent leaseholders.
A definition of an “associated person”, for the purpose of determining which building owners have links to the developers of the building, is set out in Amendment 67. Similarly, where building owners are not linked to the developer but can afford to pay, they will be required to put the money up to do so and pay in full. We intend to table further amendments to provide details of the affordability test on Report. I welcome any suggestions from noble Lords on how this could work.
Paragraphs 5 to 7 of the new schedule provide that, where building owners are not linked to the developer and are not able to afford the remediation, some costs can be passed on to leaseholders. This will be subject in most cases to caps of £10,000, or £15,000 for leases in Greater London. These caps will limit how much leaseholders can be asked to pay for non-cladding costs, after—I repeat, after—building owners and landlords have exhausted all other cost recovery options, such as litigation under the Defective Premises Act or the new construction products causes of action we have just debated.
The amendments also provide that any costs paid out by leaseholders over the past five years will count towards the cap, meaning some leaseholders will pay nothing more. They also provide that cladding costs cannot be passed on at all. Paragraph 6 sets out caps to be applied to very high-value properties. It provides that, for properties with a value of over £1 million but under £2 million, the maximum permitted charge is £50,000 and, for properties with a value of over £2 million, the permitted maximum is £100,000.
Building owners and landlords must comply with the law as set out by Parliament. However, there may be some who attempt to avoid their liabilities. These landlords may be associated with a company with substantial assets. Given the extent of the building safety crisis, it is morally right that these associated companies are asked to shoulder their fair share of the costs. Amendment 69 would give the First-tier Tribunal powers to make a remediation order on the application of an interested person, meaning the regulator, local authority, fire and rescue authority or another person specified in regulations by the Secretary of State. A remediation order will require a landlord to remedy defects in their building, as specified in the order.
Amendment 70 would give the First-tier Tribunal powers to make a remediation contribution order on the application of an interested person if it considers it just and equitable to do so. For the purposes of Amendment 70, interested persons include the new regulator, the local authority and the fire and rescue service, as well as leaseholders and other persons who have a legal or equitable interest in the building. A remediation contribution order will require an associated company to make specified payments, at a specified time or event, to the landlord to remedy relevant fire safety defects in the building.
Where a company needs to be wound up, our provisions enable the liquidator to apply to the court to access the assets of associated companies to contribute to the remediation of building safety defects. All too often, companies let subsidiaries go into liquidation to cut their losses. It is morally wrong that they can just fold a company up and leave leaseholders in unsafe buildings with outstanding building safety defects and the corresponding liabilities. The court’s decision will be based on whether it is just and equitable to do so—in other words, whether it is right for that associated company to help to meet the building safety remediation liability of the failing landlord.
Some unscrupulous companies may try and wind up subsidiaries before these provisions come into force, which is why we have included provisions to enable liquidators to pursue associated companies of those landlords who are currently going through insolvency proceedings. It is unfair that innocent leaseholders have had to pay for remediation of building safety defects while those who caused the fire safety issues are able to exploit company law to escape liabilities that are morally theirs. I ask your Lordships to support this significant and important set of amendments.
Lord Young of Cookham (Con)
My Lords, I am grateful to my noble friend. It was bit like listening to one of the advertisements on the radio when, right at the end, all the terms and conditions are read out very quickly and one has to listen to them very carefully. I welcome the assurances that my noble friend gave right at the beginning; I will come back in a moment to some of the things he said.
In the meantime, I will speak to Amendment 56 in my name and also to Amendment 131 in the name of two of the three wise men. This group of amendments focuses on Schedule 8 to the Bill, which defines building safety charges. It takes up no less than 12 and a half pages of rules and regulations. My Amendments 58 and 60 would eliminate eight of them, but any benefit so gained would be wiped out by the 13 government amendments tabled since the Bill left the other place.
Lord Stunell (LD)
My Lords, first, I am very sorry if taking a long time last time irritated the Minister. It was an important set of amendments and I think these amendments are also important, although I will try not to irritate him. It is a pity that he did not feel able to accept the amendment in the name of the noble Baroness, Lady Neville-Rolfe, about openness and transparency and impact assessments. I remind him that he dealt with my argument by assuring me that I would know that the Government clearly would not have brought forward proposals unless they had been cleared at the highest level and that lawyers had looked at them and he wanted to assure me that they all worked. That sounded to me very much like an impact assessment or, at the very least, an explanatory note, so I am hoping that he can publish the documents that were used inside the department to decide that this is indeed a viable system to place before your Lordships.
With that preliminary, I enthusiastically support my noble friend Lady Pinnock’s Amendments 93 and 94 proposing a peppercorn figure for the cap. The Minister indicated at an earlier stage that the figures in the Bill are, to an extent, arbitrary. A number has been decided, perhaps based on some total amount of money that the Treasury thinks it is prepared to pay which has been divided by an assumed number of residents to produce a cap figure. It may be neat arithmetic for the Treasury, but it is not neat arithmetic for leaseholders facing their payment.
Some very pertinent questions have been asked by the noble Baroness, Lady Hayman, and other participants in this debate. I hope that the Minister will at least be able to commit to writing a letter, having carefully read Hansard, about this group of amendments and the previous group to make sure that he has ticked off all the queries that have been raised. They have all been advanced by noble Lords who very strongly want to see effective legislation but have various levels of severe concern about whether this legislation will be effective. I am sorry that it may be a little painful for him, but we need to understand the correct answers to this and, if not, to try again on Report.
This is a sensational policy development by the Government in interfering with the market. We believe it is justified in principle, but we want to see that it has not just been waived through without serious thought and consideration. It is easy to have popular legislation, although it would be more popular if the cap were a peppercorn, as my noble friend Lady Pinnock has proposed, but that does not mean that it will work. Plenty of popular legislation turned out not to work. The Dangerous Dogs Act occurs to me, and we must not turn this into a dangerous buildings Act full of good intentions but unable to deliver.
In relation to the other amendments, in Amendments 56 and 57, the noble Lord, Lord Young of Cookham, has produced, as he always does, extremely reasonable amendments and it is hard to see how the Minister can dismiss them. When we look at this, and bearing in mind that the Minister said in relation to the whole of this debate that the Government are still in listening and learning mode, it might be important to listen to them and to bring them forward again.
There was a theme too about excluded groups. It starts with a bold statement that no leaseholder will have to pay and then, as the noble Lords, Lord Leigh and Lord Naseby, and others have pointed out, there are little nooks and crannies in this which means that there are groups of leaseholders who will not benefit from the pledge, apart from the fact that there is a cap, which there certainly should not be.
In the debate on the last group, I commented on government amendments in some detail. I am sorry that it was a bit too hard for some people—it was a bit hard for me and I probably got some of it wrong—but I want to pick out from this current group some points that arise from government Amendment 70, which puts in place remediation contribution orders. I have a feeling that when it comes to assessing what the sum should be, the quantum that appears in a remediation order, all the issues I raised on the last group will raise themselves again. I hope the Minister is not persuaded by an argument that says, “The facts will speak for themselves. It is easy with a building, you can just go and look at it and tell whether it is compliant or not, and then you can decide how much it cost, and then they have to pay.” It is all a question of who decided that that would be used, who put it up in that particular way and what kind of regulation was carried out. We are talking about events that may have taken place 20, 25 or 30 years ago; the current opportunities to retrieve that information are very small and the chance of delivering it is very small as well.
The noble Earl, Lord Lytton, raised the point about the interaction of this process with the courts, which will be required to decide what a building safety order and a remediation contribution order should actually be. What should it be when it gets signed off by the courts? They will want to know the answers to this and I think the Minister will have heard that a number of noble Lords have a sneaking feeling that that will prove a very difficult hurdle to get over with the provisions in the form that they are.
Lord Greenhalgh (Con)
My Lords, this has been a fascinating debate, it really has. I shall start with the noble Lord, Lord Stunell, because he served as Minister from 2010 to 2012 and we are graced by his presence. I think that in the coalition he was succeeded by the noble Lord, Lord Foster, from 2012 to 2014, and then there was a chap called Stephen Williams, who never made it to this place. If the noble Lord talks to his colleague Stephen Williams of the Liberal Democrats, who was in the coalition Government, he will know about Florrie’s Law, because that came into existence in 2014. The protection we are talking about today is based on Florrie’s Law that came into effect in public housing. This is about applying that principle of a liability cap across all types of tenure. In fact, I had a meeting in this place with the noble Lord, Lord Pickles, who introduced that amendment in response to a leaseholder who received an enormous bill which was so great that, through the shame of receiving it, she subsequently died. That is why we came up with the cap, as a coalition Government, through Florrie’s Law, and it is that principle we are looking to apply.
I turn to the noble Baroness, Lady Hayman. My admiration for her has increased, with her detailed grip of policy. She read it out with such aplomb, I have to be honest. I think it is important for me to take the high level and I will respond to her in writing, but I want to give her the outline. She is absolutely right in her assessment; what she read out was absolutely correct and the phrases “cascade” and “waterfall” have been applied to the approach we are taking. The waterfall or cascade is in five parts. We start with the developers. Then we move to the freeholders, via an affordability test, and other interim landlords; that is the second wave of the cascade. The third is freehold and interim landlords seeking redress from third parties that have contributed to pollution. The fourth is leaseholders who pay a capped amount—that is for non-cladding costs, to be clear, and is where Florrie’s Law kicks in. Of course, the fifth is freeholders and interim landlords who pay the remainder. That is the cascade approach, but I will write to the noble Baroness, because it was so eloquently put that I believe her questions of me deserve full and detailed answers.
Lord Greenhalgh (Con)
Therefore, the scope of “relevant defect” is sufficiently broad and will take account of many of the defects listed by my noble friend Lord Blencathra.
In relation to cladding, the Government have already put in place separate provisions, whereby leaseholders of properties in buildings over 11 metres will be protected from all costs associated with cladding remediation. I know that my noble friend has raised very real examples of leaseholders with narrow, not broad, shoulders who may have a certain amount of property in their retirement portfolio and have chosen to invest in property as a way of guaranteeing their income in old age. I would like to sit down with my noble friend and policy officials to see that we have got the policy intention right. He raises an important point that, sometimes, there are landlords with pretty narrow shoulders, and I do not think it is the intention of the Secretary of State and the Government to be unduly unfair on those people. We will sit down to understand the concerns. At this stage, there are a number of protections in place, but we recognise where my noble friend is coming from.
I forgot in the desire to get going that I should have declared my residential and commercial property interests as set out in the register. They are all properly laid out.
I also forgot to mention something in response to the noble Baroness, Lady Hayman, who raised the important point about retrospection. I got through the waterfall and the cascade but forgot about retrospection. It has been raised by a number of noble Lords; even the noble Baroness, Lady Pinnock, probably mentioned it as well.
The important thing is that day zero for the building safety reset is 14 February 2022. Once we have got this Bill through, that is the date we will start from. However, retrospection does kick in, in the sense that leaseholders who have spent money to date will not pay more than the cap. We will take into account the money they have already spent. Admittedly, we are not going back to refund those who have already spent money, but there is a cap in terms of liability. I shall also deal with the specific issue raised by my noble friend Lord Leigh of Hurley.
I shall now address the building safety charge amendments tabled by my noble friend Lord Young of Cookham. I shall race through these, because, basically, my noble friend is right to recognise that there may be other ways of skinning a cat, and looking at service charges as opposed to the building safety charge. Let us just see how we evolve that as time goes on—so I shall leave that, if I may. I thank him for raising those points. The Government’s intention was not as it has been painted by some people, but we recognise the points that he has raised.
Turning to Amendment 131, I thank my noble friends for raising this interesting matter, but I am afraid that the Government will not be able to accept the amendment. It would require the Secretary of State to establish a statutory inquiry into costs leaseholders have paid since 10 January 2022 which are not recoverable by those leaseholders. As I have already described, the Government have tabled a series of amendments either to remove or to greatly restrict the costs that the vast majority of leaseholders living in blocks over 11 metres will have to pay. Given these significant protections, the Government do not consider that the costs and bureaucracy involved in setting up another statutory public inquiry would be appropriate or justified. On that basis, I ask my noble friends not to press their amendment.
Turning to Amendment 86, I thank the noble Lord for raising this important matter, but I am afraid that the Government will not be able to accept the amendment. Managing agents play an important role in managing and maintaining buildings on behalf of their clients, and it is fair that they should be paid for the services they provide. I agree with my noble friend that it is important that managing agents do not charge excessive fees for those services, and that such charges must be reasonable. Managing agents also need to be clear about the charges they pass on. This Government strongly believe that service charges should show this. They should be transparent and communicated effectively, and there should be a clear route to challenge or redress if things go wrong.
The law is already clear that service charges must be reasonable and, where costs relate to work or services, the work or services must be of a reasonable standard. Leaseholders may challenge the reasonableness of the service charge through the appropriate tribunal, whether that is the First-tier Tribunal in England, or the leasehold valuation tribunals in Wales.
It is also important to recognise that there may be practical challenges in setting a fee. The cost of carrying out a fire risk assessment specific to the safe occupation of an individual building will range considerably, owing to the significant variations between buildings and their individual risk profiles.
It may have unintended consequences to impose a cap on a charge for work carried out by managing agents solely on fire risk assessments. Capping one cost, without considering whether charges for other activities they carry out should also be capped, might simply allow managing agents to recoup costs from other services they provide. Any such cap would need to ensure that the intended outcomes were achieved.
The Government are already considering in what circumstances fees or charges are justified and whether they should be capped or banned. We established a working group, chaired by the noble Lord, Lord Best, who looked at this alongside the regulation of property agents and reported back to government in 2019. We are currently considering those recommendations.
I thank the noble Baroness, Lady Hayter, for her work in preparing the codes of practice. As the Minister, I can say that we take on board the need to ensure that managing agents are professionalised and properly regulated. The Government will respond on that, and we take it extremely seriously. It is all about getting the right legislative vehicle, with some forward planning. Noble Lords will hear more about that—“in due course” is, I think, the phrase we use.
With regard to legal costs, not all leases allow landlords to recover their legal costs incurred through the service charge. Even where the lease permits this, there are already statutory protections in existence. Where a landlord has incurred, or has intended to incur, legal costs in connection with proceedings before a court or an appropriate tribunal involving a leaseholder, leaseholders can apply under Section 20C of the Landlord and Tenant Act 1985 for some or all of those costs not to be regarded as “relevant costs” in determining the amount of any service charge payable by the leaseholder. I thank the noble Lord for raising this important matter and assure him that the Government are actively considering the issues raised. With that assurance, I ask him to not move his amendment.
Now we turn to the amendment from the noble Baroness, Lady Hayman of Ullock, the Workington Warrior. She highlighted an amendment raised in the other place on the proposed building works agency, which would undertake the work the department is already doing on the auditing and monitoring of buildings over 18 metres with unsafe cladding. This represents poor value for money and would have the effect of increasing costs and burdens. Furthermore, the proposed works agency would oversee an audit of cladding, insulation and other building safety issues in all buildings over two storeys. This would result in hundreds of thousands of buildings being audited and would be very expensive and take numerous years. We do not consider this proportionate and therefore we oppose it.
The Earl of Lytton (CB)
The Minister answered a query I raised in connection with Amendment 72; I apologise for jumping a group. It was to do with commercial developers. I think I used the term “commercial developers”, but I intended to say “developers of commercial property”—that is, as opposed to commercial developers of residential property.
The Earl of Lytton (CB)
I said commercial developers, but I meant to say “developers of commercial property”. However, I will leave that point for the next debate.
Lord Young of Cookham (Con)
My Lords, as the Committee enters its sixth hour of sitting, this is not the time for a comprehensive wind-up. However, I thank all those who have taken part in this debate.
My noble friend Lord Naseby made a valuable point about buy-to-let investors. Over the past 10 or 20 years, buy to let has become an alternative to a conventional pension for many people. I am grateful that my noble friend the Minister said that he is open to discussion on this; we count that as a win.
My noble friend Lord Blencathra had a series of amendments on the theme of protecting leaseholders. I am grateful for them.
My noble friend Lord Leigh of Hurley made a legitimate point about the freeholder who had not claimed the money he could have. I wrote down the solution that my noble friend the Minister arrived at. He said, “We will fix it at the political level.” The mind boggles as to what exactly that involves but I am sure that, with his robust physique and experience of government, he will come up with a satisfactory outcome on that.
The amendment in the name of the noble Baroness, Lady Pinnock, would remove the cap for leaseholders. I have a lot of sympathy with that. New paragraph 2(1), proposed by government Amendment 92, states:
“No service charge is payable under a qualifying lease in respect of a relevant measure relating to a relevant defect if a relevant landlord … is responsible for the relevant defect.”
That is fine, but then there is a whole series of exclusions, of which this is one. I find it difficult to reconcile the cap with the principle that the leaseholder is innocent and should not pay; I think we will have to come to back to that.
The noble Earl, Lord Lytton, made the same point as my noble friend Lord Leigh of Hurley: that the leaseholder should be able to apply. If the leaseholder could have applied in my noble friend’s case, there would not have been a problem and the freeholder would not have been in the loop, as it were.
I am grateful to my noble friend Lady Neville-Rolfe for supporting a number of the amendments. The noble Baroness, Lady Hayman, had her own, thoughtful approach to protecting leaseholders. She referred to the cascade. I hope that her many questions will be answered; perhaps we can all share in the letter that goes round. She also supported the request for an inquiry into compensation, for which I am grateful.
On the waterfall, the Government did not seem to appear in it. I thought that they were right at the end, but they have somehow been left out. I think that the Government are at the end of the waterfall if all else fails; my noble friend the Minister is indicating that this may not be the case, but what are the levy and fund for if not to help where the costs are not otherwise met by the freeholder, the leaseholder or the developer?
The noble Lord, Lord Stunell, asked how the cap was arrived at. It may well have been through a reverse process involving the Treasury.
Finally, my noble friend the Minister said that I thought he was a snake oil salesman. I believe that he believed what he said; my comment was about the pace at which he said it, which was like an advertisement where the terms and conditions are spelled out at an accelerated pace and one does not really have time to hear them. I think my noble friend said that enfranchised leaseholders are now within the scheme; I think he said that because I read his lips. I find that difficult to reconcile with what is in government Amendment 63:
“‘Relevant building’ does not include a self-contained building or self-contained part of a building … in relation to which the right to collective enfranchisement … has been exercised.”
If that should not be there, that is fine, but that is how I read it; I also made that point in an earlier contribution.
Lord Greenhalgh (Con)
We can sort it out. I am told by my lawyer that you are wrong.
Lord Young of Cookham (Con)
If I am wrong, the Bill may be wrong, because I have just read out what is in it, but I think this is something we can sort out at the political level.
I am grateful to all noble Lords who have taken part in this debate. I beg leave to withdraw my amendment.
Lord Greenhalgh
Member’s explanatory statement
This amendment removes the provision providing that Part 4 does not apply in relation to the Palace of Westminster.
Lord Greenhalgh
“Remediation of certain defects
(1) Sections (Meaning of “relevant building”) to (Meeting remediation costs of insolvent landlord) and Schedule (Remediation costs under qualifying leases) make provision in connection with the remediation of relevant defects in relevant buildings.(2) In those sections—(a) sections (Meaning of “relevant building”) to (Associated persons) define “relevant building”, “qualifying lease”, “the qualifying time”, “relevant defect” and “associate”;(b) section (Remediation costs under qualifying leases) and Schedule (Remediation costs under qualifying leases) contain protections for tenants under qualifying leases in respect of costs connected with relevant defects, and impose liabilities on certain landlords;(c) section (Remediation orders) makes provision about remediation orders, under which a landlord in a relevant building is required to remedy certain relevant defects;(d) section (Remediation contribution orders) makes provision about remediation contribution orders, under which an associate of a landlord in a relevant building is required to contribute towards the costs of remedying certain relevant defects;(e) section (Meeting remediation costs of insolvent landlord) makes provision about cases where a company that is a landlord in a relevant building is being wound up, and confers on the court a power to require an associate of the company to contribute to its assets.”Member’s explanatory statement
This new Clause introduces provisions about the remediation of certain defects arising out of works carried out before commencement.
Lord Greenhalgh
“Meaning of “qualifying lease”
(1) This section applies for the purposes of sections (Remediation costs under qualifying leases) to (Meeting remediation costs of insolvent landlord) and Schedule (Remediation costs under qualifying leases).(2) A lease is a “qualifying lease” if—(a) it is a long lease of a single dwelling in a relevant building,(b) the tenant under the lease is liable to pay a service charge,(c) the lease was granted before 14 February 2022, and(d) at the beginning of 14 February 2022 (“the qualifying time”)—(i) the dwelling was a relevant tenant’s only or principal home,(ii) a relevant tenant did not own any other dwelling in the United Kingdom, or(iii) a relevant tenant owned only one dwelling in the United Kingdom apart from their interest under the lease.(3) Where a dwelling was at the qualifying time let under two or more leases to which subsection (2)(a) and (b) apply, any of those leases which is superior to any of the other leases is not a “qualifying lease”. (4) For the purposes of this section—(a) “long lease” means a lease granted for a term of years certain exceeding 21 years, whether or not it is (or may become) terminable before the end of that term by notice given by or to the tenant or by re-entry, forfeiture or otherwise;(b) a person “owns” a dwelling if the person has a freehold interest in it or is a tenant under a long lease of it;(c) “relevant tenant” means a person who, at the qualifying time, is the tenant, or any of the tenants, under the lease mentioned in subsection (2);(d) “service charge” has the meaning given by section 18 of the Landlord and Tenant Act 1985.”Member’s explanatory statement
This new Clause defines “qualifying lease” for the purposes of the provisions relating to the remediation of defects arising out of works carried out before commencement.
Lord Greenhalgh
“Meaning of “relevant defect”
(1) This section applies for the purposes of sections (Remediation costs under qualifying leases) to (Meeting remediation costs of insolvent landlord) and Schedule (Remediation costs under qualifying leases).(2) “Relevant defect” means a defect as regards a building that—(a) arises as a result of anything done (or not done), including anything used (or not used), in connection with relevant works, and(b) causes a building safety risk.(3) In subsection (2) “relevant works” means works relating to the building (including its initial construction) that were carried out—(a) before completion, if completion occurred in the period of 30 years ending with the coming into force of this section, or(b) by or on behalf of a relevant landlord or management company, after completion and within that period.(4) For the purposes of this section—“building safety risk”, in relation to a building, means a risk to the safety of people in or about the building arising from—(a) the spread of fire, or(b) the collapse of the building or any part of it;“completion” and “management company” are defined by regulations made by the Secretary of State;“relevant landlord” means a landlord under a lease of the building or any part of it.”Member’s explanatory statement
This new Clause defines “relevant defect” for the purposes of the provisions relating to the remediation of defects arising out of works carried out before commencement.
Lord Greenhalgh
“Associated persons
(1) For the purposes of sections (Remediation costs under qualifying leases) to (Meeting remediation costs of insolvent landlord) and Schedule (Remediation costs under qualifying leases), a person (A) is associated with another person (B) in the circumstances mentioned in subsections (2) and (3).(2) If A is an individual, A is associated with any body corporate of which A was a director at any time in the period of 5 years ending at the qualifying time.(3) If A is a body corporate, it is associated with another body corporate (B) if—(a) at any time in the period of 5 years ending at the qualifying time, a person who was a director of A was also a director of B, or(b) at the qualifying time, one of them controlled the other or a third body corporate controlled both of them.Subsections (4) to (6) set out the cases in which a body corporate is regarded as controlling another body corporate.(4) A body corporate (X) controls a company (Y) if X possesses or is entitled to acquire—(a) at least half of the issued share capital of Y,(b) such rights as would entitle X to exercise at least half of the votes exercisable in general meetings of Y,(c) such part of the issued share capital of Y as would entitle X to at least half of the amount distributed, if the whole of the income of Y were in fact distributed among the shareholders, or(d) such rights as would, in the event of the winding up of Y or in any other circumstances, entitle it to receive at least half of the assets of Y which would then be available for distribution among the shareholders.(5) A body corporate (X) controls a limited liability partnership (Y) if X—(a) holds a majority of the voting rights in Y,(b) is a member of Y and has a right to appoint or remove a majority of other members, or(c) is a member of Y and controls alone, or pursuant to an agreement with other members, a majority of the voting rights in Y.(6) A body corporate (X) controls another body corporate (Y) if X has the power, directly or indirectly, to secure that the affairs of Y are conducted in accordance with X’s wishes.(7) In subsection (5) a reference to “voting rights” is to the rights conferred on members in respect of their interest in a limited liability partnership to vote on those matters which are to be decided on by a vote of the members of the limited liability partnership.(8) In determining whether one body corporate (X) controls another, X is treated as possessing—(a) any rights and powers possessed by a person as nominee for it, and(b) any rights and powers possessed by a body corporate which it controls (including rights and powers which such a body corporate would be taken to possess by virtue of this paragraph).”Member’s explanatory statement
This new Clause defines “associated person” for the purposes of the provisions relating to the remediation of defects arising out of works carried out before commencement.
The Deputy Chairman of Committees (Baroness Watkins of Tavistock) (CB)
The question is that Amendments 79 to 81 be agreed to.
Lord Greenhalgh (Con)
I am sorry. Those amendments are not government amendments. Will they go in Hansard?
The Deputy Chairman of Committees (Baroness Watkins of Tavistock)
Do not worry. They will not because Hansard will cover your back and my back. I have been told that this is the most complicated thing that has been done in Grand Committee for years, so I think we have to accept it if I have made a mistake. I thought they were government amendments.
Lord Greenhalgh
“(c) the relevant Northern Ireland department.”Member’s explanatory statement
This amendment places the Secretary of State under a duty to consult the relevant department in Northern Ireland before making arrangements to establish the new homes ombudsman scheme.
Lord Greenhalgh
“SCHEDULE REMEDIATION COSTS UNDER QUALIFYING LEASESInterpretation
1_ In this Schedule—“associated”: see section (Associated persons);“building safety risk” has the meaning given by section (Meaning of “relevant defect”);“qualifying lease”: see section (Meaning of “qualifying lease”);“the qualifying time” has the same meaning as in section (Meaning of “qualifying lease”); “relevant building”: see section (Meaning of “relevant building”);“relevant defect”: see section (Meaning of “relevant defect”);“relevant measure”, in relation to a relevant defect, means a measure taken—(a) to remedy the relevant defect, or(b) for the purpose of—(i) preventing a relevant risk from materialising, or(ii) reducing the severity of any incident resulting from a relevant risk materialising;“relevant risk” here means a building safety risk that arises as a result of the relevant defect;“service charge” has the meaning given by section 18 of the Landlord and Tenant Act 1985.No service charge payable for defect for which landlord or associate responsible
2_(1) No service charge is payable under a qualifying lease in respect of a relevant measure relating to a relevant defect if a relevant landlord—(a) is responsible for the relevant defect, or(b) is or has at any time been associated with a person responsible for a relevant defect.(2) For the purposes of this paragraph a person is “responsible for” a relevant defect if—(a) in the case of an initial defect, the person was the developer or carried out works relating to the defect;(b) in any other case, the person carried out works relating to the defect.(3) In this paragraph—“developer” means a person who undertakes or commissions the construction or conversion of a building (or part of a building) with a view to granting or disposing of interests in the building or parts of it;“initial defect” means a relevant defect arising in connection with works carried out before completion (within the meaning of section (Meaning of “relevant defect”));“relevant landlord”, in relation to a qualifying lease, means the landlord under the lease or any superior landlord.Paragraph 2: extension of protection to superior leases
3_(1) This paragraph applies if, as a result of paragraph 2, an amount of service charge (an “unrecoverable amount”) that would otherwise be payable under a qualifying lease in respect of a relevant measure is not payable.(2) Any superior lease has effect as if any liability of the tenant under the superior lease to pay an amount in respect of the relevant measure (“the relevant amount”) were a liability to pay an amount equal to—(a) the relevant amount, minus(b) the unrecoverable amount.(3) In this paragraph “superior lease” means any lease which is superior to the qualifying lease.No service charge payable if prescribed conditions are met
4_(1) No service charge is payable under a qualifying lease in respect of a relevant measure relating to any relevant defect if any prescribed conditions, relating to a relevant landlord or the value of the qualifying lease, are met.(2) In this paragraph—“prescribed” means prescribed by regulations made by the Secretary of State;“relevant landlord” has the same meaning as in paragraph 2. Limit on service charge in other cases
5_(1) A service charge which would otherwise be payable under a qualifying lease in respect of a relevant measure relating to any relevant defect is payable only if (and so far as) the sum of—(a) the amount of the service charge, and(b) the total amount of relevant service charges which fell due before the service charge fell due,does not exceed the permitted maximum.(2) In this paragraph “relevant service charge” means a service charge under the lease in respect of a relevant measure relating to any relevant defect that—(a) fell due in the pre-commencement period, or(b) falls due after commencement.(3) In sub-paragraph (2) “the pre-commencement period” means the period—(a) beginning 5 years before commencement or, if later, on the day the relevant person became the tenant under the qualifying lease, and(b) ending with commencement.“The relevant person” means the person who was the tenant under the qualifying lease at commencement.(4) In this paragraph—“commencement” means the time this paragraph comes into force;“the permitted maximum”: see paragraph 6.Paragraph 5: the permitted maximum
6_(1) In paragraph 5 “the permitted maximum”, in relation to a qualifying lease, has the following meaning.(2) The permitted maximum is (subject to sub-paragraphs (3) to (5))—(a) if the premises demised by the qualifying lease are in Greater London, £15,000;(b) otherwise, £10,000.(3) Where the qualifying lease is a shared ownership lease and the tenant’s total share was less than 100% at the qualifying time, the permitted maximum is the tenant’s total share (as at that time) of what would otherwise be the permitted maximum.(4) Where the value of the qualifying lease at the qualifying time is at least £1,000,000 but does not exceed £2,000,000, the permitted maximum is £50,000.(5) Where the value of the qualifying lease at the qualifying time exceeds £2,000,000, the permitted maximum is £100,000.(6) The Secretary of State may by regulations make provision about the determination of the value of a qualifying lease for the purposes of paragraph 4 and this paragraph.(7) In this paragraph “shared ownership lease” and “total share” have the meaning given by section 7 of the Leasehold Reform, Housing and Urban Development Act 1993.Annual limit on service charges
7_(1) The Secretary of State may by regulations make provision limiting the total amount of service charges payable in any period of 12 months under a qualifying lease in respect of relevant measures relating to any relevant defect to one fifth of the permitted maximum.(2) In this paragraph “the permitted maximum” means the permitted maximum as defined by paragraph 6 in relation to the lease.No service charge payable for cladding remediation where tenant was resident
8_(1) No service charge is payable under a qualifying lease in respect of cladding remediation if the condition in section (Meaning of “qualifying lease”)(2)(d)(i) (resident tenant) was met at the qualifying time. (2) In this paragraph “cladding remediation” has the meaning given by regulations made by the Secretary of State.No service charge payable for legal expenses relating to relevant defects
9_(1) No service charge is payable under a qualifying lease in respect of legal expenses relating to the liability (or potential liability) of any person incurred as a result of a relevant defect.(2) In this paragraph “legal expenses” means any costs incurred, or to be incurred, in connection with—(a) obtaining legal advice,(b) any proceedings before a court or tribunal,(c) arbitration, or(d) mediation.Paragraphs 2 to 9: supplementary
10_(1) This paragraph supplements paragraphs 2 to 9 (the “relevant paragraphs”).(2) Where a relevant paragraph provides that no service charge is payable under a lease in respect of a thing—(a) no costs incurred or to be incurred in respect of that thing (or in respect of that thing and anything else)—(i) are to be regarded for the purposes of the relevant provisions as relevant costs to be taken into account in determining the amount of a service charge payable under the lease, or(ii) are to be met from a relevant reserve fund;(b) any amount payable under the lease, or met from a relevant reserve fund, is limited accordingly (and any necessary adjustment must be made by repayment, reduction of subsequent charges or otherwise).(3) In this paragraph—“the relevant provisions” means sections 18 to 30 of the Landlord and Tenant Act 1985 (service charges) and section 42 of the Landlord and Tenant Act 1987 (service charge contributions to be held on trust);“relevant reserve fund” means—(a) a trust fund within the meaning of section 42 of the Landlord and Tenant Act 1987,(b) an express trust of a kind mentioned in subsection (9) of that section, comprising payments made by the tenant under the qualifying lease and others, or(c) any other fund comprising payments made by the tenant under the qualifying lease and others, and held for the purposes of meeting costs incurred or to be incurred in respect of the relevant building in question or any part of it (or in respect of that building or part and anything else).No increase in service charge for other tenants
11_ Where—(a) an amount (“the original amount”) would, apart from this Schedule, be payable by a tenant under a lease of premises in a relevant building, and(b) a greater amount would (apart from this paragraph) be payable under the lease as a result of this Schedule,the lease has effect as if the amount payable were the original amount.Recovery of service charge amounts from landlords
12_(1) The Secretary of State may by regulations make provision for and in connection with the recovery, from a prescribed relevant landlord, of any amount that is not recoverable under a lease as a result of this Schedule.(2) In this paragraph—“prescribed” means prescribed by regulations under this paragraph;“relevant landlord”, in relation to a lease, means the landlord under the lease or any superior landlord. Information
13_(1) The Secretary of State may by regulations make provision requiring a tenant under a qualifying lease to give prescribed information or documents to the landlord under the lease or any superior landlord.(2) The regulations may provide that the information or documents are to be given in a prescribed way.(3) In this paragraph “prescribed” means prescribed by the regulations.Anti-avoidance
14_ A covenant or agreement (whenever made) is void insofar as it purports to exclude or limit any provision made under this Schedule.”Member’s explanatory statement
This new Schedule contains protections for certain leaseholders and others, relating to certain remediation costs, and imposes corresponding liabilities on certain landlords.
Lord Greenhalgh
Member’s explanatory statement
This amendment is to ensure that the new homes ombudsman scheme includes provision about provision of information to the relevant department in Northern Ireland.
Lord Greenhalgh
Member’s explanatory statement
This amendment glosses the meaning of “occupation condition” for homes in Northern Ireland.
Lord Greenhalgh
“(c) in relation to land in Northern Ireland, a legal estate which is—(i) an estate in fee simple absolute in possession,(ii) an estate in fee simple in possession subject to a rent payable under a fee farm grant, or(iii) a term of years absolute granted for a term of more than 21 years from the date of the grant.”Member’s explanatory statement
This amendment provides the meaning of “relevant interest” for land in Northern Ireland.
Lord Greenhalgh
(a) in the case of regulations made by the Secretary of State or the Welsh Ministers, by statutory instrument, and(b) in the case of regulations made by a Northern Ireland department, by statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979 (S.I. 1979/1573 (N.I. 12)).”Member’s explanatory statement
This amendment provides for procedural matters connected to the power conferred on a Northern Ireland department to make regulations.
Lord Greenhalgh
“(c) the relevant Northern Ireland department.”Member’s explanatory statement
This amendment places the Secretary of State under a duty to consult the relevant department in Northern Ireland before making regulations about the new homes ombudsman scheme.
Lord Greenhalgh
Member’s explanatory statement
This amendment places the Secretary of State under a duty to consult the relevant department in Northern Ireland about the code of practice.