Building Safety Bill

(Limited Text - Ministerial Extracts only)

Consideration of Commons amendments
Tuesday 26th April 2022 Lords Chamber

Moved by

[Lord Greenhalgh]

That this House do not insist on its Amendment 6 and do agree with the Commons in their Amendment 6A in lieu.

6A: Page 11, line 7, at end insert the following new Clause—
“Report on certain safety-related matters
(1) Before the end of the period of three years beginning when this section comes into force, the regulator must—
(a) carry out a cost-benefit analysis of making regular inspections of, and testing and reporting on, the condition of electrical installations in relevant buildings;
(b) consider what further provision under the Building Act 1984, or in guidance under that Act, may be made about—
(i) stairs and ramps in relevant buildings,
(ii) emergency egress of disabled persons from relevant buildings, and
(iii) automatic water fire suppression systems in relevant buildings, with a view to improving the safety of persons in or about relevant buildings, and carry out a cost-benefit analysis of the making of that provision.
(2) Before the end of that period, the regulator must—
(a) prepare one or more reports about the analysis mentioned in subsection (1) (which may also contain recommendations), and
(b) give them to the Secretary of State.
(3) The Secretary of State must publish any report received under subsection (2).
(4) In this section “cost-benefit analysis” means—
(a) an analysis of the costs together with an analysis of the benefits that will arise if the things mentioned in subsection (1)(a) are done or the provision mentioned in subsection (1)(b) is made, and
(b) an estimate of those costs and of those benefits (subject to subsection (5)).
(5) If, in the opinion of the regulator—
(a) the costs or benefits cannot reasonably be estimated, or
(b) it is not reasonably practicable to produce an estimate, the cost-benefit analysis need not estimate them, but must include a statement of the regulator’s opinion and an explanation of it.
(6) In this section—
“electrical installation” means fixed electrical cables or fixed electrical equipment located on the consumer’s side of the electricity supply meter;
“relevant building” means a residential building or any other kind of building that the regulator considers appropriate.”

[The Minister of State, Home Office and Department for Levelling Up, Housing & Communities (Lord Greenhalgh) (Con)]

My Lords, with the leave of the House, I will also speak to Motions B to H.

Here we are again: debating this landmark Bill which will bring forward the biggest changes to building safety legislation in our history. I will turn quickly to the outstanding non-government amendments. Noble Lords, led by the dynamic duo, my noble friends Lord Young of Cookham and Lord Blencathra, extended the definition of “relevant building” to buildings of all heights containing two or more dwellings. As the Government have said on many occasions, we must restore proportionality to the system. That is why we cannot agree to extend leaseholder protections to include buildings under 11 metres. As I have said repeatedly, there is no systemic risk of fire for buildings below 11 metres. Such buildings are extremely unlikely to need costly remediation to make them safe. Despite research and lobbying from a number of areas, the department has been made aware of only a handful of low-rise buildings where freeholders have been commissioning such work, and even fewer where that work was actually based on a proper assessment in line with the PAS 9980 principles.

My right honourable friend the Minister for Housing was clear that leaseholders in buildings below 11 metres should write to my department should they find that their freeholder or landlord is commissioning costly remediation works. I have already intervened directly with building owners and landlords to challenge freeholders, such as in Mill Court, and will continue to do so. Your Lordships can be assured that I will bring my full weight to bear where landlords are looking to carry out works that are not needed or justified. However, given the very small number of buildings involved, it is not appropriate to take forward a blanket legislative intervention and bring hundreds of thousands more buildings into scope. I must point out to noble Lords that doing this could backfire, sending mixed signals and encouraging the market to take an overly risk-averse approach to this class of buildings.

Turning to leaseholder-owned—or collectively enfranchised and commonhold—buildings, the Government’s original proposals included an exemption from the leaseholder protection provisions for leaseholder-owned buildings: those in which the leaseholders have collectively enfranchised, and those which are on commonhold land. Noble Lords agreed an amendment in the names of my noble friends Lord Young and Lord Blencathra—the dynamic duo again—and the noble Earl, Lord Lytton, to remove that exemption.

Those noble Lords will know that I have a great deal of sympathy with their position. I know that the amendment is well-intentioned and driven by a desire to protect these leaseholders, and the Government share those aims. However, as I said on Report, these amendments will not have the intended effect of protecting leaseholders living in those buildings. Those leaseholders who have enfranchised would still have to pay, but in their capacity as owners of the freehold rather than as leaseholders. Worse, where some leaseholders have enfranchised and others have not, the enfranchised leaseholders would have to pay for remediation of the whole building in their capacity as owners of the freehold, including the share of remediation costs that would otherwise have been recoverable from those leaseholders who have not enfranchised, once they have paid up to the cap. This would create the perverse situation where the leaseholder protections result in an increase in liability for those leaseholders who have chosen to collectively enfranchise. That is why the other place agreed to reinstate the exemption for leaseholder-owned buildings. My right honourable friend the Minister for Housing announced last Wednesday that the Government would consult on how best leaseholders in collectively enfranchised and commonhold buildings can be protected from the costs associated with historical building safety defects to the extent as all leaseholders.

Turning finally to the qualifying leaseholder contribution caps, the Government proposed that lease- holders’ contributions should be capped at £10,000, or £15,000 in Greater London. We believe that this approach protects leaseholders, while ensuring that work to remediate buildings can get under way. Noble Lords agreed with the amendment of the noble Baroness, Lady Hayman, to reduce that cap on contributions to zero.

I will not repeat all of the Government’s arguments here, but I want to remind Peers of just how far the Government have come. Leaseholders are fully protected from costs associated with the removal of unsafe cladding. On non-cladding defects, where a developer has signed up to our developer pledge—that is more than 35 developers—they will fix non-cladding defects, as well as cladding defects, in their own buildings, and these leaseholders will pay nothing. If a building owner is, or is linked to, the developer, that building owner will be liable for the costs associated with non-cladding defects, and their leaseholders will pay nothing. If the building owner or landlord is not linked to the developer but has the wealth to meet the non-cladding costs in full, their leaseholders will pay nothing. If a leasehold property is valued at less than £175,000, or £325,000 in London, the leaseholder will pay nothing, and, if the leaseholder has already contributed up to the cap, they will pay nothing. Based on this approach, the Government’s assessment is that the vast majority of leaseholders will pay less than the caps, and many will pay nothing at all.

In relation to safety checks, noble Lords agreed to an amendment that requires the new building safety regulator to look at a number of important safety matters. We have consulted with the HSE and are happy to confirm that we fully accept the principle of this amendment, and the building safety regulator will be happy to take forward these safety reviews. I thank the noble Lord, Lord Stunell, for his passionate advocacy in this area. The Government therefore proposed an alternate version of this proposal, which was agreed in the other place. I hope noble Lords will agree that this provides clearer drafting and a more practical and pragmatic approach. Importantly, we have increased the time available to the regulator from two years to three years. This reflects the time needed for the regulator to develop the capacity to carry out these reviews alongside all its other functions. We have also made a number of technical improvements to the Bill, and I am happy to answer questions while summing up.

[Lord Stunell (LD)]

My Lords, as the person who has just had his name mentioned, I will start my very brief contribution by saying that there will be noble Lords who have a lot of criticism of what has come back from the Commons, but I am not one of them in respect of Amendment 6A. I am very pleased to see that the Government have responded well to the views that were very strongly expressed by Members of your Lordships’ House on all sides on the importance of tackling these issues. The Minister has come back with an amendment that is longer than the one that we tabled, and he has come back with a period of time that is longer than the one that we suggested. I am delighted with the first, which shows that he has better drafters than I had at my disposal, but I am not so happy about the three years.

However, it is going to be a major step forward if we get these issues of fire suppression, stairways and ramps, electrical equipment and safety, and provision for people with disabilities properly examined and costed, with the regulations coming in front of the House and in front of the Secretary of State. Even if it takes three years, it will be a significant step forward, and I am very pleased indeed to see that it is included in this Bill.

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[Baroness Pinnock (LD)]

My Lords, it is good to recognise that the Bill has indeed been transformed during its passage through Parliament, but the major transformation point was initiated by the Secretary of State, Michael Gove, when he said that

“leaseholders are shouldering a desperately unfair burden. They are blameless, and it is morally wrong that they should be the ones asked to pay the price.”—[Official Report, Commons, 10/1/22; col. 283.]

I agree, as many others across the House will. Unfortunately, however, the Bill currently does expect some leaseholders to pay. My colleagues and I are asking the Government today to think again.

The Government argue that Article 1 of Protocol 1 of the European Convention on Human Rights ensures a balance of rights between property owners and leaseholders, which in their view means that leaseholders have to pay towards the costs. That is the basis of the Government’s argument for the cap of £10,000 and £15,000. However, that view was comprehensively challenged by my noble friend Lord Marks, whose argument was endorsed fully by the noble and learned Lord, Lord Hope of Craighead, on Report. Senior legal minds in this House agree that it is possible within the ECHR for innocent leaseholders to pay nothing.

This legitimately opens up the opportunity, which must be grasped, for the Government to accept that leaseholders must not pay a penny whatever the height of the building, hence Motion D1 in my name to include buildings under 11 metres so that leaseholders in those buildings do not pay. As the noble Lord, Lord Young of Cookham, rightly reminded us, a building under 11 metres has been destroyed by fire in under 11 minutes. We really need to think again about those buildings under 11 metres. However, I thank the Minister for the assurances he has given to those leaseholders in buildings under 11 metres at the Dispatch Box today and for urging them to get directly in contact with him if they get any invoices for remediation works. I am sure I will be holding him to account on that one, as will the leaseholders, and I am sure they will get in touch with us across the House to make sure that they do not pay. They must not.

What I do know is that the Government need to think again about the leaseholder cap. My Motion H2 reduces the cap back to zero, where it should be. I remind the House of the commitment by Secretary of State Michael Gove that leaseholders should not be paying the cost incurred as the result of the sometimes deliberate actions of others. The Minister himself has acknowledged tonight that some leaseholders will still pay, when we agreed in January at the very start of this great transformation that they are blameless and it is morally wrong that they should have to be the ones to pay the price. We have looked after many leaseholders but not all.

Obduracy in the face of moral right is a failure of political leadership. We on the Liberal Democrat Benches will support the noble Baroness, Lady Hayman of Ullock, in her Motion H1 to achieve a degree of improvement to the lot of leaseholders, who have shouldered the burden of anxiety and fear for too long and whose campaigning efforts have achieved so much.

[Lord Greenhalgh (Con)]

My Lords, I must thank noble Lords for their contributions to this debate. I am not sure; maybe we are close to that point where we can say, “One more heave”. I want quickly to turn to Amendment 94 and Motion D1, the amendment of the noble Baroness, Lady Pinnock, to the Government’s Motion D, where she disagrees with the Government. I explained in my opening speech the reasoning behind our Amendment 94A and I do not propose to repeat my arguments. I simply remind noble Lords that the approach the Government have proposed is sensible. Setting the threshold at 11 metres will help restore proportionality to the system, as also argued by my noble friend Lady Neville-Rolfe, and the Government have committed to consult on how best leaseholders in collectively enfranchised and commonhold buildings can be protected. On timescales, in response to my noble friend, I think we said “soon”. I shall strengthen that and say “as soon as possible”. That is a big concession.

I turn to Motion H1 in the name of the noble Baroness, Lady Hayman, as an amendment to the Government’s Motion H. It would replace a zero cap in a previous amendment with £250 for leaseholder contributions, while Motion H2 in the name of the noble Baroness, Lady Pinnock, disagrees with the Government’s caps.

Motion H1 would make changes to the leaseholder contribution caps in Schedule 8 and reduce them to £250, up from the zero cap in her previous amendment. Motion H2 disagrees with the Government’s Motion and would return the caps to zero. As I said in my opening speech, the Government have been clear that setting the leaseholder contribution caps to zero or to a nominal level, such as £250 or £25 a year for 10 years, would not be a proportionate approach. I reiterate the Government’s commitment to protecting leaseholders. Indeed, it is hard to overstate how far-reaching our proposed protections are. They represent a hugely significant and robust improvement on the existing position for leaseholders.

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Moved by

[Lord Greenhalgh]

That this House do agree with the Commons in their Amendment 78A.

78A: Clause 114, page 119, leave out lines 14 and 15.

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Moved by

[Lord Greenhalgh]

That this House do agree with the Commons in their Amendments 93A and 93B.

93A: Line 13, leave out “under qualifying leases”

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Moved by

[Lord Greenhalgh]

That this House do agree with the Commons in their Amendment 94A.

94A: Line 7, at end insert “and—
(a) is at least 11 metres high, or
(b) has at least 5 storeys.
This is subject to subsection (2A).
“Relevant building” does not include a self-contained building or self- contained part of a building—
(a) in relation to which a right under Part 1 of the Landlord and Tenant Act 1987 (tenants’ right of first refusal) or Part 3 of that Act (compulsory acquisition by tenants of landlord’s interest) has been exercised,
(b) in relation to which the right to collective enfranchisement (within the meaning of Chapter 1 of Part 1 of the Leasehold Reform, Housing and Urban Development Act 1993) has been exercised,
(c) if the freehold estate in the building or part of the building is leaseholder owned (within the meaning of regulations made by the Secretary of State), or
(d) which is on commonhold land.”

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Moved by

[Lord Greenhalgh]

That this House do agree with the Commons in their Amendments 98A, 98B and 98C.

98A: Line 6, leave out “(2)” and insert “(1A)”

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Moved by

[Lord Greenhalgh]

That this House do agree with the Commons in their Amendments 107A, 108A, 109A and 109B.

107A: Line 17, leave out “an associate of” and insert “associated with”

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Moved by

[Lord Greenhalgh]

That this House do agree with the Commons in their Amendment 145A.

145A: Line 1, leave out “4,”

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Moved by

[Lord Greenhalgh]

That this House do agree with the Commons in their Amendments 184A, 184B, 184D and 184D.

184A: In paragraph 2(4) of that Schedule, in the definition of “relevant landlord” after “lease” insert “at the qualifying time”

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20:34

Division 8

Ayes: 187

Noes: 209