Building Safety Remediation: Leaseholders

(Limited Text - Ministerial Extracts only)

Wednesday 22nd June 2022 Westminster Hall

[The Minister for Housing (Stuart Andrew)]

It is a pleasure to serve under your chairmanship, Mr Stringer. I thank the hon. Member for Birmingham, Ladywood (Shabana Mahmood) for organising this important debate and for noting the fifth anniversary of the Grenfell disaster.

The hon. Lady has been a powerful and effective advocate for leaseholders in her constituency who, like those all over the country, have been caught up in a mess not of their making, and one that they should not be held responsible for. She is right to highlight the very human cost that people have suffered from fear of the places they live in and call home, and from worrying about whether they are safe. I thank her for continuing to hold the Government to account for our role, particularly given that we promised to strengthen our support for leaseholders and restore confidence and proportionality to the market.

I will come on to the case she raised in a moment, but I first want to emphasise that the Government are on the side of leaseholders. We are making good on that sentiment with our sweeping set of reforms to building safety, the mortgage and lending market, and building insurance—reforms that will help to put things right, with far-reaching legal and financial protections for leaseholders who have been affected by this crisis. At the same time, we are forcing building owners to step up and fix the cladding issues that, in many cases, they helped to create.

I would like to say a bit more about each of those reforms and how we are addressing the issues that the hon. Lady has raised. I thank her for writing to the Secretary of State about the issues at Islington Gates. First, I recognise—we as a Government recognise—that the situation is unjust and unfair for leaseholders living in Islington Gates.

I want to be crystal clear on where the Government stand on this kind of situation. We expect—no ifs, no buts—developers to do the right thing and take responsibility for the buildings that they have developed. Most of the industry recognises this expectation and, equally, recognises the need to do the right thing by leaseholders. That is why more than 45 developers have signed a pledge to do exactly that. As I speak today, we are turning those pledges into legally binding contracts. We would expect such contracts to cover any building developed by any company within their corporate group, including complex cases where they acquired the original developer of the building.

As hon. Members would expect, my Department will work closely with pledge signatories to agree the list of buildings covered by their pledge, and we have pushed developers in the sector to take ownership of remediation work. We have always recognised that there will be complex situations, as is the case with Islington Gates, where the water has been muddied by acquisitions, corporate restructures and other changes. I commit to the hon. Lady that we will follow up at the earliest opportunity to see whether the development of the building can be attributed to one of the pledged signatories. I assure her that I will take a very personal interest in helping her with this case.

If it cannot be attributed to one of those companies, this case will inform our thinking on which further companies should be asked to sign this pledge. I assure her that even if the developer of Islington Gates is not in the initial scope, the remediation of the unsafe cladding will be fully grant-funded. The remediation of unsafe cladding on this building is being funded through the building safety fund—£6.8 million has been allocated for this work so that leaseholders are not paying for the works to the cladding. However, I take on board the point she has raised in this debate. We must listen to and learn from the experiences that she has highlighted. I want to ensure that we understand more about the issues that have been discovered here, and ensure that the building safety fund is run efficiently. I will raise those points with my noble Friend Lord Greenhalgh.

[Shabana Mahmood]

I welcome the Minister’s commitment, and I do appreciate it. I look forward to speaking to him in detail about the particular circumstances at Islington Gates. I am sure that my constituents will have heard and appreciated his recognition of the situation as unfair and unjust. Could I press him on how he sees the recovery unit working, in terms of the carrot-and-stick approaches that we might take with developers that still fail to live up to their responsibilities?

[Stuart Andrew]

The hon. Lady is right; this will probably be one of those early cases within the Act where we need to test this. That is why I am keen to work with her, so that we can ensure that officials in the Department fully understand the specific issues relating to the case, as it may well also apply to other cases, and we can roll that out further.

The hon. Lady will know that we have introduced many protections relating to non-cladding defects under the leaseholder protections within the Act. I assure her and residents of Islington Gates that no qualifying leaseholder in a building taller than 11 meters or five stories will face bills to remediate dangerous cladding, and that the bills for non-cladding remediation will, as she said, be capped at a maximum of £10,000. Those cost protections will come into force on 28 June, and costs already paid out in the last five years, including for interim measures such as waking watch, will count towards that cap. I reiterate that we are protecting leaseholders, in law, from that date. Leaseholders no longer have to worry about being landed with excessive bills that they cannot afford.

We will not stand by and allow developers and contractors who have created these defects to get away with it. Significant new powers in the Building Safety Act will allow those who created building safety defects to be held to account. We are retrospectively extending the limitation period under the Defective Premises Act 1972 to 30 years, giving new powers to courts to remove the protection afforded by shadowy shell companies and special-purpose vehicles, and creating new powers to hold construction product manufacturers to account.

Remediation orders and remediation contribution orders will allow the first-tier tribunal to force firms to fix—and pay to fix—their buildings. We have introduced those powers so that legal action can be pursued against developers, contractors, manufacturers and freeholders. The Department’s own recovery unit has been established to pursue firms who fail to do the right thing, including through the courts. Leaseholders deserve accountability from those who built the buildings and those who have owned and exploited them.

I am conscious of time, but I will quickly touch on the insurance issue, because I know that hon. Members have mentioned it. We are working tirelessly with industry to unlock that market. Where individual buildings have struggled to access cover, we have worked with industry to highlight the issues, and we have seen the British Insurance Brokers’ Association place those risks through its members. I offer my full support if such help would prove to be useful to the hon. Lady’s constituents.

To address the lack of affordable and adequate buildings insurance, we have been working closely with the Association of British Insurers to develop solutions, and my colleague Lord Greenhalgh met the association last month to discuss progress on an insurance pool. The Secretary of State received an initial report from the FCA on 10 May as part of its ongoing review, the findings of which will be critical to developing a full understanding of the issues in the market.

The FCA will consider all routes, whether enacted by the regulator, Government or industry, to ensure leaseholders get the value for money that they deserve. I understand the many concerns that the hon. Member for Birmingham, Ladywood has raised. We must bring proportionality back into the system, and I know that the Secretary of State takes this very seriously.

On the point that the hon. Lady made about including insurance payments in the cap, that is obviously something that I cannot commit to right now, but I will certainly take it back to the Department. However, I do take this very seriously, and we will take the recommendations very seriously. No solution is off the table when it comes to getting back to a competitive and fair insurance market for leaseholders. As I said at the beginning, I am happy to continue to work with the hon. Lady, and with other hon. Members who may have constituents affected by this, as we roll out the benefits of the Act.

Motion lapsed (Standing Order No. 10(6)).