Leasehold and Freehold Reform Bill (Second sitting)

Debate between Mike Amesbury and Marie Rimmer

Committee stage
Tuesday 16th January 2024 Public Bill Committees

[Mike Amesbury]

Q Have the Government spoken to you about why they have seemingly rowed back on the direction of travel on commonhold?

Professor Hopkins: Since we published our reports in 2020, we have been supporting the Government as they work through the reports and develop their legislative plans, but I cannot speak for what decisions they have made and what has led them to make those decisions on what is and is not in the Bill.

[Ms Marie Rimmer (St Helens South and Whiston) (Lab)]

Q Good afternoon, professor. You have provided several recommendations to the Government on leasehold enfranchisement. Do you believe that the provisions in the Bill will make it easier and cheaper to buy a freehold or extend a lease?

Professor Hopkins: Yes, they certainly will, and I will draw attention to a number of provisions. First, those that deal with the price that leaseholders will pay will ensure that it is cheaper. For the first time, how that price is calculated is mandated, and it is designed to identify the value of the asset that the leaseholder is receiving. At the moment, the focus is on compensating the freeholder for the asset they are losing. The price will consist of two elements. There will be a sum of money representing the terms and buying out the ground rent, but that will be capped so that onerous ground rents are not taken into account in calculating that sum, and a price representing the reversion, which would be the value today of either a freehold or a 990-year lease that will come into effect at the end of the current lease. In calculating those elements of the price, the deferment and capitalisation rates will be prescribed, so that will remove the current disputes.

The price is mandated and the price is cheaper, and there are other things in the Bill that will help, such as the ability of leaseholders to require the landlord to take leasebacks of property when they are exercising a collective enfranchisement so that, for example, they do not have to pay for the expense of commercial units that they do not want responsibility for. There is a lot in there. There is reducing price and also reducing the ability for disputes to arise.

I will also refer to the provisions on costs that will generally ensure that parties pay their own costs in relation to a claim. Leaseholders will not be paying the costs of freeholders.

Building Safety Bill (Fourth sitting)

Debate between Mike Amesbury and Marie Rimmer

Tuesday 14th September 2021 Public Bill Committees

[Mike Amesbury]

Q Various Ministers have promised 17 times. The language has slightly changed. Originally, it was

“to protect leaseholders from historical remediation costs”,

and then it was “unaffordable costs”. Does this Bill do that? What key things are missing from the Bill?

Dr Glen: No, I do not think it does, because the Bill says that historical costs can be levied on the leaseholders at 28 days’ notice et cetera. I heard in an earlier session about whether that would really help. It could increase costs, because we will have two separate charges now. We might want to touch on that later. No, it does not. There are some amendments around. As we said, the polluter pays is part of the amendments, because we need to try to figure out where the money is coming from. I go back to my earlier statement: the only way I can see it happening, unless we are going to be here in four years’ time still discussing this, is something big like Government—I think the Government are the only size that can do this—to make sure that we front-fund pay. Then, absolutely, Government should figure out how to get the money back to protect the taxpayer. So I do not think it does it, in short.

Martin Boyd: I agree. I have nothing to add to that, it is just not going to do it.

[Ms Marie Rimmer (St Helens South and Whiston) (Lab)]

Q On a similar line to my colleague on the right, will the Bill deliver what we are looking for in the future? We are talking about a Bill for the future and not historically. Does it handle the design of buildings? Does it adequately answer the questions about construction, materials and insurance? Will it prevent future incidents such as Grenfell?

Martin Boyd: No. Judith Hackitt said the problem is that we need a fundamental culture change in the industry, but I have to defend the industry. If you are providing into a market that says, “You have liability for a product for two years. After that two years, the liability moves over to a warranty scheme for another eight years, and then after that you walk away scot-free,” how does that encourage developers to produce high-quality products? The Bill reinforces that because, again, we have a new homes ombudsman. For two years, we are not proposing to change in any way the idea that somebody builds a building, keeps quiet for two years that they have problems with it, and then says, “I’m sorry, Mr Customer, you are not protected by the normal Consumer Protection Act rules because this is a property, not a toaster.”

--- Later in debate ---

[Mike Amesbury]

Q Thank you, Matt, for everything that you and your members do. What is missing from the Bill? What would genuinely make buildings safer, and things a damn sight easier for your members?

Mr Wrack: A single system of regulation would be better than what is proposed. I understand that there may be a need for a phased approach, but I am not sure that is what is in front of us. I think that the 18-metre cut-off point is incorrect, too. There should be a move towards an elimination of private-sector interests in building control. The idea that people can choose their own building control system is wrong, and appears wrong to many people. Finally—this relates more to the background to the Bill—resourcing is a huge issue for us in the fire service, for local authority building control, and for the HSE.

[Ms Rimmer]

Q That covered part of my question, which was: were the Government right to retain the duty holder’s power to choose a building control body? Will the reforms in the Bill fix the problems identified by Dame Judith Hackitt?

Mr Wrack: We welcome the commitment in the Bill to driving up standards. Regrettably, we in the union attend inquests, sometimes on the deaths of members of the public and sometimes on deaths of our members. There have been incidents in which our members have died and it has emerged that the fire risk assessor in the building had no qualifications. That is quite shocking. It is a sign of a deregulated sector.

We welcome the drive to improve and professionalise standards operating in a whole number of areas; if you listen to the shocking evidence to the Grenfell Tower inquiry, you find it relates to fire safety awareness among architects, to fire risk assessors, and to building control. We have from day one opposed the privatisation of local authority building control. If you listen to the evidence from Grenfell, there have been unprecedented cuts in local authority building control teams. That was reflected in the harrowing evidence given to the inquiry by an individual who reported that his team had been slashed completely. He kept a notebook by his bed because he could not keep up with the scale of work.

If we are to take building safety seriously, we need to provide adequate resources to those organisations tasked with delivering it, and that needs to improve standards. In the fire and rescue services, cost-cutting has reduced fire safety specialist teams and the provision of training. In the fire and rescue service, over the past 15 or 16 years, there have been reductions in training across the board—from the initial training that firefighters receive on joining the service to the training they receive when they enter specialist teams, such as fire safety departments—and, in our view, reductions in standards. If we are talking about driving up standards, we need to invest in the provision of adequate training and support for people to adopt those standards.

Building Safety Bill (Third sitting)

Debate between Mike Amesbury and Marie Rimmer

Tuesday 14th September 2021 Public Bill Committees

[Mike Amesbury (Weaver Vale) (Lab)]

Q80 Good morning, Sarah, Peter and Graham. Does the scope of the Bill give you sufficient resources—the toolbox—to change the landscape of building safety in this country?

Sarah Albon: That is a very broad question. I will bring Peter in on some of the technical aspects of scope. It gives us a real opportunity to take a holistic approach to the management of safety in buildings, from the very beginning of the design phase, through building and into occupation. It is important to recognise that although there is rightly a lot of focus on the taller buildings that are in scope for the special gateway process and the safety case process that will go on once buildings are in occupation, there are many other aspects in the Bill around improving the competence of those who work in the various aspects of the industry and in oversight of that, and around the wider built environment, that will apply to all buildings and all professionals working across the industry. It gives the foundation for a real sea change in the improvement of safety in the built environment in this country.

Peter Baker: To add to that, if you take a step back and look at the findings from Dame Judith Hackitt’s review about poor culture, attitude and behaviour of the industry, the lack of accountability of individuals, the lack of resident engagement, and all the things that were found to be wrong with the system as it stands, the Bill covers off all those points and, in fact, goes further in a number of areas. I am fairly confident that the Bill, as currently structured, addresses all the key points that Dame Judith raised in her report.

Graham Russell: If I may add to that, the products that go into those buildings are the foundation, if you will, of the safety approach, culture and regulation that we have just heard described. It is our responsibility to make sure that those products are what they say they are and that they are properly labelled and traceable, and the Bill makes provision for that through the schedule and then through statutory instruments.

[Ms Marie Rimmer (St Helens South and Whiston) (Lab)]

Q Good morning to each of you. The Government have chosen not to legislate for a register of competent building safety managers, and said that any register should be industry-led. Are the Government right to leave it to industry?

Sarah Albon: I think there is always a balance between what industry needs to do and what the overarching regulatory regime seeks to do. From my perspective, it is important, in addressing the cultural issues, that we recognise that, ultimately, it is not the regulator or Government who will lead to a sea change in behaviour, but industry. It is therefore important that the responsibility for driving improvements, and for ensuring that people have the right kind of competence and do the right thing, rests squarely with industry, as well as the ownership of safety within individual buildings resting squarely with the owners of the buildings who are responsible for safety within them. They are the only people on the ground who can, day in, day out, ensure that things are being managed properly and that people are competent and are appropriately fulfilling their duties and obligations under the law.

Peter Baker: I would add that it will be set out in the legislation that a building safety manager is required. As Sarah said, the key thing for me—we have seen this with other workplace health and safety requirements—is that, although the building safety manager will have an important role on a day-to-day basis in effecting the safety, engaging with residents and so on, the accountability for the accountable person who is ultimately responsible for that building is not inadvertently delegated to the building safety manager, so that the BSM effectively takes on the ownership of the risk. That should be firmly with the accountable person, because they are the individual or the company that has the resources and the capability to really manage the risk.

Graham Russell: This is not an area for me.

--- Later in debate ---

[Mike Amesbury]

Q Does the Bill ensure that key stakeholders in your industry, rather than the leaseholders, are paying their fair share for a mess that was created over a series of decades?

Richard Silva: If you are referring to whether building owners should pay to fix the existing stock, a distinction should be drawn between the responsibility for maintaining the existing stock and the liability to pay; I covered the liability to pay in my previous answer. The responsibility should absolutely lie with the accountable person, under the new regime. Historically, the accountable person has been either the freeholder, where there is a two party lease, or, where the building is resident-controlled—as roughly two thirds of our portfolio is—the RMC or the RTM. In the future, when the Law Commission’s proposals are brought into legislation, it could be the commonhold association. They are responsible, with emphasis on the word “responsibility”, for the maintenance and repair of buildings. It is a complicated answer, but it does go to the Building Safety Bill, and the question of who will be accountable in the future.

It is an interesting debate. We have to ask ourselves whether members of an RMC or a commonhold association have time, expertise and willingness to do that work. Certainly, our research suggests that people do not want to do it, for a whole bunch of reasons. Forget criminal and civil liability—it is about having the time. People have other things to do. In the context of the Bill, among the wider Government reforms on leasehold, we need to focus on the fact that the role of the freeholder will become redundant. That is unambiguous from the leasehold reform agenda proposed. That means that the work done by my building safety team—it includes chartered fire engineers and surveyors—for the leaseholders and at no cost to them, save a modest ground rent, will become redundant. So this part of the Bill needs to be really carefully looked at. Who wants to do this role, absent the professional landlord?

Kieran Walker: I would be inclined to agree with Richard on the accountable persons piece, moving forward. If I understood the question correctly, you are really asking whether costs are fair and proportionate for historical issues and for historical defective buildings. It is very difficult to answer, if I am honest with you. As has been mentioned already this morning, you have some really good practice going on in the industry in terms of the developers and construction companies, and you have some culprits in there as well. We know that as a trade body and as an industry. Similarly, the manufacturing process and the manufacturing companies also have some culprits.

It is difficult, therefore, to nail down whether costs are fair and proportionate. Obviously, as of next year, our industry will feel the impact of the residential property developer tax, as well as the building safety levy. Time will tell whether that is fair and proportionate. Obviously, the building safety levy is subject to consultation at the moment. I think that closes in mid-October and we are busily compiling responses to it. Within that scenario, some companies, responsible persons and organisations will pay part of, some of or none of the building safety levy, while others will pay the full residential property developer tax as well.

Time will tell whether costs are fair and proportionate, but I certainly think that things are moving in the right direction in respect of the Bill itself and in terms of levying costs.

[Ms Rimmer]

Q I have listened to your comments, but are the Government right to introduce the building safety charge on residents, by which building owners can recover the cost of building safety measures? If not, could that be done through the existing service charge instead?

Richard Silva: It is a very good point. We engage with a lot of the managing agents who manage our blocks on a day-to-day basis and I think that there needs to be clarity on this point in the Bill. A separate regime for levying a charge to residents living in a block comes with cost and complexity; people need to understand what it is for.

It is a difficult one. There is service charge legislation in existence. There is a regime for it, with all of the reasonableness tests, information, budgeting, finalising of accounts and so on. I think that is probably quite a neat place for the building safety charge to become a specific sub-item within the overall service charge budget. Then, you are not really giving residents extra information—they are not understanding what the extra charge is really for—and it also helps to mask any chasm that might be in place between life-cycle maintenance and building safety maintenance, and where there is a crossover. It can become a bit ambiguous.

So long as the regime is clear, understood and, frankly, does not increase the financial burden on people living in their own homes, that is where the focus should be.

--- Later in debate ---

[Mike Amesbury]

Q What is missing from the Bill? This question is for both of you.

Councillor McCoy: A lot of additional clarification is needed regarding the accountable person, the building safety manager and their responsibilities. A lot of detail is required. We need that detail and clarification because the industry, including councils in particular, needs to gear up to meet those responsibilities. Until they know what those responsibilities are, they cannot effectively gear up and commit the resources.

In particular, I would talk about the skills within building safety management. There is a lack of skills out there at the moment. There is a lack of resource out there at the moment. We cannot recruit as a council. My council cannot recruit to building control at the moment because people are not out there. Until we have clarification about what the skills are, and a framework for that, we cannot build up the capacity and skills needed. I would also flag that councils need the resources to be able to do that, because an awful lot of burdens are falling on councils.

Andrew Bulmer: I concur with the councillor. There is a lot of detail in the regulations, especially when it comes to the role of the building safety manager. We would like to see the regulations brought forward. They can either go in the Bill or be introduced promptly. Until then, we are operating a little one-handed. We are anxious to prepare and gear up for this, but without that information we are struggling.

That is one thing that is missing from the Bill; the other is protection for leaseholders from historical building safety defect costs. We understand that the Bill has to be written in a way that allows the reasonable costs of safety maintenance going forward to be recovered. That is fair and reasonable, but at the moment there is no protection for leaseholders from existing building safety failures that they did not cause.

[Ms Rimmer]

Q The draft Bill is largely a framework Bill, sometimes referred to as an enabling Bill, which provides for key parts of the new regulatory regime to be established by delegated legislation and building regulations. Do you find that acceptable? Is enough tied down to get the secondary legislation done quickly enough? There is no timescale—just what is “reasonable”. Is that acceptable, or do you have any concerns?

Councillor McCoy: We have some concerns. You are right that timeliness is key. It reflects the points that I made earlier about having time for industry to gear up. There needs to be a proper, informed transition period. That is London Councils’ view. There needs to be a transition period that allows time for the capacity to be built. It needs to be fully funded, and there needs to be prioritisation within it. Obviously, we are very keen to see the safety measures implemented as soon as possible, but there needs to be a prioritisation of high-risk buildings in the meantime. That goes back to a holistic assessment of those buildings. We think that we need a transition period of about five years, and we need that clarity as soon as possible.

Andrew Bulmer: I am relatively unexercised about whether it is done through enabling legislation or written in from day one; what I am exercised about is getting the regulations delivered quickly. We are trying to prepare for the future regime. Dame Judith Hackitt called for a culture change and we, as an organisation, are driving that hard into our membership. They are receptive, and wish to adapt and move to the new regime as quickly as they can. It is difficult to prepare without the information, so I am less concerned about the mechanism; I am just concerned that we need to see the rules.

Building Safety Bill (First sitting)

Debate between Mike Amesbury and Marie Rimmer

Thursday 9th September 2021 Public Bill Committees

[Ms Rimmer]

Q You just mentioned it coming forward very quickly after the Bill goes through, but there is nothing to guarantee that.

Sir Ken Knight: No, there is not, but I think the Building Safety Regulator is already on the case. He has issued a document only this week about what safety cases will look like. He and his team will be having the same capacity issues as everyone else, but nevertheless I suspect he is not waiting for the Bill to happen. Nor are the major people out there responsible for buildings in the future, which is pleasing. They are already looking at what they need to do now to make people feel safe in their homes, rather than waiting for the Bill to pass through Parliament.

Dan Daly: I do not have much to add. The detail will come. I would like and welcome the opportunity for NFCC to be part of those discussions, as some other stakeholders are, to keep the promises that are made here. I do agree that there is an awful lot left to trust, and there needs to be some oversight to ensure that that trust is not betrayed and that, if the Bill is put through as an enabling piece, the guidance that follows is suitable to bridge the gaps in the information that is not there at the moment.

[Mike Amesbury]

Q Will the new regime stop resident leaseholders being fleeced by the mediation costs—the EWS1 process, the astronomical insurance costs? The list goes on and on—not to mention waking watch, of course.

Sir Ken Knight: I can deal with some of that shopping list, which you are right to highlight. EWS1 has been one of those areas. The external wall system 1 form is the surveyor form for evaluations. I would argue that it has been misused on premises where it has added cost to the leaseholder. I have seen real examples where people trying to sell a bungalow have been required to have EWS1 for an external wall, which frankly is nonsense. Again, that is about the proportionality of lenders and insurers recognising that some of those building heights and risks do not need that.

The other reason for me saying that about EWS1 in principle is that I believe it will quickly be overtaken by the external wall assessment of the Fire Safety Act 2021, because everyone will require that. One of the advantages is that you will have one risk assessment for the whole building and not every leaseholder having to have an EWS1 form to satisfy their lender when they want to sell, adding to the cost for each leaseholder in turn. Will the Bill address that? I think the combination of those other things I have just mentioned will certainly assist that, but it does mean needing to get back to an approach that is both risk-based and risk-assessed, and people being competent, and the culture has to change. It is going to have to change very quickly because Dame Judith recognised that both culture and competence were key issues. I think they still are.