Leaseholders: Safety Remediation Costs

Baroness Brinton Excerpts

Thursday 4th November 2021 Lords Chamber

[Baroness Brinton (LD) [V]]

My Lords, I declare an interest as vice-chair of the All-Party Group on Fire Safety and Rescue and as a vice-president of the LGA. I congratulate my noble friend Lord Stunell on securing this important debate.

I start by agreeing with him and my noble friend Lord Shipley about the need for affordable, safe and green housing. Homes built for lifetime occupation also need to be part of it, ones which can easily and cheaply be adapted for disabled and elderly residents. It says much about the current large property companies that they regularly refuse to build to these standards, although Habinteg tells us that average new-build costs are just a handful of thousands of pounds, whereas adaptations in later life can cost 10 times that amount, as well as the costs of people having to leave their beloved homes and move into care homes. This also says much about who is currently in the driving seat on standards and regulations: it is not the Government or local government, but the builders. There is now evidence of the system being abused, as outlined by the noble Earl, Lord Lytton.

The Grenfell Tower fire happened in June 2017. As we know, 72 people lost their lives. The very moving “Grenfell: The Untold Story” documentary on Channel 4 took us step by step through the concerns of residents during the obviously mismanaged updating works, the night of the fire, and the problems they have had since in other accommodation. For those who have never been present at a fire, it was pretty terrifying. I speak as someone who has been; as part of my job as a stage manager, I had to get an entire audience out of a theatre that caught fire. It is pretty frightening as the smoke rolls towards you.

Far too many blocks are excluded from government assistance, as outlined by a number of noble Lords, including my noble friend Lord Stunell, despite the Government offering some billions of pounds to “end the cladding scandal”. Sitting behind the large growth in flats recently has been the need to increase the number of homes, especially in the greater south-east and around our larger cities and conurbations across the UK. Large numbers of flats and apartments, many high-rise, have been built over the last decade, which are essential. Many more are needed. But the financial structures, as outlined by noble Lords, have also exacerbated the problems of leaseholders facing large bills for cladding.

This Government’s obsession with home ownership has meant that, for many young people, finding that deposit and part ownership have enabled them to get on to the property ladder. But neither they nor their funders understood that these homes were being built to unsafe standards, signed off by a less than independent inspection process, which has now resulted in them facing extraordinarily large bills for remediation and, prior to remediation, the cost of 24-hour walking warden services.

I will spend a short time on the liabilities of the construction sector. The major builders say that, for those buildings completed after the standard 10-year structural defect warranty, they and their insurers can wash their hands of any liability. However, most structural defect warranties assume that the contractors have built to building standards and complied with the building inspection rules of the day. It is now evident, way beyond the chilling evidence at the Grenfell inquiry, that the short cuts that too many of these companies, and their contractors and suppliers, took have resulted in unsafe buildings with dangerous cladding never designed for these blocks, which act, in effect, as installed firelighters.

As a member of the All-Party Group for Fire Safety and Rescue, I have watched the evidence given by cladding manufacturers at the Grenfell inquiry. Managers of cladding firms, granted immunity under the terms of the inquiry, explained how they deliberately used the wrong cladding—and cladding certificates—for these buildings. Clerks of works at the site, at best, took their words at face value; in the worst cases, some inspectors clearly turned blind eyes. That immunity was a high price to pay but at least we are now getting to the real root of the problem: a broken building and inspection system.

Three years ago, the APPG even heard of one tower block, not in London, where all the non-fire-compliant front doors to the flats were removed and replaced with compliant doors for one week, to the utter bemusement of the residents. After the building was inspected, the old doors went up again. Whistleblowers have been saying for the past few years that many bad practices had already started since the relaxation of the inspection regime.

In any other industry, local government, the Government, construction and financial services industry bodies, and their insurers would have got together to talk through how to manage this crisis. Banks, building societies and housing associations will also need support if they are to find the resources to help them round their rules, so that they can help people who have mortgages or leases with them in these buildings with cladding.

In any other industry, freeholders would have sued the building companies and their insurers to protect the leaseholders. Instead, too many freeholders have turned to leaseholders to pay. Other noble Lords have talked about the “polluter pays” principle. I agree with the noble Lord, Lord Young of Cookham, that there will also need to be other structures for payment. I like the idea, as others have said, of an extra levy to provide for the £10-billion and £5-billion holes in the system.

In any other industry, those who falsified construction certificates, especially if relating to cladding, would have been interviewed by the police. Falsifying cladding safety certificates, and inspection works in this instance, have put hundreds of thousands of leaseholders and their families at high risk of fire, of damage to their properties and of their injury or death.

However, this is not any other industry. In 2019, property tycoons gave the Conservatives more than £11 million. There were questions about cash for access and a dinner at which the then Housing Secretary, Robert Jenrick, was sat next to a large potential donor. I know that he left, but the point is that it was very uncomfortable. Despite the Select Committee in the other place recommending that the Government do all they can to protect leaseholders from these costs, instead, the reality is that leaseholders are facing bills so large that some are higher than the value of the property they have bought. They cannot sell with that liability. Their mortgagors are equally stuck because their rules are also strict.

There are 500,000 homes facing a tornado of problems. It is time that the Government led a proper round of emergency discussions with all the parties and not just for high-rise buildings of over 12 metres. This arbitrary height definition has no place when cladding remains dangerous. However, what needs to happen first is that the building sector, especially large construction companies, must agree its share of the immediate payment of remediation costs. I hear the Minister saying, “But we’ve told freeholders not to pass charges on to leaseholders”. Until the Government own this issue and start to strong-arm the various bodies to take responsibility, this will not change; it should, but will not. If there is no change, will the Minister agree that a class action of leaseholders against the constructors should be funded by the public purse? In the meantime, will the Government take other actions to help resolve these issues?