Leaseholders: Safety Remediation Costs

Baroness Pinnock Excerpts

Thursday 4th November 2021 Lords Chamber

[Baroness Pinnock (LD)]

My Lords, I draw the attention of the House to my relevant interests as a vice-president of the Local Government Association and as a member of Kirklees Council.

I thank all noble Lords who have contributed to the debate, and, in so doing, making many constructive proposals for the Government to consider in seeking a solution to the appalling situation people find themselves in. I particularly thank my noble friend Lord Stunell for the clarity of his analysis of the issues we are addressing, and Peter Apps of Inside Housing for his very helpful briefing to those of us contributing to the debate.

I make no apology for concentrating my comments on the cladding crisis. This debate is, at its heart, about people—people as leaseholders, shared owners and tenants. A very large number of people are affected. It is estimated that as many as one in 10 of all households in England has been drawn into this building safety crisis. The Government’s own figures estimate that 8,000 buildings over 18 metres, involving 460,000 households, are affected. For those in buildings between 11 and 18 metres, the figures are 34,000 buildings and 700,000 households. There are also buildings below 11 metres that have flammable cladding that need to be considered, as the noble Lord, Lord Thurlow, has just said, especially if they are, for example, residential care homes. As my noble friend Lord Stunell said, this is not a niche issue that is wrecking the lives of just a few people in very high-rise blocks. This is adversely impacting the lives of at least 3 million of our fellow citizens.

Following the awful tragedy of Grenfell, the Government have put blanket expectations on buildings over 11 metres for the removal of flammable cladding and everything else that is combustible. The questions that follow that Government decision are: who is to pay for the remediation, and who is responsible?

Early estimates of the total cost for just removing and replacing the cladding were £16 billion. The spending review last week—cynically, in my view—included a restatement of the funding available, which, as we have heard from several noble Lords, is £3 billion from the taxpayer and a further £2 billion raised by a levy on developers over the next 10 years. I thank the noble Lord, Lord Young of Cookham, for his comment about there being a precedent, when dealing with the Airey homes, for the taxpayer contributing far more towards remediation, rather than this capped and inadequate £3 billion currently in place from the Government.

I remind noble Lords that that government contribution is only for the replacement of flammable cladding, and only for buildings over 18 metres. Worse follows because, as cladding is removed, so are building safety defects revealed, as we have heard—a big one being the lack of fire breaks. These, too, must be put right, but there is no government grant for these serious building errors.

Leaseholders, who do not own a single part of the building, are being expected to pay for the failings of the construction industry. Leaseholders should not be paying a penny piece towards putting right the absolute failures of developers, materials manufacturers and government regulation. That view has been supported by many noble Lords, including the noble Lord, Lord Young of Cookham, and the noble Earl, Lord Lytton. Leaseholders are receiving bills for non-cladding work of over £100,000. As my noble friend Lord Stunell stated, Inside Housing has estimated that the majority of leaseholders have been billed for over £30,000. This is—I repeat—for putting right a building that belongs not to them but to the freeholder.

Even worse follows, because the fire risk has resulted in “waking watch” costs and enormous hikes in insurance. I have previously quoted in this House a leaseholder whose average service charge was £700 per quarter but which then jumped to an unaffordable £3,000 a quarter. For some, that alone has been enough to push them over the financial cliff edge: an elderly gentleman who I met at a campaign rally said to me, through tears, “I just can’t pay—what am I to do?”

The consequences for leaseholders are catastrophic. They have a flat that literally has no value, they have no recourse to effective legal action and they are being forced into totally unpalatable choices: bankruptcy, repossession or eviction, or putting their flat into an auction. This is so unjust. Leaseholders have done everything right and nothing wrong, and their lives are being wrecked by the inability of government to produce effective solutions. There are solutions that the Government should and must consider, so that leaseholders are not seen as collateral damage in this awful crisis.

As the noble Earl, Lord Lytton, has explained, the “polluter pays” approach has much to recommend it. This well-developed proposal has also been supported by several other noble Lords, including the noble Lord, Lord Young of Cookham, my noble friend Lord Stunell and the right reverend Prelate the Bishop of London. I too add my support to their plea for the Minister to respond positively to this proposal.

The Government should also consider a more risk-based assessment of flammable cladding and building defects. Will the Minister agree to provide information on the conclusions that the Government have reached on such risk assessments? Will he also tell the House whether alternatives to cladding remediation have been considered and assessed, and remedies sought, such as the ones that my noble friend Lady Brinton suggested? These are actions that the Government can, and should, take to put an end to the suffering of millions of our fellow citizens.

Those in shared ownership, for example, forfeit their equity if they are unable to pay hugely inflated service charges. Is that right and just, when none of it is their responsibility? Leaseholders have already been driven to the edge of despair. Some have already chosen bankruptcy, despite the consequences, simply to escape the mental torment of living under such constant pressure. Next April is the deadline for bills for remediation that cannot be paid and will, therefore, see many more driven to bankruptcy.

Leaseholders tell me that there are already institutions lining up to benefit from their misery, as they seek to buy up property, cheaply, vacated by leaseholders through bankruptcy or in other ways. That is simply not acceptable. Leaseholders, as I will constantly say, have done everything right and nothing wrong. They must not pay the price for others’ failures, and I for one will continue to speak up for them until the Government effectively address all their issues. I look forward to hearing full and constructive answers from the Minister to the many proposals suggested today.