Building Safety Bill (Thirteenth sitting)

Eddie Hughes Excerpts

Thursday 21st October 2021 Public Bill Committees

[The Chair]

With this it will be convenient to discuss that schedule 7 be the Seventh schedule to the Bill.

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Eddie Hughes)]

It is a pleasure to have you back in the Chair and to serve under you, Mr Dowd.

The Government are committed to ensuring that leases reflect the duties and obligations placed on landlords and tenants to keep buildings safe, and that the costs associated with the regime are fair and transparent. Clause 120 implies terms relating to building safety into leases, so that both landlord and tenant have obligations associated with the new regime clearly set out in their leases. This cements the duties set out in other parts of the Bill.

Clause 120 also ensures that the landlord passes costs associated with the new regulatory regime, via the building safety charge, to leaseholders with long leases of seven years or more. The overriding principle behind the building safety charge is to give leaseholders further information about what they are paying for to keep the building safe and assurance that the manager of the building is charging reasonably. Without the building safety charge, many of these costs would be charged via a service charge. We are introducing this separate mechanism to deliver greater protection to leaseholders, ensuring that costs are transparent and reasonable. By introducing the building safety charge, the Government are ensuring that costs are clearly set out to leaseholders and that certain costs, such as the cost of enforcement against an accountable person, can never be recovered from leaseholders. In well-run buildings, leaseholders will likely see costs partially offset by a corresponding reduction in service charge costs.

Schedule 7 will enable the Government to set out certain obligations for the landlord to fulfil, including providing details of the building safety charge together with a summary of their rights and obligations to leaseholders. Schedule 7 will also give leaseholders the right to request further information about the charge, and they will be able make a written request for a summary of the relevant building safety costs. Once a summary has been obtained, the leaseholder can request more detailed accounts.

We expect that the protections included around the building safety charge will provide the necessary transparency to drive competition to reduce costs for leaseholders. Leaseholders will be able to challenge the costs associated with keeping a building safe in the same way as they can challenge the costs of unreasonable service charges—that is, through the first-tier tribunal.

Clause 120 is key to ensuring the smooth implementation of the new regulatory regime. Setting out further requirements in respect of the building safety charge in secondary legislation—for example, on the obligations of landlords, consultation requirements and excluded costs—ensures that the provisions remain relevant and responsive to changes in the duties of the accountable person or broader leasehold reform. Leasehold law is a highly technical policy area, and it would be inappropriate and counterproductive to include it in the Bill.

We wish to make it clear that remedial costs are not included in the building safety charge. This clause does not make leaseholders liable for the costs of remedial works. Whether or not leaseholders are liable for works is governed by the terms of their existing leases. Clause 120 is vital to ensure transparency on the costs of the new regime, empowering leaseholders to interrogate bills and hold their building owner to account.

[Mike Amesbury (Weaver Vale) (Lab)]

It is a pleasure to serve once again under your chairmanship, Mr Dowd.

I have a number of questions. The building safety charge has proved to be somewhat controversial among leaseholders, residents, tenants and cladding campaigners—the UK Cladding Action Group, the Leasehold Knowledge Partnership, the National Leasehold Campaign and so on. The Minister has mentioned that charges will be fair and transparent. What is the definition of fair and transparent? What is the Department’s assessment of what will be fair and transparent? Given that on 17, if not 18, occasions a promise was made not to put charges for historical remediation costs, which we will get on to in a moment, on to the shoulders of leaseholders, there is a real fear that there could be considerable interplay between the building safety charge, historical remediation costs, service charges and so forth. I would like the Minister to expand on that. Of course, many leaseholders over the past two weeks have had massive invoices arrive through the door for remedial costs relating to historical building safety defects. Some are going bankrupt, as I know he and Department officials will know.

--- Later in debate ---

[Eddie Hughes]

The point about fairness and transparency is incredibly important, not least given the comments that the hon. Member for Brentford and Isleworth made about the opaqueness or otherwise of the existing service charge system. The reason why we will have two clearly defined separate charging systems is to ensure that everybody—leaseholders, landlords and tenants—understands completely what is being covered within the charging system. We will set out further details in secondary legislation, but it is critical that we know—I am sure the hon. Member for Weaver Vale was not confusing the two—that the charges that will be covered by the system are those that result from the introduction of the Bill, and safety aspects that will be applied going forward. It is not about retrospective remediation. There is a clear delineation between the two, and we will make very clear what is covered.

With regard to what might be considered fair, I genuinely feel that, as the system develops people will be able to see within one building what amount is being charged for a particular service or constituent elements of it, and to make a direct comparison with other buildings, how they are being managed and what charges are being applied. They will then be able to use that as evidence to challenge their own bill in the future. Ensuring that people can challenge their bill and ask for further details will be pivotal to the success of the process.

[Ruth Cadbury]

With respect, although it is good to know that there may be yet another, possibly complex, mechanism by which leaseholders can challenge, would it not be better if they did not need to challenge, except in exceptional circumstances? If the system were clear, transparent and honest at the outset there would be less need for challenges.

[Eddie Hughes]

If there was any ambiguity in what I said, I apologise. The expectation is that this will be clear and transparent from the start. We are not setting out in any way to obfuscate; however, it will be reassuring to know that the safety net of challenge exists should it need to be deployed, which I hope will be a rarity.

Question put and agreed to.

Clause 120 accordingly ordered to stand part of the Bill.

Schedule 7 agreed to.

Clause 121

Provision of building safety information

Question proposed, That the clause stand part of the Bill.

[Eddie Hughes]

We recognise the need to ensure that the building safety regime is compatible with existing legislation, especially when it comes to ensuring that tenants of higher-risk buildings receive important building safety information from their landlords. Clause 121 aligns the Landlord and Tenant Act 1987 with the Bill by ensuring that dedicated provisions are in place for tenants of higher-risk buildings, including those who may be subletting from a long leaseholder, to receive relevant building safety information from their landlords. The clause makes it mandatory for the landlord of a dwelling in a higher-risk building to give the tenant a notice containing the relevant building safety information. The clause states that, where a landlord fails to give such notice to a tenant, any rent, service charge, administration charge or building safety charge that is due from the tenant to the landlord is not due before the landlord gives the notice to the tenant.

The clause amends the Landlord and Tenant Act 1987 by placing a requirement on landlords to include relevant building safety information when giving a tenant a written demand for payment. If the relevant building safety information is not provided with the written demand, any amount demanded, other than in respect of rent, will not be treated as due until such time as the information is provided. The clause specifies that the relevant building safety information will include information about the higher-risk status of the building, and the name and contact details of each person responsible for building safety in their buildings, including details of the Building Safety Regulator. It also makes an exception to those requirements where a court or tribunal-appointed receiver or manager is in place.

Finally, clause 121 allows the Secretary of State to prescribe additional information that must be included in the notice or the written demand. These are key provisions to ensure that tenants have access to vital building safety information about their building—an important principle of our new reforms, which give residents a more transparent understanding of their building’s safety information.

Question put and agreed to.

Clause 121 accordingly ordered to stand part of the Bill.

Clause 122

Amendments to the Commonhold and Leasehold Reform Act 2002

[Eddie Hughes]

In July 2020 the Law Commission published a report on reinvigorating commonhold, and it has made recommendations to make the tenure a workable alternative to leasehold tenure. In partnership with industry and leaseholders, the Government have also established a new commonhold council, which will prepare homeowners and the market for the widespread take-up of commonhold. Although there are no existing commonhold tenure buildings that fall into the scope of the new building safety regime, it is necessary that we ensure that our new building safety regime applies to new, higher-risk commonhold buildings, as they may be developed in the future.

Clause 122 amends the Commonhold and Leasehold Reform Act 2002 to ensure that building safety management is adequately considered in higher-risk commonhold buildings. As per clause 69, the commonhold association will be the accountable person and will be subject to the fire and structural safety building regime. Clause 122 makes it mandatory for a commonhold association to include in its commonhold community statement provision to ensure compliance with its duties under part 4 of the Bill. It also makes amendments to the Commonhold and Leasehold Reform Act 2002 to ensure that the directors of the commonhold association make an annual estimate of the income required to meet the building safety expenses. That must be detailed in the commonhold community statement of a higher-risk commonhold building.

The clause also ensures that each commonhold unit holder makes payments in relation to building safety expenses to meet the building safety expenses income requirement. The amendments made by the clause are necessary to ensure that the commonhold legislation aligns with the Bill’s requirements.

[Mike Amesbury]

I want to address a couple of points, for clarity. I thank the Minister for the explanation. Her Majesty’s official Opposition support commonholds and have argued for them for a long time. I am pleased to see the emerging consensus as we listen to stakeholders, whether the Leasehold Knowledge Partnership, the national leaseholder campaign or others in the housing sector. I have one question in relation to the Minister’s opening narrative. In commonhold, are building safety expenses on top of the building safety service charge?

[Eddie Hughes]

I completely understand. No, that is not separate; it is one of the items that would typically be covered by the building safety charge in other buildings. Exactly the same principle applies.

Question put and agreed to.

Clause 122 accordingly ordered to stand part of the Bill.

Clause 123

Interpretation of part 4

Question proposed, That the clause stand part of the Bill.

[Eddie Hughes]

The clause contains key definitions used in part 4 of the Bill. It also clarifies the fact that the requirements in part 4 do not apply to the Palace of Westminster. For example, the clause refers to clause 59, citing that we have defined a “building safety risk” as

“a risk to the safety of people in or about a building”

due to “the spread of fire” or “structural failure”. We see those definitions as appropriate and considered, and they are an important addition to aid the understanding of the various clauses that refer to those terms. The clause provides for a specific place in part 4 that can act as a helpful index of the defined terms used in said part.

[Ruth Cadbury]

I am intrigued to know why the Palace of Westminster is included. I do not believe it comes under a definition of a residential building, because I thought only one household lives here. We also know that it is a historic building that is a fire risk and has lots of risks, but it cannot be unique in that, either. Why is it in particular drawn out in the Bill?

[Eddie Hughes]

On the question of one person officially residing here, it may be that two people end up officially residing here at some point due to historical reasons, so it was worth taking it out, just in case that situation could fluctuate. With regard to other elements of the building’s safety, other legislation applies and ensures safety.

[Ruth Cadbury]

I realise that the other person who once resided here was Emily Davison, who resided one night in the broom cupboard downstairs. I wonder whether that is the second resident to whom the Minister refers.

--- Later in debate ---

[Eddie Hughes]

I am embarrassed to say that historically I am not completely clear about that.

[The Chair]

Order. I would appreciate it if Members intervened while the Minister is on his feet. Otherwise, if we are not careful, we will end up with some sort of badminton.

Question put and agreed to.

Clause 123 accordingly ordered to stand part of the Bill.

Clause 58 ordered to stand part of the Bill.

Clause 124

Service charges in respect of remediation works

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Eddie Hughes]

This is an exciting day for me. I hope that the Committee will indulge me briefly while I refer back to my time as the chair of the all-party parliamentary group on excellence in the built environment. Our report seeking better redress for homebuyers came just a year after I became an MP, working with the Government and hoping to enjoin them to create a new homes ombudsman—so, an exciting day.

The Government are committed to improving redress for new build homebuyers and improving the quality of new build homes. The clause places a duty on the Secretary of State to ensure that a new homes ombudsman is—finally, I might say—established in England. The clause should be read alongside clause 128, which sets out the conditions that must be met for the new homes ombudsman scheme.

There is no existing provision in legislation for purchasers of new build homes to complain to an ombudsman or redress scheme. The new homes ombudsman is intended to provide clearer and more comprehensive means of redress when problems arise. It will provide a place for new build homebuyers to go with complaints, and it will be able to undertake objective determinations based on its investigations. By creating a trusted independent redress system that is easily accessible, we can drive up performance and create a better housing market.

[Brendan Clarke-Smith (Bassetlaw) (Con)]

I thank the Minister for giving way, and may I say what a pleasure it is to serve under your chairmanship, Mr Dowd? Have the Government considered extending the new homes ombudsman provisions to Scotland, Wales and Northern Ireland?

[Eddie Hughes]

Regardless of where in the UK people live, it is important that they have access to the redress that we have set out in the Bill. Discussions are ongoing with the devolved nations, because housing is a devolved matter and so it is for them to determine. Those negotiations seem to be going well, and the feeling seems to be warm, so we may have to return to the matter at a later stage of proceedings on the Bill.

The arrangements are flexible to ensure that the best provider can establish and maintain the service. The scheme will be free for homebuyers and is intended to be funded by fees that are paid by the scheme’s members. However, should it be necessary, the clause provides the power to give financial assistance to a person for the establishment and maintenance of the scheme.

[Shaun Bailey]

Will my hon. Friend confirm that the provisions will allow the new ombudsman scheme to work effectively with other ombudsmen and redress schemes to maximise its impact for affected residents?

[Eddie Hughes]

Schedule 8 allows the scheme to include provision about a person exercising functions under the new homes ombudsman scheme, and it allows them to do so jointly with persons exercising functions from other redress schemes. It is important that we make it possible to work collaboratively. That may include the making of joint determinations by the new homes ombudsman and an independent person making determinations under another redress scheme. We are considering whether amendments may be required further to facilitate joint determinations and other forms of co-operation between the new homes ombudsman and other ombudsmen or redress schemes. I thank my hon. Friend for that helpful intervention, and it is something we are considering.

Clause 128 relates to the conditions that the new homes ombudsman scheme must meet under clause 127, and it sets out who can make a complaint to the scheme. The clause requires the scheme to be open to all developers to join as members so that qualifying complainants can escalate complaints about the scheme’s members. A qualifying complainant is a person who, at the time of the complaint, is a relevant owner of a new build home in England. The scheme is given the flexibility to set out other persons who can complain about the scheme’s members.

Schedule 8 details the other provisions that the scheme must or may include. This includes provision on which matters may be complained about; how complaints are to be made, investigated, determined and enforced; and complaints about the scheme itself. The scheme must also contain certain provisions required by schedule 8, such as the procedure for developers to become and remain members of the scheme.

To avoid duplication, the scheme may provide that the ombudsman will not be required to investigate and determine complaints that are dealt with under another redress scheme, or complaints that are subject to legal proceedings. The scheme may make provision about working with another redress scheme.

The scheme will require developers to provide complainants with redress if a complaint is well founded. This includes the ombudsman requiring the scheme members to provide compensation, make an apology, provide an explanation or take such other action in the interests of the complainant as the new homes ombudsman may specify. The scheme may also include provision about how the ombudsman’s determination will be enforced. This may include provision for the ombudsman to request a member to take action and, where a developer does not meet its requirements, the scheme may as a last resort include the expulsion of a member from the scheme. In such cases, provision must be made for how they can then rejoin the scheme.

[Ian Byrne]

I thank the Minister for giving way, and it is an honour to serve under your chairmanship, Mr Dowd. The independence of the scheme is critical and the Minister has not really outlined the make-up of the ombudsman, and how people will be able to have confidence in it. I will keep going back to the culture change point because if the ombudsman is seen as reputable and upstanding, people will have confidence in it. Culture change can then derive from the ombudsman. I welcome the scheme, but I would like a bit more clarity on who will sit on the ombudsman. The explanatory notes say that the scheme could also select a third party to be established to run it, so may we have some clarity on that point, too?

[Eddie Hughes]

I thank the hon. Gentleman for his intervention. I completely agree with the premise of his point, which is that that independence needs to be present in such a way that those making complaints can have confidence in it. The scheme could be set up in a number of ways. For example, it would be possible for it to be done in-house so that the Government have tighter control of it, or it could be done by another party. With the New Homes Quality Board, a shadow version is being constituted at the moment. We will be able to see further details on that, but there is no presumption that the shadow board would become the final board once the Bill is passed into law. We will be able to get some indication of how the scheme will work by looking at the workings of the shadow board, and details are available for that, but as I say it will be for the Secretary of State to determine in what form it continues to ensure that there is the confidence that the hon. Gentleman so rightly says is important.

[Ruth Cadbury]

May I ask the Minister a question on another aspect of the scheme? It is a voluntary scheme, so I believe that for the developers it is voluntary whether they join or not. Can he clarify that point, and if that is correct, what is the redress for leaseholders and other affected parties in blocks developed by developers that are not voluntary members of the scheme?

[Eddie Hughes]

I apologise if there was any ambiguity in the point that I was making. Housebuilders will have to be a member of the scheme, so if they do not comply with the scheme requirements and are therefore rejected from it, that will effectively prevent them from developing in the future, and that is why we are making provision for them to rejoin subsequently.

[Ruth Cadbury]

May I get absolute clarification? Is the default that all developers of defined blocks are members of the ombudsman scheme, unless they are excluded? Is that correct?

[Eddie Hughes]

That is correct.

[Ruth Cadbury]

Thank you.

[Eddie Hughes]

The purpose of the ombudsman is not only to resolve complaints but to drive up standards of quality. Therefore, the scheme must include provision for the making of recommendations by the ombudsman to improve widespread or regular unacceptable standards of conduct or quality of work by the scheme’s members. Additionally, the scheme must include provision about the provision of information to the Secretary of State and reports on the operation of the scheme. The clause sets out a comprehensive framework for an effective ombudsman scheme that will afford homebuyers substantially more protection and redress than they currently receive.

The new homes ombudsman scheme will allow new build homebuyers to complain to the new homes ombudsman about a developer for up to two years following the purchase of a home from a developer. Clause 129 provides definitions which determine who may complain to the new homes ombudsman, and a definition of a developer, who the Government can require to belong to the ombudsman scheme. The definition of developer includes those constructing new homes and converting existing buildings into new homes, so that complaints about developers of converted homes under permitted development rights, or those creating additional homes from larger buildings with the intention to dispose, sell or grant them to someone else, can be required to become scheme members and subject to the scheme’s rules under clause 130. I hope that offers the hon. Lady some reassurance. Clause 129 also includes a power to include an additional description of a developer, which could include organisations connected to developers.

[Mike Amesbury]

I thank the Minister for the explanation, and his enthusiasm for the creation of the new homes ombudsman scheme, which by his admittance he has rightly argued for in principle since before coming to this place as a Member of Parliament. In principle, the new homes ombudsman is a good thing, though some Committee members have raised concerns and advocated for ensuring that it will be truly independent. I think new build homes have an average of 157 snags at the moment. We will all be familiar from our casework, regardless of where we represent in Britain, that this is a big and very live issue. I would hope that the ombudsman will change the landscape.

On the New Homes Quality Board, which is operating as a shadow board at the moment, sits Jennie Daly, a group director of Taylor Wimpey. The board has representatives of housebuilders and the finance sector, and the hon. Member for Dover (Mrs Elphicke) is the independent chair. I can think of examples in my constituency of Taylor Wimpey homes that have considerable snags and are what we call leaky homes. The 19 million leaky homes that are not properly insulated have been constructed with gas boilers, fossil fuels and the rest of it. All of them will need to be retrofitted and a number have snags. In fact, there is one such development that will probably go forward in the Sandymoor and Daresbury part of my constituency, on former farmers’ fields, despite all the rhetoric that we hear in this place. I would hope that they will not be leaky homes, full of snags. It is very important that those on the shadow board take things forward in future.

On the reassurance about independence, if someone is part of the club, whether they be Taylor Wimpey or another housebuilder, they are paying for that service. Then the complaint goes from our constituents—our residents—to the ombudsman. I have real concerns about the checks and balances, and the independence. The Minister mentioned that there are various models to take it forward. It could be done in-house or at arm’s length as a Government agency. That would certainly by the Opposition’s preference, via a principle, to ensure that checks and balances are hardwired into the process. In principle, we welcome the new homes ombudsman, which is very much needed, but we already have concerns about the evolution of the process, if we look at the shadow board.

[Eddie Hughes]

I thank the hon. Gentleman for bringing some of his casework for us to consider. The hon. Member for Brentford and Isleworth mentioned the demise of the role of the clerk of works. I started life as a civil engineer but then moved into building site management for housing projects. At that time, we would have had a clerk of works whose job it was solely to monitor the progress of the work and ensure that it complied with the relevant standards. With cost-cutting and other things, we no longer have that, but thanks to the clause and the prospect of the new homes ombudsman, the industry has bought into the concept that quality has to rise and that people will be held more accountable in future.

On the point that the hon. Member for Weaver Vale made regarding the number of snags in a property, we will all have seen that. A comparison that has been made previously is that someone has more rights if they buy a faulty kettle than if they buy a faulty home that has minor problems that do not qualify under the National House Building Council regulation. They do not have something such as subsidence; they just have niggly problems. The developer has taken the money and perhaps trades are no longer on site, and the buyer wants to see those things addressed.

I genuinely think that we will see the industry taking quality much more seriously than they might have previously, particularly with that line of accountability coming back to Parliament. I understand that the hon. Gentleman may have reservations about members of the shadow board. We need to draw the sector into the programme and get them bought into the idea that we will raise quality. I do not think that this Secretary of State or any future one would want to be associated with a product that was not delivering for the public, so they will ensure that that confidence remains.

[Mike Amesbury]

One of the roles that the ombudsman will be charged with will be dealing with rogue builders. What would happen if one of the members of the board seemed to be classed as a rogue builder? How would the checks and balances be assured going forward?

[Eddie Hughes]

Such a complex question may be outwith the coverage of the Bill; however, it would be beholden on the Secretary of State to ensure that the process was managed appropriately. Given that the scheme allows for builders who are not complying with the code to be ejected from the ability to develop, I am sure that the opportunity would be there for us to deal with members of the board appropriately. If we can chuck a builder out of the scheme, I am sure that we can deal with a member of the board.

Question put and agreed to.

Clause 127 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Scott Mann.)