Building Safety (Leaseholder Protections) (Information etc.) (England) Regulations 2022

Lord Khan of Burnley Excerpts

Tuesday 19th July 2022 Lords Chamber

[Baroness Pinnock (LD)]

My Lords, it is always a pleasure to follow the forensic approach of the noble Lord, Lord Young, to the details of any piece of legislation but particularly this statutory instrument. It is important, as he pointed out. At this point, I again remind Members of my interests as a councillor and a vice-president of the Local Government Association.

The principle of this SI is positive news for leaseholders. As we have heard, in blocks of five or more storeys or above 11 metres, the news is good. I want to ask the Minister something, although I appreciate that she may not be able to answer all our questions; perhaps she could just write and confirm. Can she confirm that the very different funding packages, which are outlined partly in the Explanatory Memorandum and in more detail in the impact assessment, will fund all the work that is going to be required? The impact assessment makes it clear that the Government have no idea of the extent of the non-cladding remediation work that will have to be done. That is not a surprise because, until you take the cladding off, it is not clear what needs to be done. It would be good to know that all that work is covered by the various funding packages that have been put together. I am pleased to see that the measures include protecting leaseholders from having their service charges raised to fund some of the remediation costs. So there is positive news in this SI but, as the noble Lord, Lord Young, has said, there are questions that remain.

I will continue to raise questions about those leaseholders and tenants in blocks of four storeys or fewer, or under 11 metres. They may still have flammable cladding or fire safety defects in their blocks. What assurance can the Government give us, because they are excluded from this SI, that they will be able to sell their properties at a fair price even if no work is done, because that is what the Government are anticipating? The risks are low, and no work will be needed; therefore, they will still be able to have a fair price for their properties. We have never seen a risk assessment for those who live in properties below 11 metres in terms of fire safety. Again, it would be good to see that. We have been told the risk is lower, but how low is it? What is the risk?

The second big thing is the timeliness of this remediation work. My Twitter feed is full of concerns from leaseholders as cladding is removed, plastic sheeting is put round and then no work is done for six months. That is not acceptable. It has been five years since the dreadful Grenfell tragedy exposed all these construction failures. Leaseholders and tenants have been living in a state of anxiety and concern since then through no fault of their own, as I and many others have constantly said.

The impact assessment published alongside the SI makes it clear that there can be no assessment of the value of fire safety remediation to be done as there is no adequate data. What then can the Minister say to leaseholders and tenants about how quickly the Government anticipate the work being concluded? If the Minister is able to provide regular updates of remediation work, that would be very welcome.

Finally, there have been some reports of some developers challenging the extent of their liability. What assurance can the Minister provide on the deals with the 45 developers referenced in the impact assessment? If the developers take that to court, are the Government fully assured that they will lose? Otherwise, the whole funding package for remediation work will fall apart. I hope that the Minister, who has been put in this impossible position, can perhaps write and let us have some answers to those questions.

[Lord Khan of Burnley (Lab)]

My Lords, the Building Safety Act made provisions for the remediation of certain defects to buildings following the Grenfell tragedy and, in certain circumstances, gave protections to leaseholders from the costs. The regulations before the House make provisions for how leaseholders can secure those protections. Labour welcomes these regulations and, throughout the passage of the Act, called for leaseholders to be better protected from the costs of fixing historic defects to their homes.

I must say to the Minister that just as the noble Lord, Lord Young of Cookham, the noble Baroness, Lady Pinnock, and the Joint Committee have raised concerns, we are concerned about the rushed nature of these regulations today. It spells chaos, but when you have had 60 Ministers resign, including the Minister for this department, I understand what is going on here.

We want to ask the Minister to be more clear about how the scheme will operate. Given that many leaseholders are still living in buildings with extensive defects, this should include urgent information on when it will be fully operational. There are also still technical questions remaining over how retrospective protections will come into force, especially given that the Cabinet Office guidance makes it clear that you cannot implement retrospective law unless the Attorney-General and Solicitor-General have both approved it.

As leaseholders continue to suffer without any real guidance or information, Ministers must act with great urgency to give people security in their homes and ensure that there are no further delays. We on these Benches support this measure today. However, we have concerns about the rushed nature of bringing it through. What continuing conversations and consultations will the Minister have with the Joint Committee to ensure that its concerns are addressed?

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank noble Lords on all sides of the House for their contributions and their kindness in suggesting that I might like to write if I find that I cannot or have not answered anything when I have had a look at Hansard tomorrow. However, I shall take this opportunity to provide further detail on some of the points that have been raised.

I go first to the noble Baroness, Lady Pinnock. She asked whether non-cladding remediation work would be covered by the provisions. The various apportionment provisions in the regulations will apply to non-cladding remediation works. She also asked what happens when developers might challenge the extent of their liability. We are confident that the provisions will survive any legal challenge, but the department may indeed take forward some court cases itself in order to prove this.

The noble Baroness also asked me what happens with buildings under 11 metres, and I know this is a common concern of many. We remind your Lordships that building owners should ensure that residential buildings of any height are safe, as it is their long-standing legal responsibility to do so. We have no evidence of systemic risk in low-rise buildings, and although we recognise that height should not be the only factor determining the level of risk in buildings, experts generally recognise that height is an important factor. Any mitigation work needs to be appropriate and proportionate to the level of risk. Less expensive mitigating measures, such as fire alarms, are likely to be more appropriate and proportionate for buildings under 11 metres.

My noble friend Lord Young asked a number of questions that I would like to respond to. He asked first how leaseholders will be required to prove that a flat is their sole or primary residence. Leaseholders will be required to provide information in the form of a short deed of certificate in relation to their qualifying lease status, their property’s last sale price and their shared ownership status. As my noble friend said, proving a negative for other properties is a challenge; that is why the certificate itself carries a formal legal status. This one-off process will enable landlords to calculate their liability for historical safety defects under the Act. The certificate is set out in the schedule to these regulations and will be available to download from the GOV.UK website in the next few days. We will also be issuing comprehensive guidance and digital tools for leaseholders that set out this process in further detail.

My noble friend asked about enfranchised buildings. I remind the House that there is a distinction between resident-managed blocks, which are protected, and resident-owned blocks, which are not. As flagged up during debates in this House, it does not help leaseholders in enfranchised buildings if the leaseholder protection provisions in Part 5 of the Building Safety Act apply to leaseholder-owned and commonhold buildings. This is because leaseholders, in their capacity as freeholders, would still have had to pay the remedy for the safety defects in their building.

Following this, my noble friend asked about buildings where only some of the leaseholders own the freehold. This scenario was one of the reasons why we did not include leaseholder-owned buildings in the protections, as doing so would be unfair to those leaseholders, as my noble friend described. I remind the House that the Building Safety Act 2022 provides other routes for redress, which apply equally to leaseholder-owned buildings for buildings with relevant safety defects, enabling them to pursue those directly responsible for defects through the courts. These are now available for longer and in a far greater range of circumstances, including a course of action relating to product manufacturers and the provisions enabling associated companies to be sued. On next steps, I assure the House that the Government will very soon launch a call for evidence to understand better the particular issues facing leaseholder-owned buildings and their residents.

My noble friend also asked about resident-managed buildings and whether we have in some way let developers off the hook. I can categorically say that we have not. Developers will be liable to pick up historic building safety costs in resident-managed buildings, just as in other buildings. We have agreed with over 47 residential property developers that they will fix life-critical fire safety defects, including cladding, in all buildings above 11 metres that they had a role in developing or refurbishing in the past 30 years. The provisions relating to resident management companies and the like ensure that building owners are in the loop when it comes to getting work done. It will be up to them rather than the residents to pursue developers where the pledge does not apply.

My noble friend then asked if regulations 3(3) and 4(3) create some sort of loop. I can reassure your Lordships that they do not. There cannot be a circumstance whereby amounts could be claimed under both regulations. Under regulation 3, if the landlord is or is associated with a developer, they will be required to pay all remediation costs. If that is not the case, regulation 4 will apply to test whether the landlord or building owner meets the contribution condition. If they do, again, they will be required to pay all remediation costs, so a situation simply cannot arise where claims could be made under both regulations, because if a building owner were to meet the requirements of regulation 3 first, there would be no need to make a claim under regulation 4, and the same applies in reverse.

Finally—I am glad to say—in answer to my noble friend’s question about whether the Government will be producing guidance, as the Explanatory Memorandum does indeed suggest, to support the operation of these regulations and the leaseholder protections as a whole, subject to the House approving these regulations, the Government will be publishing on Thursday, to coincide with their coming into force, a comprehensive package of guidance for leaseholders, landlords and building owners. The draft package of guidance, which has been shared with the leaseholder groups to ensure its usability, will be accompanied by an online tool that will use the data from the certificate in the schedule to these regulations to enable qualifying leaseholders to determine the maximum they will have to pay in respect of non-cladding costs.

If I have not answered any questions, I will of course get back to noble Lords in writing, but in conclusion, these regulations are vital to ensure that the leaseholder protection provisions in the Building Safety Act are fully implemented, enabling landlords to apportion historical safety remediation costs and leaseholders to demonstrate their qualifying lease status, so that leaseholders can fully benefit from the protections that the new legislation affords them. I am glad that noble Lords are joining me in supporting these regulations and I beg to move.