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

Lord Young of Cookham Excerpts

Tuesday 19th July 2022 Lords Chamber

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, these regulations were laid before Parliament on 7 June and were debated in the other place yesterday, 18 July. They are a key part of the implementation of the leaseholder protection provisions in the Building Safety Act 2022, which your Lordships debated at some length. The regulations are made using powers in Part 5 of, and Schedule 8 to, the Act and introduce the necessary detail to implement the leaseholder protection provisions.

I will start by providing some context and background to the regulations. Before the relevant sections of the Building Safety Act came into force on 28 June, many leaseholders were liable for the costs of historical safety defects in their buildings. They were landed with bills they could not afford to sort out problems not of their own making. Now the provisions have come into force, all leaseholders in buildings that are 11 metres or at least five storeys in height are protected from all remediation costs, whether cladding related or not, where their building owner or landlord is the developer or is connected to the developer.

In addition, qualifying leaseholders in those buildings are protected from all cladding remediation costs. Any non-cladding or interim measure costs—for example, waking watches—will be firmly capped. Where the landlord has a net wealth above £2 million per relevant building or the flat is worth less than the specified amount, £325,000 in Greater London or £175,000 elsewhere in England, they are protected from all historical safety remediation costs. Any costs paid out in the last five years will count towards the caps, and qualifying lease protections will pass on to subsequent buyers.

The House will be aware that the Joint Committee on Statutory Instruments has drawn attention to the content of these regulations. I would like to address the committee’s concerns, but first I will set out some of the background that influenced the Government’s approach. The House will know that the underlying statutory provisions, the leaseholder protections, were added to what is now the Building Safety Act about half way through its passage through Parliament, in recognition of the unfair and intolerable position that many leaseholders found themselves in. They were facing bills often running into many thousands of pounds to fix problems they had played no part in creating.

The leaseholder protections were devised and drafted at pace, drawing on expertise in a number of fields, including proposals put forward by parliamentarians from both Houses. I record my thanks for their time and engagement on this. The Act received Royal Assent at the end of April, and the protections came into force two months later. It was therefore both important and urgent to prepare the two sets of regulations that will enable the protections to take practical effect. That urgency meant that we were not in a position to share the regulations in draft with the Joint Committee, as is the usual practice. That meant the committee and its staff had limited time to get to grips with both the regulations and the underlying primary legislation in what is, in many ways, a ground-breaking piece of law.

None the less, we have engaged with the committee in two rounds of correspondence, culminating in the memorandum and response set out in the appendix to the committee’s report. Some noble Lords will have read the report in full and seen the detail of the committee’s concern and the Government’s response. To summarise, the committee raised a number of technical and legal issues with the instrument in respect of both its drafting and its vires. The Government have considered these issues carefully, including working closely with the First-tier Tribunal about the way it will deal with appeals, and are satisfied that, notwithstanding the committee’s concerns, no issues with the regulations will prevent the process operating successfully.

As I have described, the Government consider it imperative that these regulations come into force before the Summer Recess to alleviate the issues facing leaseholders in defective blocks. We will, of course, monitor closely the progress of cases. If it becomes apparent that changes are necessary, we will come back to Parliament with those proposals. I therefore ask the House to consider the important effect of these regulations and to approve them.

To go into more detail on the instrument, the Act does not set out how leaseholders will demonstrate that their lease qualifies for the protections, nor how liability for historical safety defects will be shared between multiple landlords. That is what these regulations do. They set out the essential detail needed to implement the leaseholder protection provisions in the Building Safety Act. Their effect can be considered in three parts.

The first is the leaseholder certificate. These regulations make provision for leaseholders to provide information relating to their qualifying lease status—that is, the number of properties they own—their property’s last sale price and their shared ownership status. The regulations provide a template certificate, which the leaseholder must complete and which needs to be done just once. The certificate and evidence requirements are intended to be as simple as possible for leaseholders, while also being robust enough to prevent fraud and to assure landlords and lenders of the lease’s qualifying status.

The regulations also set out two trigger points at which the landlord must notify the leaseholder of the need to complete the certificate. These are when a defect is found or the leasehold property is to be sold. But any leaseholder may submit a certificate voluntarily once the regulations are in force—hopefully later this week—and they have the information to hand. These provisions will allow leaseholders to demonstrate whether they qualify for protections under the Act and, if so, what their maximum cap would be.

Secondly, these regulations make provision for the landlord to identify who is liable to pay for the remediation of historical safety defects and how much they are liable for, and to enable them to recover these amounts. They set out formulas which the responsible landlord must use to apportion liability where more than one landlord is connected to the developer or where remediation costs are not recoverable from leaseholders. The effect is that the landlord may recover some costs of remediation from other landlords with an interest in the building, in accordance with the Act.

Finally, these regulations provide detail on what a person making an application for a remediation order to the First-tier Tribunal must provide as part of their application. Applicants, who can be anyone connected with a building, along with enforcement bodies such as the new building safety regulator or a fire and rescue authority, will need to state under which provision the application is made. They will also need to state the building, its landlord, and the relevant defect. The First-tier Tribunal will then be able to determine whether to require a landlord to remedy particular defects in a building by a specified time.

To summarise, our overall approach to these regulations is entirely consistent with the policy and legal intent of the Building Safety Act and gives full effect to the leaseholder protection provisions in the Act. These regulations serve a very specific purpose, which is to provide the detail needed to implement the leaseholder protection provisions in the Building Safety Act. This will then enable leaseholders to benefit fully from the protections, which came into force last month.

This instrument is necessary to provide the detail needed to implement the leaseholder protection provisions in the Building Safety Act, which are already in force. I hope that your Lordships will join me in supporting the draft regulations. I commend them to the House, and I beg to move.

[Lord Young of Cookham (Con)]

My Lords, I am grateful to my noble friend for introducing this statutory instrument. I appreciate that she was engaged on other government Bills when the legislation was going through earlier this year. As she explained, the context of this instrument are the clauses in the Building Safety Act which were introduced at a relatively late stage to protect leaseholders from remediation costs following the Grenfell tragedy. That protection was improved during the passage of the Bill, though not as far as some of us would have liked. However, it is good news that the secondary legislation is now being passed to give effect to it.

I have a number of issues to raise about this SI and will quite understand if my noble friend writes to me in response. First, looking at the schedule, there is a form headed “Evidence”, and a leaseholder who believes that he has protection under the SI has to provide a number of documents. One is to show that the dwelling, which is usually a flat, is his or her only principal home on 14 February. Most people have only one home. I wonder what document they must provide to satisfy the landlord that they do not own any other property. Is it a simple assertion, or will the landlord be entitled to expect something else before he accepts liability, and, if so, what? It is quite hard to prove a negative. This is important, because if the landlord can say that the leaseholder has not completed the form properly, the lease is no longer a qualifying lease.

Secondly, during the passage of the Bill, on several occasions I raised the question of leaseholders who had enfranchised and then bought the freehold. I was invited to read the Minister’s lips. Other noble Lords in Committee will remember the exchange. I was assured that they would be treated as leaseholders and not as freeholders, and that they would get protection under the Bill. My noble friend Lord Greenhalgh said:

“They are effectively leaseholders that have enfranchised as opposed to freeholders. I hope that helps.”—[Official Report, 28/2/22; col. GC 262]


That would have been consistent with the policy of successive Governments to encourage leaseholders to enfranchise, and it would be perverse to penalise those who had done so.

Without resurrecting old arguments, when the Bill completed its passage, they were treated as freeholders and not as leaseholders, and so they got no protection under Section 117 of the Act and no protection under the SI. My noble friend Lord Greenhalgh was concerned about this, and I ask my noble friend the Minister whether any action was being taken by the Government to fulfil the commitment that was initially given. I recall that my noble friend Lord Greenhalgh mentioned some consultation on this issue.

Thirdly, related to that, there will be problems where some of the leaseholders are freeholders and others are not. Can my noble friend the Minister say whether, under those circumstances, leaseholders who do not own a share of a freehold can pass on their share of the remediation bill to those who are freeholders? Again, that would be a perverse consequence. Do the Government intend to make regulations under Section 117(3)(d) to deal with any situation of some residents being freeholders and others not?