Levelling-up and Regeneration Bill

Lord Young of Cookham Excerpts

Report stage
Monday 18th September 2023 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, it is pleasure to follow the noble Earl, Lord Lytton. I pay tribute to him, not just for the professional expertise that he brings to the subject—something that none of us can match—but for his persistence in campaigning to rectify the injustice done to leaseholders.

I shall speak to the amendments in my name but, before doing so, I want to say this: not all our debates in this House on the Bill have had a wide following in the outside world, but this one will. Hundreds of thousands of leaseholders are living in unsafe buildings, and they are looking to your Lordships’ House to deliver on the promises that the Government have made to them but which remain currently unfulfilled and which the amendments in this group seek to rectify. The End Our Cladding Scandal team have done a first-class job in briefing noble Lords.

I compliment the Government on the measures they have taken to help people living in unsafe flats. They introduced the Building Safety Act, protecting many leaseholders from ruinous bills, they took aggressive action against 50 of the country’s biggest developers and secured binding legal commitments worth more than £2 billion to rectify their failings, and they set up the building safety fund to help to pay for remediation for orphan buildings. I welcome this and the patience with which my noble friend Lady Scott listened to my representations on this subject.

But my noble friend the Minister will not expect a speech from me to be an unqualified paean of praise. What promises did the Government make at the outset, and have they been met? In his Statement in the other place on 10 January 2022, the Secretary of State said:

“We will take action to end the scandal and protect leaseholders”.


He went on to say:

“We will make industry pay to fix all of the remaining problems and help to cover the range of costs facing leaseholders”.


He then said there would be “statutory protection”, and he clarified what he meant by this:

“First, we will make sure that we provide leaseholders with statutory protection—that is what we aim to do and we will work with colleagues across the House to ensure that that statutory protection extends to all the work required to make buildings safe”.—[Official Report, Commons, 10/1/22; cols. 285-291.]


Note that that commitment extends to all building work, not just cladding, and there was no qualification of the word “leaseholders”.

These broad commitments were confirmed in a letter written to all noble Lords by my noble friend’s predecessor, my noble friend Lord Greenhalgh, on 20 January last year, entitled:

“Introduction of the Building Safety Bill”.


Under a section headed

“Protecting Leaseholders from Unnecessary Costs”,


it said:

“The Secretary of State recently announced that leaseholders living in their homes should be protected from the costs of remediating historic building safety defects”—


not just cladding but “building safety defects”. But the position now is that there are significant exclusions from those commitments: not all buildings are covered, not all building safety defects are covered and, crucially, not all leaseholders are protected. These amendments help to fulfil the Government’s earlier promises.

One specific commitment given to me by the then Minister, no doubt in good faith, has been explicitly and inexcusably broken. During the passage of the Bill, I raised the question of leaseholders who had enfranchised and bought the freehold. I was assured that they would be treated as leaseholders and not as freeholders, and that they would get leaseholder 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.]


To avoid doubt, I was asked to read the Minister’s lips. But the Government resisted amendments that would have done just that, and leaseholders who have enfranchised are in a worse position than those who have not. Amendment 282ND addresses that unjustified distinction.

It remains perverse that a Government who are about to introduce legislation to encourage enfranchisement, with the proposal that eventually all blocks should be enfranchised, should at the same time deliberately choose to disadvantage exactly those leaseholders in the Bill. The two principal exclusions from the commitment I referred to a moment ago are leaseholders who live in buildings fewer than 11 metres tall and non-qualifying leaseholders, a category of people that does not exist in Wales, where all leaseholders are qualifying leaseholders and protected.

On buildings under 11 metres, the Government’s position is that residents should be able to leave the building in the case of fire without expensive remediation. This position is at odds with the position of the London Fire Brigade, whose statement said:

“While we understand the approach of starting with tall buildings, LFB have always been clear that using building height as the only measure of risk is too restrictive and believe that there are other high risk buildings with vulnerable occupants that also need to be considered”.


It concluded:

“With regards to the remediation of buildings, we strongly assert that all buildings with serious fire safety defects should be remediated regardless of height”.


That is an unequivocal professional rejection of a distinction made by the Government.

There are countless examples of the problems that have resulted from this exclusion. I give just one. Leaseholders took over the freehold of their five-storey block in London because the developer, who had originally retained the freehold, went into liquidation. They thought that they were doing the right thing but, in their words, “It seems like we are being punished for this now”. The building has combustible insulation, combustible spandrel panels that extend the full height of the building, and vertically aligned timber balconies. Unless every leaseholder in the block can pay, at an estimated cost of over £30,000 per flat, the work cannot take place and leaseholders simply remain trapped in unsafe, unsellable flats. The 2011 fire at the retirement home Gibson Court in Surrey, where 87 year-old Irene Cockerton lost her life, makes very clear why fire safety issues in low-rise blocks can be life-critical, yet many retirement homes remain unremediated.

Defective buildings of any height may require remediation if they have life-critical safety risks and, as Michael Gove himself acknowledged in the House of Commons on 14 March, of fire safety defects in buildings under 11 metres, “some will be life-critical”. Yet there is no requirement for responsible developers to remediate such life-critical safety defects, no access to government funding, no matter how high-risk the building is, and in a recent consultation on the issue DLUHC has even excluded freeholders of such buildings from the duty to try to pursue alternative cost recovery routes before charging leaseholders. These flats are unsaleable. The owners cannot afford to pay for remediation. In the view of the fire brigade, they are unsafe; in the views of insurers, they are uninsurable; and in the view of lenders, they are unmortgageable. This cannot be what the Government intended.

The second exclusion is non-qualifying leaseholders. I have already mentioned enfranchised and resident-run buildings, which are excluded from the Building Safety Act 2022 cost protections. Any costs of remedial works required to those buildings will fall on the leaseholders, although they may be entitled to some help with the costs of cladding removal. The principal exclusions are the approximately 400,000 flats in mid or high-rise buildings owned by a non-qualifying leaseholder who owns or has an interest in three or more properties.

The problem has a ripple effect—in any building that has but one non-qualifying leaseholder who cannot pay, remediation work to make all the homes safe may be delayed or unable to go ahead. The perverse consequence of this is that if you own a manor in the Cotswolds, plus a villa in Italy on Lake Garda and a luxury penthouse in central London worth £1.5 million, you qualify for protections under the Act. Yet if you and your partner own a small, terraced house and three small £100,000 buy-to-let apartments as part of your pension planning, only one of which has non-cladding fire safety issues, you may face bankruptcy. Amendments to change the exclusion of buy-to-let leaseholders were resisted by the Government as the Bill went through. Again, Amendment 282ND puts that right.

The LUHC Committee, with its government majority, rightly noted last year:

“Leaseholders are no more to blame for non-cladding defects than they are for faulty cladding on homes they bought in good faith. Buy-to-let landlords are no more to blame than other leaseholders for historic building safety defects, and landing them with potentially unaffordable bills will only slow down or prevent works to make buildings safe”.


The unintended consequence of the Building Safety Act 2022 has created a two-tier system where leaseholders deemed qualifying will benefit from the protections, whereas those arbitrarily deemed non-qualifying have been left to fend for themselves. Shared-ownership leaseholders face even greater difficulties because of the nature of their leases. Without a truly comprehensive solution to all buildings, of all heights and tenures, uncertainty and a lack of confidence in the residential flat sales market are set to perpetuate. My amendments seek such a solution.

I note in passing that a property’s non-qualifying status remains on the title in perpetuity. That means that any future purchaser—whether a first-time buyer, second-stepper or landlord investor—will be required to take on the risk of unlimited costs to fix safety defects that may not even yet have been identified. This renders non-qualifying leases effectively unsellable, regardless of the existence of known safety defects.

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Moved by

[Lord Young of Cookham]

282C: After Clause 226, insert the following new Clause—
“Qualifying leases under the Building Safety Act 2022After section 119 of the Building Safety Act 2022 (meaning of “qualifying lease” and “the qualifying time”), insert—“119A Variation, surrender or regrant of qualifying leases(1) A qualifying lease varied, or subject to any surrender and regrant, remains a qualifying lease.(2) This section has effect in relation to any qualifying lease varied, or subject to any surrender and regrant, before the coming into force of this section.(3) Any agreement contrary to this section is void, whether made before or after the coming into force of this section.”” Member's explanatory statement
This section fixes a gap in the Building Safety Act 2022 to ensure qualifying leases retain their protection if the leaseholder enters into a deed of variation, or exercises statutory lease extension or enfranchisement rights.

[Lord Young of Cookham (Con)]

My Lords, I am grateful to all those who took part in the debate some hours ago about protecting leaseholders. I am grateful to my noble friend Lord Howe for what he said—that proposals will be brought forward shortly to help those blocks that have enfranchised. My noble friend said that I would greet with a sigh his rejection of my amendment, and he was quite right. I say in return that his heart must have sunk when he read his brief and saw the less than convincing reply he had been equipped with to rebut my amendment.

In a nutshell, the Government made a mistake when they drafted the Building Safety Act. Unwittingly, they have removed the protection that some leaseholders were entitled to. They have known for months that there has been this defect, and I do not accept that the defect is so complex that it cannot now be put right. That is what my amendment does. I seek leave to test the opinion of the House.

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Moved by

[Lord Young of Cookham]

282ND: After Clause 226, insert the following new Clause—
“Non-Qualifying Leases under the Building Safety Act 2022(1) Section 119 of the Building Safety Act 2022 (meaning of “qualifying lease” and “the qualifying time”) is amended as follows.(2) After section 119(1) insert—“(1A) This section only applies to a dwelling if it is a dwelling in a relevant building and the relevant building has one or more relevant defects.”(3) After section 119(4)(b) insert—“(ba) where a person (“T”) was a tenant under a lease of, or had a freehold interest in, a dwelling and at the qualifying time T was a tenant in common of that dwelling, T is not deemed to own that dwelling unless T’s share under the tenancy in common was more than 50%.”(4) After section 119(4) insert—“(5) Notwithstanding anything in this section:(a) a tenant is always deemed to own a qualifying lease for each of the first three dwellings that tenant owns; and(b) a landlord must cease to make any distinction between qualifying leases and non-qualifying leases once all work to remedy relevant defects in a relevant building is completed.””Member’s explanatory statement
This amendment secures parity between non-qualifying and qualifying leaseholders under the Building Safety Act 2022. It extends protection to 3 properties for all types of leaseholder. It also amends the Building Safety Act to exclude shares in a property of 50% or less from being counted as wholly owned. Lastly, it removes the distinction between leaseholders once relevant defects are remedied.

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Moved by

[Lord Young of Cookham]

286: Clause 231, page 272, line 30, at end insert—
“(ca) under section (Secretary of State’s duty to promote healthy homes and neighbourhoods);”

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Moved by

[Lord Young of Cookham]

315A: Clause 234, page 276, line 15, at end insert—
“(c) section (Qualifying leases under the Building Safety Act 2022) comes into force on 1 August 2023.”Member's explanatory statement
This amendment provides a commencement provision for one of Lord Young’s new clause amendments.