Oral Answers to Questions

Manuela Perteghella Excerpts

Monday 2nd December 2024 Commons Chamber

[Alex Norris]

That is another important argument for why we need longer-term, allocative settlements. It is my hon. Friend, her local authority, her local residents and her community who know Rhyl. They are the experts, and they should have the flexibility to break the one-size-fits-all model to make things work for themselves.

[Manuela Perteghella (Stratford-on-Avon) (LD)]

I declare an interest as a Stratford-on-Avon district councillor. Does the Minister agree that, in two-tier local government areas, district and borough councils are best placed as the most local form of government to allocate funds from the UK shared prosperity fund, given their proximity to communities and their deep understanding of local needs?

[Alex Norris]

The hon. Lady tempts me to discuss the shared prosperity funding, which communities will receive shortly. I have to say that my enthusiasm is for all tiers of government in local areas—whether that is metro mayors, upper-tier authorities, boroughs and districts or indeed parish and town councils—to come together in shared interest to improve their communities.

Grenfell Tower Inquiry

Manuela Perteghella Excerpts

Monday 2nd December 2024 Commons Chamber

[Tessa Munt (Wells and Mendip Hills) (LD)]

I associate myself with the remarks of the Deputy Prime Minister and my hon. Friend the Member for Taunton and Wellington (Gideon Amos) in recognising the pain, grief and hurt caused to so many connected to the Grenfell Tower tragedy, in which 72 lives were lost. I have heard the sombre comments in this debate and mean no disrespect by raising a specific matter relating to the understanding and interpretation of the legislation passed subsequently—namely, the anomaly of non-qualified leaseholder status, as it affects some constituents of mine.

My constituents own a one-bedroom flat in north Somerset. It is not a penthouse or anything luxurious; it is simply a home. They purchased it in 2015 with a 999-year lease, and it was a new build, so it was theoretically covered by the NHBC 10-year guarantee. They believed it would be an ideal long-term rental property, without too many maintenance issues ahead.

A neighbouring flat went up for sale in August 2024, and the buyer’s solicitor asked for an up-to-date fire risk appraisal. This prompted the management company to organise an assessment of the external walls, and the report strongly recommended cladding remediation work. My constituents would have known none of that, had it not been for the seller keeping them in the loop.

The new financial protections in the Building Safety Act 2022 apply to leaseholders in buildings above 11 metres, or five storeys in height, with historical safety defects. From 28 June 2022, qualifying leaseholders in England could no longer be charged for cladding remediation, and there are legal protections for non-cladding costs. The accompanying secondary legislation came into force on 20 and 21 July 2022.

The Government are clear that developers must pay to fix buildings that they had a role in developing or refurbishing, even when they no longer own the building. That seems right. The Act ensures that building owners who are, or are associated with, the developer must pay for the remediation of historical defects. The courts have been granted new powers to extend liability to associated companies, ensuring that civil cases for claims against defective buildings can be brought against companies associated with a developer, preventing the use of complex corporate structures to avoid that liability.

Qualifying leaseholders are protected from all cladding system remediation costs. Those whose property is calculated to be worth less than £175,000 outside London, or £325,000 in Greater London, or whose building owner has a group net worth of more than £2 million per relevant building as of 14 February 2022, are exempt from all historical safety remediation costs. The Act also includes a robust package of measures designed to ensure that those responsible finally put right the buildings they have contributed to making so dangerous, and that leaseholders are firmly protected from the unfair costs of remediation that they previous faced. No one could disagree that, on the face of it, that is fair.

Unfortunately, the previous Government failed to notify any leaseholders, qualifying or non-qualifying, of the implications of the Building Safety Act 2022, which came into force on 28 June 2022. However, four months ago, my constituents had no knowledge of the non-qualified leaseholder status that had been bestowed on them. Without any prior notice or consultation, my constituents’ legal rights as leaseholders had been significantly changed, backdated to 14 February 2022. That is because, as of that date, the threshold for non-qualified leaseholder status cuts in at ownership of four properties.

It is very hard to find definitions of non-qualified leaseholder status on the Government website. There is plenty about qualified leaseholder status, but very little about non-qualified leaseholder status. The Under-Secretary of State for Housing, Communities and Local Government, the hon. Member for Nottingham North and Kimberley (Alex Norris), has confirmed that, weirdly, under the previous Government’s legislation, a couple can own five properties, provided that they own their primary home jointly and two other properties each. However, a couple who own four properties jointly become non-qualifying leaseholders. Who on earth can think that is fair? That will discriminate against couples and families as compared with sophisticated business entities, which are probably the intended target of the legislation.

[Manuela Perteghella (Stratford-on-Avon) (LD)]

Does my hon. Friend agree that the Grenfell Tower inquiry has laid bare the failure of successive Governments in their duty of care to their citizens and revealed a catastrophic culture of carelessness that has caused untold suffering? Does she agree that the Government must act urgently to assist all leaseholders, including those currently excluded, such as non-qualifying leaseholder residents, like my constituents, who are unfairly left in financial and emotional turmoil through no fault of their own?

[Tessa Munt]

Yes, I agree with my hon. Friend, and I will come on to some of those issues.

Sophisticated business entities are probably the intended target of the legislation, so there is good news for people who have divided their property assets, and bad luck for those who jointly own their property investments, which is a terribly random criterion. It was shocking enough for my constituents to find out that the nine-year-old building in which their flat sits had a cladding issue, but due to the fact that they jointly owned four properties on 14 February 2022, they were left largely unprotected. They are not like the developers or cladding suppliers. Not only that, but their status as non-qualifying leaseholders has been attached to their flat in perpetuity. Even after all the remediation work has taken place, centuries have passed—currently, this is another 990 years on the lease —and they have departed this world, every future owner of their flat will inherit the same diminished lease, while neighbouring flats are protected from the costs of making the building safe.

The impact of the legislation is profound. Solicitors are advising their clients not to buy any flat with the non-qualified leaseholder status attached, even after the fire safety work has been completed. Lenders are refusing to lend on properties of that status. The values are expected to reduce considerably, possibly by as much as 50%. Estate agents realise that trying to sell properties with this status is pretty much a lost cause. Non-qualified leaseholders cannot sell their flats—they are mostly flats—and cannot mitigate the risks they have been exposed to. If a leaseholder has a 75% mortgage and the value drops by 50%, it is easy to see how financial crisis can hit ordinary people who saved hard, invested in bricks and mortar and are providing homes for rent all over the country, helping alleviate our housing crisis. Insurance premiums are sky high. If this continues, it is likely that lenders will not want to take possession if there is a default on the mortgage, because they themselves would become liable. Leaving a flat with this status in a will may expose family and friends to long-term problems associated with its status, as they will potentially inherit a liability not an asset.

The legislation has removed a whole tier of property from the ever-increasing number of young buyers and those who want to downsize, such as older citizens. It is clear that without the support of surveyors, agents, solicitors and lenders, it will become increasingly hard to secure one’s first or last home. Whatever one’s political ideals, surely we all agree that there is a terrible shortage of affordable homes, and the affordable end of the market often comes in the shape of a leasehold flat. I cannot find the path of logic through this legislation. I have no idea who tried to think this one through—I recognise that it was not the Minister. It seems deeply unfair that someone’s legal rights can be different from those who own flats in the same building, just because my constituents had four or more properties in their ownership on 14 February.

Will the Minister try to explain the logic, though I recognise he did not write the legislation? It would be nice if his opposite number, the hon. Member for Ruislip, Northwood and Pinner (David Simmonds), would have a crack at trying to tell me how it works—I just do not get it. It is a bit like someone having their car recalled for a safety issue and having to pay to correct the problem and any other safety problem in the future due to the fact that they and their family have three other cars between them, and they might want to sell the car once the safety fault is fixed. This is madness.

The Minister is on the record as having confirmed that the Building Safety Act 2022 was written to safeguard the health and safety of those who lived in the affected buildings. If a non-qualified leaseholder has a leasehold flat as their principal flat, they are protected. What about the tenants who live in the flats owned by private landlords who are in this trap? Are they not important enough to be protected, too? The Minister further confirmed in a letter last month that once the property is brought up to standard and safety remedies are completed, in the years ahead

“the expectation is that the qualification point should essentially become moot”.

There is plenty in the Government’s guidelines about non-qualifying leasehold status remaining with the property in perpetuity. I can find absolutely nothing about it becoming moot. I wonder how the Minister sees that being legislated for.

On the subject of Government guidelines, they are so complicated and hard to interpret that solicitors are at loggerheads over their ramifications. My constituents’ management company initially confirmed that they would be liable for all the costs associated with cladding remediation works, even if the building were accepted into the cladding safety scheme—that is, until my constituents were able to get the Ministry of Housing, Communities and Local Government to write to them confirming that they would be protected under the cladding safety scheme. However, it fell to my constituents to get proof and to convince their management company.

Worse than that, the Department advises owners to contact LEASE—the Leasehold Advisory Service—to establish their rights. LEASE confirmed both on the phone and in writing that my constituents did not qualify for any help or support in the cladding safety scheme. They were advised by others in the same predicament to contact the Ministry of Housing, Communities and Local Government. Can the Minister confirm who should indicate whether non-qualifying leaseholders are covered by the cladding safety scheme?

These Government Departments are set up to help and guide people such as my constituents, yet they are giving completely conflicting advice. That situation has caused my constituents anguish, sleepless nights and constant worry about the possible life-changing financial burden that may be heading their way. If the Government do not sort that out so that advice is clear and consistent, we are all lost. Will the Minister meet my constituents and me to further discuss non-qualified leaseholder status as soon as possible?