Leaseholders and Cladding: Greenwich and Woolwich

Debate between Matthew Pennycook and Elliot Colburn

Monday 16th November 2020 Commons Chamber

[Matthew Pennycook]

As I was saying, the Minister must surely recognise that the Government cannot argue that height should not be the sole, or even the main, determinant of investigations but then make height the main criterion for access to public funding. Nor is it equitable, as my hon. Friend the Member for Vauxhall (Florence Eshalomi) touched on, that leaseholders continue to bear the exorbitant costs, the median of which in London stands at £256 a month per household, of interim fire safety measures either through service charge increases or the draining of sinking funds.

[Elliot Colburn (Carshalton and Wallington) (Con)]

I congratulate the hon. Member on securing this important Adjournment debate. I have a building under 18 metres in Carshalton and Wallington that is similarly affected. Does he agree that it is not the leaseholder’s fault that they are living in a building that has this cladding on it, and therefore any remediation that we offer has to accept that, and we need to support them through the process?

[Matthew Pennycook]

The hon. Member makes an excellent point, which I will pick up on towards the end of my remarks. To my mind, either the Government are responsible, in terms of defective regulation over many years, or builders are responsible, in terms of defective buildings. I cannot accept that the leaseholder, who of all the parties involved bears the least responsibility, is potentially being landed with the costs. The leaseholders I represent cannot understand how that potential still hangs over their heads.

I believe that eligibility for the building safety fund should be overhauled to cover buildings between 11 and 18 metres in height. The Government should re-open the private sector remediation fund for ACM-clad buildings in the same height category, and secondary costs as they relate to any affected building should be covered. I would be grateful if the Minister could indicate whether the Government are at least willing to consider those changes.

Buildings insurance is a growing problem, and the Government must step in to help to find a solution. With the insurance industry moving to limit its exposure on buildings covered in combustible materials of any kind, leaseholders in my constituency are finding it increasingly difficult to keep their buildings insured or, if they are able to do so, they are having to absorb soaring premium costs.

The case of Blenheim Court, a 24-unit development in east Greenwich, is worth citing as it is a good example of what is happening on the ground. Having secured several extensions to its policy as the right to manage sought to progress plans for remedial works, the insurer in question made it clear that the risk involved no longer fell within its underwriting appetite and the leaseholders faced the prospect of seeing their building uninsured, with the heightened risk of repossession that that entailed. Thankfully, at the eleventh hour they secured a policy with a consortium, but at an eye-watering cost of £163,000 for just 12 months’ cover. With the cost of renewals on affected buildings increasing across the board, does the Minister accept that to protect leaseholders adequately the Government will ultimately have to support the insurance industry, in all likelihood by acting as an insurer of last resort, in bringing forward a temporary solution?

I could have had a whole Adjournment debate on the mortgage crisis alone, such is the scale of the problem it is causing across the country and for the housing market. For all the hopes originally invested in it—and let us be clear it was an initiative that the Government were involved in developing even if they decided to distance themselves prior to its announcement—it has been clear for some time that the external wall fire review process has not resolved the difficulties caused within the mortgage lending market through changes in Government building safety guidance.

The guidance is not sufficiently clear. Too many buildings have been brought within the scope of the process. The issues around professional indemnity insurance are too thorny to resolve, and the scale of the remediation challenge is far bigger than originally assumed. The problem cannot be resolved by industry alone—something that I hope the Government have also now accepted. I do not pretend to have the answer, but I would be grateful if the Minister could at least provide leaseholders with some reassurance that his Department is trying to devise a system that facilitates the valuation and sale of properties that have some fire risk or an unconfirmed external wall façade, and to ensure that all buildings can be surveyed within a reasonable timeframe.

There are many other issues I could cover—not least what more can be done to speed up the pace of remediation more generally—but decisive Government action in the three areas I have covered would go a long way to improving the situation for affected leaseholders in my constituency and around the country. However, even if each were to be resolved in short order, that would not entirely alleviate the concerns, because there remains an ambiguity on the fundamental issue of leaseholder liability.

Strip away all the complexity in this crisis and the fundamental questions have always been: how can we make buildings safe more quickly, and who is going to pay to clean up this mess? It has always been my firm view that it would be indefensible—I turn to the point made by the hon. Member for Carshalton and Wallington (Elliot Colburn)—to pass on to leaseholders even a fraction of the £15 billion that the Select Committee on Housing, Communities and Local Government estimates will be required to fully remediate all buildings over 18 metres and the unknown costs of remediating buildings between 11 and 18 metres. As I said earlier, of all the parties caught up in this scandal, leaseholders bear no responsibility whatsoever for it.

Leaving aside the fact that over the past three years countless leaseholders across the country have been hit with huge bills for interim fire safety costs and remediation, and that the Government have entirely failed to protect them, until a few months ago the Government’s stated position, repeated by successive Secretaries and Ministers of State from the Dispatch Box, had always been that leaseholders should be fully protected. The then Housing Minister, the hon. Member for North West Hampshire (Kit Malthouse), set out the position succinctly on 22 January last year, when he made it clear that the Government would

“ensure that leaseholders do not bear the cost of this situation in any circumstance.”—[Official Report, 22 January 2019; Vol. 653, c. 135.]

Fast-forward to 16 October this year, and, in response to a written question, the current Housing Minister stated only that the Government were looking to protect leaseholders from “unaffordable costs”, subsequently defined by one of his colleagues as anything short of bankruptcy. Likewise, in evidence to the Select Committee on 19 October, the Minister for Building Safety and Communities stated plainly that

“some costs would fall on leaseholders—they would not be protected from all costs”.

Hon. and right hon. Members, as well as leaseholders across the country, concluded that the Government’s position had changed, and they worried accordingly.

Today at departmental questions, in a response to a question from the Chair of the Select Committee, my hon. Friend the Member for Sheffield South East (Mr Betts), the Housing Minister argued that there had been no change of position and that the Government are “quite clear” that they “do not expect” and “do not want” leaseholders to bear the cost of remediation. If that is the case, why has Michael Wade been charged with

“rapidly identifying financing solutions that protect leaseholders”

not from costs entirely but from “unaffordable costs”, and why does the draft Building Safety Bill, a legislative vehicle that should have been used to properly protect leaseholders in the way Ministers promised repeatedly from the Dispatch Box, seek instead to render leaseholders liable for defects, irrespective of the terms of their individual leases?

As I stand here this evening, not only are leaseholders more confused than ever about the Government’s position on their liability, but even if it remains the case that—again, I quote the Minister’s words earlier—the Government “do not expect” and “do not want” leaseholders to bear the cost of remediation, the Government actually have to take steps to ensure that that is the case.

Perhaps I am being unduly cynical, but I and leaseholders in my constituency fear that, confronted with a situation where, in all likelihood, more than half the country’s stock of buildings over 18 metres have had or still have some kind of building safety defect that requires fixing, and unprepared on the one hand to openly admit that this crisis is the result of profound regulatory failure under successive Governments but on the other hand not willing to go after developers more assertively on the grounds of mass non-compliance with the regulations in place over many years, the Government have decided that the only way through this morass is for them to cover a small proportion of the costs, to encourage but not compel developers and building owners to bear some of the costs, and to allow the latter to pass on the remaining costs to leaseholders using the mechanisms that the Government will have afforded them to do so.

I truly hope that I am wrong, and if that is the case the Minister has a perfect opportunity this evening to make clear precisely why, but if leaseholders did ultimately end up picking up the lion’s share of the bill, not only would it be an outrage but it would force untold numbers of leaseholders—even if the blow was limited by some form of cap or a long-term payment system—into financial hardship and, in many cases, ruin. For many leaseholders, all but the most superficial costs are likely to be unaffordable.

I will finish by saying this: any Member who has spent any time listening to the testimonies of leaseholders affected by this scandal will know that it is hard to overstate the abject misery it has caused. There is, of course, plenty of anger, but the overriding feeling on the part of leaseholders I have spoken to over the years is one of utter desperation—a feeling driven by the belief not only that they are trapped in their homes physically, mentally and financially, but that they have been all but abandoned by their Government. I hope that in his response the Minister disproves that belief and makes it clear that the people at the centre of this crisis can expect not just comforting words in this Chamber, but action to remediate their buildings, and action that will afford them more protection financially than they look likely to receive at present.