Leaseholders and Cladding

Meg Hillier Excerpts

Wednesday 12th February 2020 Westminster Hall

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate my right hon. Friend the Member for Leeds Central (Hilary Benn), who summarised what we would all have said, had he not covered it so thoroughly. I want to focus on the costs to individuals and ultimately to the taxpayer—if the Government implement a bailout—and to highlight the impact on many of my constituents.

It is fair to say that after the Grenfell fire, Hackney was relatively unscathed, despite having a large number of tower blocks, because aluminium composite material cladding affected a few blocks, but not many. However, the new rules have affected so many of my constituents.

I declare an interest, as I am a leaseholder myself. All my cladding is being removed and, happily, my developer is footing the entire bill, although no doubt my property is worth nothing at the moment. I argue not for myself but for the many constituents who are not in as fortunate a position as I am.

The costs mount up. There are the survey costs. Hackney Council has been given £88,000 for data collection, which has got to cover more than 200 council blocks. It is inadequate. There are survey costs for all building owners, which fall on the leaseholders. There is the cost of remedial work, some of which needs to happen immediately—for example, new fire alarms in individual flats and in corridors. That work has to happen before removing waking watch can even be considered, and we have heard about the costs of waking watch.

There are the hugely increased mortgage costs. One constituent tells me:

“I can neither re-mortgage or sell my flat. I am currently stuck paying a variable rate mortgage, and am paying £800 more a month than necessary.”

That is on top of the other costs around waking watch and so on.

Insurance costs have gone up for blocks around the country, which the excellent all-party parliamentary group on leasehold and commonhold reform heard about only a few weeks ago. That does not look like it is going away, and the Minister needs to look at that. Insurance companies should not just get away with this. The reality of the risk is probably not as high as their algorithm throws up, but it is punitive for residents. Shared owners are paying the whole cost, not just for the bit that they own, so there is a problem with the shared ownership model.

There are challenges in tracking down owners, and a shortage of skills for surveys and remedial work. Has the Migration Advisory Committee looked at the skills that are needed and whether they could be urgently rushed through, so that more people could be available to speed up the work, which is being done on a riskier buildings first basis?

Then there is the inability to get the paperwork. Some of the properties could get mortgages, but without the right certificate, they cannot, as my right hon. Friend the Member for Leeds Central highlighted. There are too many mortgage prisoners.

The previous Secretary of State made a bold decision with the ministerial direction to set up the fund to deal with ACM cladding. This Government need to be equally bold. They must make sure that bad developers do not get away with it and, if they are considering loans, that loans are to the developer rather than the owner, because a loan increases the lack of mortgageability.

The certificate of safety would help a lot of my constituents, right here, right now. If the Minister could reassure us on that one issue alone today, that would help a lot of people right now, while we recognise that there are bigger challenges ahead.

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[Fleur Anderson (Putney) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate my right hon. Friend the Member for Leeds Central (Hilary Benn) and all those from across the country who have spoken in the debate to show what strength of feeling there is. I want to join them, to represent my many constituents who feel just as strongly. Their lives are a misery because of the situation—surely an unforeseen result from a fund that is meant to save lives and to be a good thing for people across the country. Actually it has led to dreadful circumstances for residents.

To add to the stories we have heard, I will mention the leaseholders of 66 and 200 flats respectively at two buildings in my constituency—the Swish building and the Riverside Quarter. They have been told by their freeholder that the cladding and other fire safety measures in the building—the cladding is either not ACM, or it is a mixture between ACM and HPL—do not now meet the standard that the Government regard as adequate for the issue of a fire safety certificate, and that recladding is needed. To their horror, they have been told that they need to foot the bill for the work, which comes to tens of thousands of pounds. They have not been told exactly how much the cost is, but they believe it is between £50,000 and £80,000 per flat.

That raises a few issues, the first of which is safety. If the current cladding does not meet the safety requirements for a safety certificate, are the blocks safe? As we have heard today, different blocks are being treated differently. The fire regulations are not up to scratch. Another issue is fairness. To make leaseholders foot the bill is outrageous. They are not multi-million pound landlords, by any stretch. They are normal people trying to live their lives, and they do not have £50,000 lying around. The situation is taking a huge emotional toll.

[Meg Hillier]

My hon. Friend is right to raise the unfair cost to leaseholders, which we have all highlighted. Does she agree that, as the taxpayer could ultimately foot the bill, we should make sure that dodgy developers, or those who will not step up to the mark, do not get away with a situation where the taxpayer bails people out just because they will not pay?

[Fleur Anderson]

I absolutely agree. There has to be a way to make the fund easy to use and urgently accessible, so that it is not held up for a long time in red tape, and the right people have to foot the bill. I argue that the Government need to extend the cladding fund to all types of unsafe cladding. That is what it is there for.

As to the emotional toll, one person said:

“The net result for me is that I will lose my home, as I cannot sell it, or raise a mortgage to finance repairs because it is unsellable and I am unemployed, and therefore will lose my lease.”

He will become homeless as a result. Another resident told me that his flat is unsaleable and effectively worthless. It was bought in 2004 in good faith in the belief that it was a safe home. The fact that it is now considered to have the problems in question is not of his making:

“We cannot afford to pay a sum of this size on top of the existing service charge”.

In summary, I am as shocked as everyone else here. I hope that the Minister will urgently tell us some good news. Three years after Grenfell, my constituents are being asked to fork out huge sums of money for a building that ultimately they do not own—a point that relates back to the leaseholder crisis. No leaseholder should have to pay for the work in question, or experience such huge stress and uncertainty. An urgent response is needed. I join those who are asking for the cladding fund to be urgently extended to all forms of unsafe cladding.

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[Sarah Jones]

I completely agree.

We know that 75 private block owners do not even have a plan in place to remove this cladding. Will the Minister confirm that, as the Secretary of State promised on 20 January, the Government will name all block owners who fail to put a plan in place by the end of January? Will she publish those names in tomorrow’s building safety update?

The Government’s £200 million fund for ACM removal on private blocks is nine months old, yet just a single block has so far been accepted for funds, and none has been made safe as a result of the fund. Labour has for years called on the Government to legislate to ensure that building owners cannot pass costs on to innocent leaseholders. Even with the £200 million fund, leaseholders are still exposed to risk, because state aid rules mean that fund payments are capped at €200,000 per property.

As the Mayor of London and the National Housing Federation said, the fact that the fund covers only ACM cladding creates a two-tier system. Will the Minister explain what protections she is putting in place to ensure that leaseholders are not handed the bill in the event that remediation costs exceed the state aid cap? What is she doing to protect leaseholds in blocks with other forms of dangerous cladding from being unfairly passed those costs?

Research from Labour revealed last year that up to 600,000 people are now stuck in unsellable flats because of flawed Government guidance relating to advice note 14, which is compounded by the failure to publish the Government’s tests into suspect non-ACM cladding. In recent weeks, new advice has been issued, and a new form from the Royal Institution of Chartered Surveyors—the EWS1 form—for buildings whose cladding status is uncertain. In spite of those changes, in the past few days I, like others, have dealt with constituents who have been able to complete their sale. One constituent is facing major delays and bills over the work that she has been told needs to be done. Will the Minister give some clarity on how many sales are still being held up, how many EWS1 forms have successfully been signed off, and what the Government are doing to ensure that leaseholders are not being ripped off for those forms?

Interim measures such as waking watch, which other hon. Members have mentioned, were put in place after Grenfell as a very temporary measure before remediation works were undertaken. However, nearly 1,000 days on, leaseholders are still paying exorbitant costs—thousands of pounds per year—as a direct consequence of the Government’s failure to hold building owners to account and make their blocks safe. What plans does the Minister have to ensure that leaseholders who cannot afford to continue paying the costs are supported?

On non-ACM and data collection, ACM is the tip of the iceberg. High-pressure laminate and other forms of cladding are just as dangerous and should be removed. However, two years on, Ministers have failed to audit residential blocks, so we still do not know how many blocks are covered in HPL or other types of potentially lethal cladding. Ministers promised that that work would be completed by March this year, but an Inside Housing investigation report revealed that 70% of blocks remain uninspected, meaning that it is virtually impossible to reach that deadline. It is ridiculous that the Government have often shifted their deadline on publication of the non-ACM test results. Will the Minister today commit to a date for the publication of the tests, or explain to us the reason for the delay?

[Meg Hillier]

Does not the delay in getting the data in speak to the lack of expertise available? I spoke to one of my housing associations at the end of last week, and it is having to assess its buildings in risk order. Many people in not so risky buildings will never get the work done to get the necessary paperwork—the data—to get a mortgage, which is also important for the property owners.

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[Esther McVey]

The Government took immediate action straight after the report. The actions that we took included a comprehensive independent review of building safety, chaired by Dame Judith Hackitt, and we have accepted all the recommendations of her independent review. We will continue to bring forward legislation to deliver an enhanced safety regime for high-rise residential buildings. As we announced last month, we will begin immediately to establish the new building safety regulator—initially in shadow form, pending legislation—which Dame Judith will chair, to oversee the transition to the new regime.

[Meg Hillier]

The Minister has paid tribute to MPs for doing their best and for showing the best of MPs. What we hoped for was the best of the Minister, doing the best by our constituents. Although we recognise the action that the Government took after the Grenfell fire, our residents need some assurance and action, so they know that they will not have to wait years for the issue to be resolved. Can she give our constituents any comfort today?

[Esther McVey]

I started my speech with the Secretary of State’s remarks about what we are doing, the actions that we have taken, and how we will deliver going forward. I want to ensure that people understand the rigorous work of the expert panel and the advice that we are taking from it. That work is checked and verified, and we are taking it forward at the right pace. Of course, we are here to discuss those issues, which are being dealt with—negotiations are ongoing. What the issue absolutely impresses upon us is how important it is that things are done as quickly and as thoroughly as possible.

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[Esther McVey]

The Department has met leaseholders, and we have received and replied to letters from leaseholders. The hon. Lady is right: we have to have a bigger consultation and ensure that we meet leaseholders. Yesterday, Lord Younger met a group, some of whom are in the Public Gallery. It is imperative that we hear from the people who are most affected, and I absolutely agree that we should.

[Meg Hillier]

Will the Minister give way?

[Esther McVey]

Time is short—the right hon. Member for Leeds Central might like a minute or so at the end—but I will take any further interventions.

[Meg Hillier]

Will the Minister tell us whether she has spoken to—or will speak to—the Migration Advisory Committee about ensuring that we have the right skills to do the work properly and quickly?