Fire Safety Remedial Work: Leaseholder Liability

Steve Reed Excerpts

Thursday 19th April 2018 Commons Chamber

[Marsha De Cordova (Battersea) (Lab)]

I am pleased to have secured this important debate. The issue of liability for fire safety remedial work is of great concern to many Battersea residents, as it is to people in many parts of the country, and for good reason. The horror of the Grenfell fire made it clear, if greater clarity were needed, that there should be no complacency on fire safety.

While we await the final publication of the Hackitt review, which is investigating the fire safety regulatory system and identifying who is responsible for failures and what system is needed, the interim report stated that the regulatory system, at present, is “not fit for purpose.” I fear that is the result of successive Governments not treating fire safety with the appropriate importance.

Of the 158 social housing blocks with unsafe cladding, just seven have had the cladding fully replaced. One of the blocks waiting for work to begin is Castlemaine Tower in my Battersea constituency. Its residents have known for 10 months that their building, like Grenfell, has unsafe cladding. No data is available on the progress on privately owned blocks, and Wandsworth Council has not published the number of blocks that have the aluminium composite material cladding that has been deemed unsafe. Given the number of blocks in Battersea, it is imperative the council publish that information. I have requested the information from the Secretary of State for Housing, Communities and Local Government.

The Government must get their act together and ensure that fire safety work is carried out, but to do that they need to resolve, as a matter of urgency, questions on what work needs to be done, who needs to do it and who should pay for it. It is the Government’s responsibility to resolve those questions and, so long as they do not do so, the risk of another tragedy is prolonged.

Here we arrive at the crucial question of leaseholder liability. I welcome members of the Sesame Apartments residents association to the Public Gallery. They have come to Westminster desperate to hear reassurance from the Government. They are leaseholders of an apartment block in Battersea that was completed just four years ago and that last year was found not to meet fire safety standards after a fire in the block damaged multiple apartments, revealing that compartmentalisation had failed.

Worryingly, the fire occurred while a “stay put” policy was in place. Subsequent testing found that the cladding was defective and in need of replacement. In the light of the fire safety failures, the “stay put” policy was changed to immediate evacuation, and a waking watch system was put in place as a temporary solution.

As we know, such fire safety failures need proper rectification, and that work needs to be paid for. The waking watch and fire alarm system are anticipated to cost approximately £700,000, which is more than £8,500 per flat. Replacing the cladding is expected to cost around £2 million, which is £25,000 per flat. In total, the cost per flat is estimated at between £30,000 and £40,000.

After a tribunal ruled last month that leaseholders of Cityscape in Croydon would be held liable for replacing defective cladding, the residents of Sesame Apartments fear the entirety of those eye-watering costs will fall on their shoulders, which cannot be right. They cannot be held liable for these costs. These are hard-working people who scrimped and saved to buy their flats.

[Mr Steve Reed (Croydon North) (Lab/Co-op)]

I congratulate my hon. Friend on securing this debate. She mentions Cityscape in Croydon North where the leaseholders have a similar problem to the residents she represents. When the issue has previously been raised in the Chamber, the Government have pointed the finger and said that the insurers of the builders, freeholders and managing agents should be bearing the cost of removing and replacing that cladding, but no legal obligation has ever been found on any of them.

The Government are leaving leaseholders hanging with unaffordable debt and living in homes that have become unsellable—homes that they fear are not safe to live in. Does my hon. Friend agree that the Government should act now to get the cladding removed from every building where it exists? They can sort out the legalities afterwards. The only body in a position to act now to keep people safe is the Government. Why do they keep refusing to do it?

[Marsha De Cordova]

I thank for my hon. Friend for making that valid point, which I will certainly be addressing. He is spot on in saying that the Government are the only people who can respond to this issue and deal with the problems that our leaseholders face.

So many of these people are first-time buyers, and many are living in shared ownership properties. They do not have tens of thousands of pounds to pay for the work that needs to be done, and they have done nothing wrong. They bought their flats in good faith and they are in no way responsible for the fire safety failures. To date, the Government have seemingly agreed, saying that, morally, leaseholders should not be held liable for these costs. But my constituents need those words to be backed up by action. For as long as that does not happen, the leaseholders will be beset by fear. After all, how would we feel if we were told that our home did not meet fire safety standards, that we might be asked to pay £40,000 to rectify that and that our largest financial asset, our home, was now a huge liability? That is the situation that residents of Sesame Apartments find themselves in.

I have heard from a teacher who lives in the block and who had hoped to move in order to start a family, but is now weighed down by this liability, unable to sell and trapped in her home. I have heard from a resident, who spoke to me about the heartbreak of the money they had saved for IVF—in vitro fertilisation—treatment now needing to be set aside for fire safety work. I have heard from another whose pride in getting a foot on the housing ladder was crushed when they were told that, just by owning 25% of a shared ownership property, they are now potentially liable for 100% of the costs. Every resident I have spoken to tells me of the stress and fear caused by this liability hanging over their head.

The same is true of leaseholders across the country. Why are leaseholders being put through this ordeal? The Hackitt review is identifying who was responsible for fire safety failures, but this is causing anguish. The review might conclude that the Government are responsible, because fire safety regulations are not fit for purpose. It might conclude that the building inspection regime is responsible, because some local authorities have privatised inspections, leading to a serious decline in standards. Or it might conclude that developers are responsible, because they have been cutting costs to maximise their profits. It might conclude any of or indeed all those things, but what it will categorically not conclude is that leaseholders are responsible—of course it won’t.

These are working people who have had no say over the regulations, or over the design or the building of the property, yet it seems that, legally, they are going to be held responsible for these life-shattering costs. As anyone would, they are attempting to contest that, but they tell me how powerless they feel in that process.

We are talking about a small community of hard-working people, but they are confronted by a web of opaque freeholders, management companies, insurers and unresponsive developers, none of whom wants to take responsibility. The residents do not have armies of lawyers at their disposal. It is a David and Goliath situation, and the law is not working for these people. But it not just about that, as for the corporations involved their profit lines are at stake, whereas for the residents it is their homes and their lives. There is a real concern that if this is allowed to run its course and the Government do not intervene, the working people will be paying for failures that are not of their own making—that is unacceptable.

The Government seem to recognise that, because they have already said on multiple occasions that they acknowledge that it is morally wrong for leaseholders to be held liable for these costs, but those must not be empty words. The Government have the power to intervene and make this right, and it is their responsibility to make this right. They need to do more than just encouraging freeholders not to pass on these costs. They need to do more than support the Leasehold Advisory Service. They need to step up to the plate and intervene on behalf of leaseholders.

There are actions that the Government could take. They could, and should, properly look to see whether the developers or the freeholders that profited from cost-cutting and lax regulations are liable for the costs, or they could cover the costs themselves, which is what the residents I have spoken to believe should happen.

If the Government refuse to do that, the least they could do, as suggested by one of the Sesame Apartments residents, is provide loans to cover the costs, thereby allowing fire safety remedial work to begin immediately. The loans could be attached to the freehold and stretched over the 100-year duration of the leasehold, with repayment instalments reflecting that. That would ensure that if leaseholders were held liable, the additional yearly service charge would be close to negligible. It would achieve the key requirements of any intervention: first, it would allow remedial work to begin as soon as possible, thereby minimising the risk and fear of fire; and, secondly, it would allow leaseholders to get on with their lives and not be weighed down by an unaffordable debt. I urge the Government to take action to achieve those goals.

I conclude with two straightforward questions for the Minister. First, it might become clear from the courts that leaseholders are legally liable for the costs. If that happened, does she think it would be acceptable? Put otherwise, does she think that residents should be held legally responsible for the costs of fire safety work, even though she knows that residents are in no way at fault?

Secondly, if leaseholders are found to be liable, what do the Government propose to do for those leaseholders who cannot afford the remedial work? I am asking, in essence, whose side the Government are on—David’s or Goliath’s. I thank the Sesame Apartments residents for coming today. I know that they will be listening with interest to what the Minister has to say.

[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Mrs Heather Wheeler)]

I thank the hon. Member for Battersea (Marsha De Cordova) for speaking so passionately about the situation in which some of her constituents find themselves. I thank all Members for their contributions. I recognise that the recent fire in Sporle Court will mean that fire safety is at the forefront of people’s minds in Battersea, although we understand that on that occasion there were no injuries.

Let me begin by making it clear in the widest sense that the Government are committed to promoting fairness and transparency for leaseholders in England. To that end, on 21 December 2017, we announced a package of measures to tackle abuses and unfair practices in the leasehold market. That includes introducing legislation to prohibit the development of new build leasehold houses other than in exceptional circumstances, and restricting ground rents in newly established leases of flats to zero financial value. We are working with the Law Commission to support existing leaseholders, including by making buying a freehold or extending a lease easier, faster, fairer and cheaper. With that context in mind, it is hugely important that leaseholders, like any other residents, are kept safe in their homes.

The fire at Grenfell Tower was a terrible tragedy. The Government are determined to learn the lessons and take all necessary steps to ensure that nothing like it can ever happen again. I wish to set out some of the steps that the Government have taken since the tragedy. The Department’s building safety programme, set up immediately after the fire, is working hard to ensure that all high-rise residential buildings are safe from the threat of fire, and that residents feel safe in them. To support that, the Secretary of State appointed an expert panel to ensure that the necessary steps are taken to ensure the safety of residents of high-rise buildings. Following the panel’s recommendations, the Government provided advice to building owners on the interim measures that they should put in place to ensure the safety of their residents. We swiftly identified social housing blocks and public buildings with unsafe cladding. All the affected social sector buildings that we have identified have these measures in place.

[Mr Reed]

The Minister will recall the lethal fire at Lakanal House in 2009. In 2013, the coroner who investigated that tragedy urged the Government to change the fire safety regulations that govern the use of cladding—specifically, approved document B. The Government failed to amend that regulation in 2013 and now, five years later, they have still failed to amend it. The criticism was that it was unclear what kind of cladding could and could not be put on a building. For that reason, flammable cladding exists on hundreds of blocks today. Will the Minister explain why the Government have done nothing in the nine years since Lakanal House?

[Mrs Wheeler]

The important thing is that the Hackitt review has already released interim recommendations, which we have accepted. We await the review to report later this summer. That will be the answer going forward.

All the social housing blocks and affected social sector buildings that we swiftly identified had the measures in place. In parallel, we tested different combinations of cladding and insulation to see which of them met the building regulations guidance. We published consolidated advice in September, confirming the results of the tests with advice for building owners. We have also been working with building owners and industry to support remediation work.

At the same time, the Government asked Dame Judith Hackitt to undertake an independent review of building regulations and fire safety to ensure that buildings are safe in future. We are taking forward all of the recommendations for Government contained in the interim report, and look forward to the publication of her final report shortly.

We believe we have identified all affected social housing blocks and public buildings. With regard to private sector buildings, the Government have made the testing facility at the Building Research Establishment available free of charge, and we continue to urge all building owners to submit samples for testing if they think that they may have unsafe cladding. In addition, the Secretary of State wrote to all local authorities in August asking them to identify privately owned buildings with potentially unsafe cladding in their area in line with their statutory duties.

[Mrs Wheeler]

I hear what the hon. Lady says. We have close contacts with Wandsworth Council.

In addition, the Secretary of State wrote to all local authorities in August asking them to identify these properties. The majority of local authorities recognised the urgency of that work and provided relevant information, and we are very grateful for their hard work. However, this is not a straightforward task, particularly when building owners cannot be traced or are unresponsive. We have been in constant dialogue with local authorities ever since. Last month, to support local authorities in that work, we announced a financial support package of £1 million to assist the most affected local authorities in identifying the remaining private high-rise buildings with potentially unsafe cladding.

We are progressing work to issue a statutory direction as to local authorities’ reviews of housing conditions in their area in respect of cladding-related issues. We are also working to publish additional operating guidance to support local authorities in assessing the risks to residents posed by potentially unsafe cladding.

These measures will help local authorities to take enforcement action to ensure that hazards in residential buildings in their areas are remediated as quickly as possible. I am confident that these steps will strengthen local authorities’ hands when carrying out this work. I can assure hon. Members that, as soon as we are notified of buildings with potentially unsafe cladding, we work with local authorities and the National Fire Chiefs Council to ensure that interim measures are put in place.

The Government have been clear that remediation should be done as quickly as possible, but it should also be done properly. Let us be clear: the remediation of buildings with ACM cladding is a complex process, involving major construction work which needs to be planned, consulted on and carried out carefully. Rushing any phase of the remediation process could jeopardise the safety of residents. I am encouraged that remediation has started on 103 affected social sector buildings and that, of those, seven have finished remediation work. There is clearly a long way to go, but that is significant progress.

I understand that funding is a concern for Wandsworth Council. In the social sector, all the local authorities and housing associations that we have spoken to have indicated that they have no plans to pass on the costs of essential remediation work to individual flat owners within their buildings. We will consider financial flexibilities for local authorities that are concerned about funding essential fire safety works to the buildings that they own.

In the private sector, we continue to urge those with responsibility to follow the lead from the social sector and not attempt to pass on costs. They can do that by meeting costs themselves or looking at alternative routes such as insurance claims, particularly warranties, or legal action.

[Mr Reed]

Will the Minister give way?

[Mrs Wheeler]

No, I am going to finish.

We are aware of cases in Battersea where freeholders are seeking to do just that.

[Mr Reed]

Will the Minister give way?

[Mrs Wheeler]

No, thank you.

Where building owners are seeking to pass on remediation costs to leaseholders, it is important that leaseholders can access specialist advice to understand their rights. We have provided additional funding to the Leasehold Advisory Service—LEASE—which provides independent, free, initial advice to leaseholders to ensure that they are aware of their rights and are supported to understand the terms of their leases. LEASE continues to provide valuable support to affected leaseholders around the country. On 15 March, the Secretary of State announced an industry roundtable on the barriers to the remediation of buildings with unsafe aluminium composite material cladding.

[Mr Reed]

Will the Minister give way?

[Mrs Wheeler]

No, I will not.

I hope that the points I have made have reassured—

--- Later in debate ---

[Mr Reed]

Will the Minister give way?

[Mrs Wheeler]

No, I will not, sir.

I hope that the points I have made have reassured hon. Members just how seriously we are treating the building safety issues that the terrible fire at Grenfell Tower brought to light, and our commitment to supporting leaseholders and all residents throughout this process.

Question put and agreed to.