My Lords, I declare an interest as chair of the National Housing Federation, the representative body for housing associations in England. Our members house 6 million people in 2.6 million homes, including a significant number of flats in multi-storey, multi-occupied buildings that need remedial work on their external wall system.
Nothing is a greater priority for housing associations than their residents’ safety. Following the awful Grenfell tragedy, they have been leading the way in the past three years by identifying buildings that need urgent work and carrying it out as quickly as possible. In his Motion C1, the right reverend Prelate the Bishop of St Albans wants to protect leaseholders from huge bills to make their homes safe, and I support him. Leaseholders should not be facing such costs. Other noble Lords have given vivid examples of the impact on leaseholders.
Housing associations are doing what they can to ensure their leaseholders do not have to foot the bill for developers’ mistakes by pursuing the companies that built the buildings, as well as warranty and insurance providers. Sadly, these efforts are not always successful so I applaud a move by this House to provide extra assurance to leaseholders living in these homes.
However, housing associations face a huge dilemma. They exist predominantly to provide social homes to those on lower incomes. The buildings that housing associations need to remediate due to safety concerns will largely be made up of social housing. This welcome move to protect leaseholders must also be coupled with further government funding to pay for the necessary remedial works to all the buildings that need them. While the funding that the Government have made available for remediation costs so far is very welcome, the £1 billion building safety fund and the additional £3.5 billion announced last month are not available to remediate homes in which social tenants live.
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Housing associations do not make profits to draw from, so any costs that they incur will generally be met using income from tenants’ rents, as well as money that could otherwise be spent on improvements to tenants’ homes and communities. This would mean that without additional funding, this amendment could result in charitable housing associations paying for works to both leaseholders’ and social tenants’ homes; effectively subsidising leaseholders’ share of remedial works costs with the money that social tenants pay for the upkeep of their homes and communities. Building remediation could cost the housing association sector upwards of £10 billion in total. Of course, I do not want to see leaseholders picking up large bills for this reason, but I do want to see government funding to pay for leaseholders’ share of all works in all buildings, to protect housing association renters from effectively picking up the bill.
Importantly, housing associations also use their funds to build affordable housing. Paying for urgent remedial works to people’s homes must be and is the sector’s top priority. But this essential work means that fewer affordable homes will be built in the future, at a time of desperate need. Research shows that we need 90,000 new social homes every year to meet demand in our country. The G15, a group of London’s largest housing associations, worked out that they have in aggregate spent in the last year, expect to spend next year or have included in their business plans up until 2031, a total of £2.9 billion. They estimate that, as a result of this spend, they will build 72,000 fewer affordable homes to rent, as they continue to prioritise these essential safety works. In addition to this, many of these housing associations will have to defer planned maintenance works and upgrades beyond those required to maintain decent homes compliance.
That group represents just 12 housing associations from a raft of hundreds of organisations that provide affordable homes. This is why legislating for building owners to cover remediation costs does not have the intended effect in all cases. In the case of social providers, they are facing astronomical costs for buildings that they did not construct in the first place.
We are right to seek protection for leaseholders, but that must sit alongside government funding to remediate all buildings in need, including social housing. Otherwise, tenants and people who need social housing will suffer needlessly now and for years to come. As the right reverend Prelate said, the Government are the only agency that can do this, and I hope that the Minister will confirm today that the Government will provide up-front funding for all remedial works and recoup the costs to the taxpayer by establishing liabilities later.