My Lords, I have two amendments in this group. Before I introduce them and talk about the things that we are perhaps not
so content with in the group, I just want to say that we recognise that the Government have introduced some very important amendments here. We welcome the work they are trying to do to improve the Bill from its previous incarnation.
The first amendment in my name is Amendment 88. The reason we introduced it is that, looking at all aspects of the crisis that this Bill is trying to address, these Benches are concerned that the Government’s approach does not appear to have a central plan. This amendment was also tabled in the other place by my colleagues, so we are repeating their call for the Government to act across the piece to solve the crisis. We ask that the Minister considers accepting our proposals for a building works agency, which would provide a more hands-on approach.
As we have heard, home owners, many of them first-time buyers, have become trapped in a perfect storm in unsafe buildings because they cannot sell their homes, and are forced to pay thousands in remediation works through no fault of their own. We propose that a team of experts does what the Government have not done so far with this Bill: go from building to building to assess real risk, deciding what needs to be fixed and in what order, using the building safety fund to get those buildings fixed and overseeing the work. Crucially, the Government could then sign off the buildings as safe and sellable, bringing certainty back into the market.
To make it clear, we see the building safety works agency as a separate body to the building safety regulator, with no duplication or crossover; in the debate in the other place, the Minister felt that there was crossover. We see the building safety works agency overseeing the remediation works and the other body regulating. One regulates and one does the work. This would mean that the Government could really take on those who are responsible for creating the crisis and who need to pay. This approach was put in place by a cross-party group of politicians and experts in Victoria, Australia, after there was a serious fire there. That is why we think it would work here: it is not just an idea off the top of our heads but something that has been done and worked before. It would enable the Government really to lead from the front on this matter.
Briefly, my Amendment 125 was tabled before the most recent government amendments. It replicates the McPartland-Smith new Clause 5 from the Commons, amending Part XVI of the Housing Act 1985. Now that the Government have tabled their amendments, it has been superseded, but I will still speak to it to remind the Committee that there have been previous attempts to address the fire safety question during the passage of the Bill. This amendment illustrates that there are different approaches to how the issue can be solved in legislation. It was previously tabled with a range of other amendments addressed to Part 5 of the Bill with the aim of allowing the Government and local authorities to enable grants for remediation work—specifically, by allowing the Government and local authorities to designate dwellings with cladding and fire safety defects as defective.
Having now seen the government amendments, I ask the Minister why the Government could not back the original amendment, which was after all tabled by
Conservative Members of Parliament. How did the Government then arrive at the decision to table what they have come up with?
I want now to look at some of the other amendments in the group, and in particular at the implications of government Amendment 92. We do not think that any of the announcements benefit leaseholders who have already paid for remediation work—this has been mentioned by other noble Lords today. The fact that there is no retrospective coverage means that even if the proposed amendments become law and are effectively implemented, many leaseholders will continue to suffer the financial impact of the building safety crisis.
I therefore indicate our strong support for Amendment 131, in the name of the noble Lord, Lord Young of Cookham, which proposes that the Secretary of State set up a statutory public inquiry. It is really important for us to understand exactly what the situation is. Otherwise, there will be no recovery of these costs to leaseholders. Any steps which will lead to full retrospective protection for leaseholders who have already paid remediation costs should be taken seriously by the Government.
If the Government choose to introduce a cap on non-cladding remediation works—the noble Baroness, Lady Pinnock, talked about this extensively in relation to her amendments, and we fully support what she is trying to achieve—it would mean that the maximum amount payable would be a peppercorn amount, which is effectively nothing and is where we need to be. Leaseholders should not be liable to pay for any costs that have resulted from a faulty regulatory system, whether these are related to cladding or non-cladding remediation, or interim safety measures. As the noble Lord, Lord Naseby, said, all leaseholders should be treated exactly the same.
Further, it is unclear who will be liable to pay for remediation costs or the provision of interim safety measures such as waking watch in cases where the £10,000 or £15,000 cap has been met. Many buildings with fire safety issues can be occupied thanks to waking watches and other interim measures. If these are removed, there is a risk that the building receives a prohibition or decant notice and/or a withdrawal of building insurance cover. I hope that the Minister has his thinking cap on, because I have quite a lot of questions and requests for clarification. There have been a great number of amendments to consider and fully understand, so I hope that he will bear with me.
The combined effect of the various amendments is pretty complex. They seem to create what I can describe only as a system of cascading statutory protection, each stage of which is triggered only if the prior one is exhausted. I shall go through my understanding of it. Can the Minister confirm that I am correct or clarify where I have got it wrong? I know that the noble Earl, Lord Lytton, also asked for clarification in a number of areas.
My understanding is that the system would work as follows. First, developers who are still the freeholders of a given building or are linked to it by a subsidiary, as well as cladding manufacturers, are expected to pay first. Secondly, freeholders of buildings who are not the original developers or linked to the original developers
are expected to pay second, subject to an affordability test to be set out in the future via regulations. Thirdly, if those freeholders cannot pay, leaseholders will be expected to pay only a capped amount based on Florrie’s law towards non-cladding costs only. Anything they have paid to date counts towards the capped amount. Assuming that I have understood this correctly, I ask the Minister for more clarity on how this cascade system is expected to work in practice and what estimates, if any, the Government have made.
For example, how do the Government expect to define the affordability test at stage 2 of the cascade in regulations, given that this will make a huge difference to the number of cases that then get to stage 3? Why is there no protection for social landlords at stage 2, given the impact on affordable housing supply? What happens if freeholders of buildings who are not the original developers or linked to the original developer cannot pay and the costs exceed the leaseholder cap by a substantial amount? Who makes up the difference? Would it be from the department’s affordable housing budget, for example?
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Can I also ask for some clarification regarding Florrie’s law? In reality, how robust a safeguard is this for leaseholders? How will individual leaseholders be able to prove that they have spent, for example, £8,000 over the past five years on non-cladding building safety costs via their service charges, so they can then be charged only an extra £1,500? What happens if a significant proportion of leaseholders cannot even pay the capped maximum amount? What estimate have the Government made of the number of buy-to-let landlords who own more than one rental property in an affected building? Buy-to-let landlords with their own rental property in addition to their principal home are covered if that is in an affected building, but how does it work for others? Even if this number is a relatively small proportion of the total share, it could still have a significant impact on the works getting done.
The Government talk about taking a more proportionate and common-sensical approach, but what does that actually mean in practice? What estimate have the Government made of the number of buildings removed from scope as a result of the withdrawal of the consolidated advice note? Can the Minister provide information about expected implementation dates and what will happen to leaseholders who have already been issued with invoices? What protection is there to ensure that freeholders cannot attempt to pass on costs over the proposed Florrie’s law cap before the legislation comes into force? There also appears to be no redress for leaseholders who have already paid non-cladding associated costs above the Florrie’s law capped amount; the noble Lord, Lord Leigh, mentioned them and asked what would happen to them. If that is the case, does the Minister agree that it is simply not fair that, as currently drafted, the Bill gives them no redress whatever?
At the end of his very good speech, the noble Lord, Lord Naseby, gave some examples of leaseholders who have been victims of this scandal. I want to finish by sharing with the noble Lord and the Committee a brief overview of the situation faced by leaseholders
living at Vista Tower in Stevenage, to highlight the concerns around full remediation of all fire safety defects. Vista Tower has been plagued with many costly defects due to poor workmanship by the developer and its contractors. The building is now in a sorry state, with little being done to ensure even general maintenance as all reserve funds have been spent. I understand from the person who spoke to me that the current service charge is £6,000 a year; that is what they are paying.
The developer transferred assets and is now dissolved. Leaseholders were advised during recent litigation that associated parent companies essentially have very little by way of assets. The contractor used has also ceased trading. The freeholder has taken a hands-off approach to maintaining their asset. The lack of transparency and willingness to engage with leaseholders has left many of them very frustrated and constantly trying to get answers. When a building is purchased by a shell or investment company to spin a profit, there seems to be no responsibility taken when things go wrong. The building control sign-off was outsourced to the Stroma Group. Leaseholders were advised that litigation cases against building control rarely succeed, so they decided not to incur further costs chasing this route. The structural building warranty provider went bust a few years ago.
Unsurprisingly, the majority of leaseholders in this building are disheartened, anxious and very concerned about their future. They face one of the largest remediation bills in the country. They should not be expected to carry the can for the appalling behaviour of the developers and others who were involved, and they should certainly not have to pay thousands of pounds to put this right, on top of all the stress and worry that it has caused.
I do hope that the Minister has listened carefully to the concerns raised in this debate and that the Government will finally plug the gaps and loopholes that remain so that, as the noble Lord, Lord Naseby, said, all leaseholders are treated equally.