Therefore, the scope of “relevant defect” is sufficiently broad and will take account of many of the defects listed by my noble friend Lord Blencathra.
In relation to cladding, the Government have already put in place separate provisions, whereby leaseholders of properties in buildings over 11 metres will be protected from all costs associated with cladding remediation. I know that my noble friend has raised very real examples of leaseholders with narrow, not broad, shoulders who may have a certain amount of property in their retirement portfolio and have chosen to invest in property as a way of guaranteeing their income in old age. I would like to sit down with my noble friend and policy officials to see that we have got the policy intention right. He raises an important point that, sometimes, there are landlords with pretty narrow shoulders, and I do not think it is the intention of the Secretary of State and the Government to be unduly unfair on those people. We will sit down to understand the concerns. At this stage, there are a number of protections in place, but we recognise where my noble friend is coming from.
I forgot in the desire to get going that I should have declared my residential and commercial property interests as set out in the register. They are all properly laid out.
I also forgot to mention something in response to the noble Baroness, Lady Hayman, who raised the important point about retrospection. I got through the waterfall and the cascade but forgot about retrospection. It has been raised by a number of noble Lords; even the noble Baroness, Lady Pinnock, probably mentioned it as well.
The important thing is that day zero for the building safety reset is 14 February 2022. Once we have got this Bill through, that is the date we will start from. However, retrospection does kick in, in the sense that leaseholders who have spent money to date will not pay more than the cap. We will take into account the money they have
already spent. Admittedly, we are not going back to refund those who have already spent money, but there is a cap in terms of liability. I shall also deal with the specific issue raised by my noble friend Lord Leigh of Hurley.
I shall now address the building safety charge amendments tabled by my noble friend Lord Young of Cookham. I shall race through these, because, basically, my noble friend is right to recognise that there may be other ways of skinning a cat, and looking at service charges as opposed to the building safety charge. Let us just see how we evolve that as time goes on—so I shall leave that, if I may. I thank him for raising those points. The Government’s intention was not as it has been painted by some people, but we recognise the points that he has raised.
Turning to Amendment 131, I thank my noble friends for raising this interesting matter, but I am afraid that the Government will not be able to accept the amendment. It would require the Secretary of State to establish a statutory inquiry into costs leaseholders have paid since 10 January 2022 which are not recoverable by those leaseholders. As I have already described, the Government have tabled a series of amendments either to remove or to greatly restrict the costs that the vast majority of leaseholders living in blocks over 11 metres will have to pay. Given these significant protections, the Government do not consider that the costs and bureaucracy involved in setting up another statutory public inquiry would be appropriate or justified. On that basis, I ask my noble friends not to press their amendment.
Turning to Amendment 86, I thank the noble Lord for raising this important matter, but I am afraid that the Government will not be able to accept the amendment. Managing agents play an important role in managing and maintaining buildings on behalf of their clients, and it is fair that they should be paid for the services they provide. I agree with my noble friend that it is important that managing agents do not charge excessive fees for those services, and that such charges must be reasonable. Managing agents also need to be clear about the charges they pass on. This Government strongly believe that service charges should show this. They should be transparent and communicated effectively, and there should be a clear route to challenge or redress if things go wrong.
The law is already clear that service charges must be reasonable and, where costs relate to work or services, the work or services must be of a reasonable standard. Leaseholders may challenge the reasonableness of the service charge through the appropriate tribunal, whether that is the First-tier Tribunal in England, or the leasehold valuation tribunals in Wales.
It is also important to recognise that there may be practical challenges in setting a fee. The cost of carrying out a fire risk assessment specific to the safe occupation of an individual building will range considerably, owing to the significant variations between buildings and their individual risk profiles.
It may have unintended consequences to impose a cap on a charge for work carried out by managing agents solely on fire risk assessments. Capping one cost, without considering whether charges for other activities they
carry out should also be capped, might simply allow managing agents to recoup costs from other services they provide. Any such cap would need to ensure that the intended outcomes were achieved.
The Government are already considering in what circumstances fees or charges are justified and whether they should be capped or banned. We established a working group, chaired by the noble Lord, Lord Best, who looked at this alongside the regulation of property agents and reported back to government in 2019. We are currently considering those recommendations.
I thank the noble Baroness, Lady Hayter, for her work in preparing the codes of practice. As the Minister, I can say that we take on board the need to ensure that managing agents are professionalised and properly regulated. The Government will respond on that, and we take it extremely seriously. It is all about getting the right legislative vehicle, with some forward planning. Noble Lords will hear more about that—“in due course” is, I think, the phrase we use.
With regard to legal costs, not all leases allow landlords to recover their legal costs incurred through the service charge. Even where the lease permits this, there are already statutory protections in existence. Where a landlord has incurred, or has intended to incur, legal costs in connection with proceedings before a court or an appropriate tribunal involving a leaseholder, leaseholders can apply under Section 20C of the Landlord and Tenant Act 1985 for some or all of those costs not to be regarded as “relevant costs” in determining the amount of any service charge payable by the leaseholder. I thank the noble Lord for raising this important matter and assure him that the Government are actively considering the issues raised. With that assurance, I ask him to not move his amendment.
Now we turn to the amendment from the noble Baroness, Lady Hayman of Ullock, the Workington Warrior. She highlighted an amendment raised in the other place on the proposed building works agency, which would undertake the work the department is already doing on the auditing and monitoring of buildings over 18 metres with unsafe cladding. This represents poor value for money and would have the effect of increasing costs and burdens. Furthermore, the proposed works agency would oversee an audit of cladding, insulation and other building safety issues in all buildings over two storeys. This would result in hundreds of thousands of buildings being audited and would be very expensive and take numerous years. We do not consider this proportionate and therefore we oppose it.
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The Building Safety Bill also includes measures to establish a building safety regulator and there are major overlaps between the regulator’s role for residential buildings over 18 metres and the proposed role of the building works agency. I therefore invite the noble Baroness not to press her amendment.
I turn to Amendments 93 and 94, tabled by the noble Baroness, Lady Pinnock—the “peppercorn” amendments. I say in response to the noble Baroness that not all leaseholders are equal, just as it is fair to say that not all freeholders are equal, and that some
have broader shoulders than others. That will be reflected in how the Government approach regulations. We recognise that and it is important that we have the discussion so that she understands how we provide appropriate protections.
I feel particularly strongly about shared owners, who have very small shoulders and yet in some cases are being asked to shoulder major historical building safety remediation costs. So I thank the noble Baroness for tabling the peppercorn amendments but, as I have outlined today, our government amendments will require that historical safety defects in any building above 11 metres or five storeys owned by the developer who built or refurbished it, or by a landlord associated with that developer, must be fixed by them, and that building owners who can afford to pay must not pass on any costs relating to historical safety defects to leaseholders. I understand where the noble Baroness is coming from, but that is what we have set out: they are, as I pointed out, the last cascade in the waterfall or cascade approach that this Government outlined with our Valentine’s Day amendments.
My noble friend Lord Leigh of Hurley raised the issue of Collier House in Knightsbridge. I will be meeting Felicity Buchan, the relevant MP, and officials to discuss this building, and I believe that we can fix this at the building level, rather than requiring an amendment to the Bill. So I ask my noble friend to bear with me. Let us return to this on Report if necessary, based on some of the discussions we are having in the department. I thank my noble friend for raising something that is inherently unfair: people are not getting the money reimbursed to them that they deserve because of the actions of, in this case, the freeholder, and I thank my noble friend for raising the matter in their interests.
I turn to Amendment 125 and thank the noble Baroness Lady Hayman, as I always do, for raising this important matter. I am really sorry that the Government will not be able to accept this amendment. Our assessment is that the amendment does not strike the right balance in proportionately funding remediation and is unnecessary, given the Government’s commitment to protecting leaseholders in buildings over 11 metres from all costs of addressing unsafe cladding and from most costs of remediating non-cladding defects. As I have already outlined, this will be achieved by making the industry pay for faults of its own making and capping contributions from leaseholders to remediation work.
In contrast to making those at fault pay, if the amendment proposed by the noble Baroness were to be passed, it would impact on private and social buildings possessing faulty external walls, or any element that poses a building safety risk or a risk to the ability of anybody to evacuate the building. Those buildings could be designated defective and be eligible for grant funding of 90% of the cost of works, or repurchased by the local authority.
The infrastructure required within local authorities to run such a scheme in today’s context would be complex and expensive—yet more expense. It would divert energy away from fixing buildings and prove hugely costly to the taxpayer. As well as lacking detail on the
types of dwelling covered, the clause lacks clarity, and so could result in disproportionate decisions on funding. This could risk taxpayer funds and is unnecessary, given the Government’s commitments to protecting leaseholders from unreasonable costs. So, with this full explanation, I ask the noble Baroness not to press her amendment.
We are approaching 90 minutes on this group. I thank noble Lords for our spirited debate on this matter, which I know is close to the hearts of many on all sides of this Committee. I hope that I have provided the information and reassurance needed, and ask noble Lords to withdraw or not press their amendments.