Written evidence submitted by the National Housing Federation [BRF 085]

 

Summary

 

Introduction

Resident safety is the housing association sector’s top priority and our members have continued to urgently remediate buildings with safety concerns as the scale of the crisis has grown.

Work has started or been completed on 100% of the social housing high-rise buildings with ACM cladding, the material that was used on Grenfell Tower.

Elsewhere housing associations have continued identifying, removing and replacing other dangerous cladding, and tackling wider building safety issues in line with government guidance.

Since the launch of Dame Judith Hackitt’s review, housing associations have also been taking steps to ensure their organisations are properly prepared for a new regulatory system.

The building safety announcements made by the Secretary of State on 10 January were an important step forward in overcoming the seemingly intractable challenges that have mired the progress of the building safety programme. 

 

The NHF agrees with the Secretary of State’s focus on greater protections for innocent leaseholders; ensuring those responsible for building safety issues make a greater financial contribution to putting things right; and adapting how building safety issues are assessed to reflect the risk they present.

 

The NHF wants to work with the government to ensure its proposals are as effective as possible in tackling the building safety crisis while also paying close attention to the need to build and make improvements to much needed social housing.

 

NHF view on the government’s announcements

Protections for leaseholders

The NHF wholeheartedly supports the principle that no leaseholder should have to pay to fix cladding and other building safety issues caused by developers, contractors and manufacturers. Housing associations have doggedly pursued every possible avenue to avoid passing costs on to leaseholders.

We support the government’s decision to move away from a loan scheme and, instead, seek to recoup the necessary funding from the businesses that created the crisis.

We are very pleased to understand that leaseholders living in housing association homes will be eligible for any additional funding made available to cover the costs of repairing unsafe external wall systems.

The government has now brought forward amendments to the Building Safety Bill to deliver on its policy aims, which will be considered first by Grand Committee in the House of Lords. There is still considerable detail to be worked through to understand how the legislation will work in practice, particularly in relation to non-cladding costs.

We also agree with the government’s plans to find a way to protect leaseholders from forfeitures and welcome the Secretary of State’s intervention on subletting for shared owners.

Housing associations have taken a supportive approach to subletting. The adjustments to the grant funding requirements for shared ownership homes will support this flexibility further. We hope the clear signal from the government on this issue will ensure lenders now show the same flexibility when receiving these requests.

Ensuring the polluters take responsibility

The NHF agrees that those who have profited from the building safety crisis should make a major contribution to funding the remediation needed. It is right that the government is seeking to recoup funds from developers, contractors and manufacturers as a priority to cover cladding costs for leaseholders, and wants those responsible for building defects to put them right without passing on costs.

 

Housing associations are already paying to fix building safety issues in buildings where social renters live. These works are likely to cost the sector close to £6bn and, depending on the number of 11-18m buildings affected, it could be above £10bn. This is money that is diverted away from building new homes, routine maintenance and meeting net zero carbon targets.

 

In addition, housing associations that have their own construction arm – where they employ architects, engineers, builders and other key trades directly – have already agreed to cover all costs for any buildings they built that need to be fixed.

 

It would, however, be wrong for not-for-profit housing associations to shoulder the costs where they are the customer of a developer, commissioning a building through a “design and build” contract or acquiring homes through section 106.

 

In both instances, the responsibility for the design and delivery of a building that is safe and compliant with building regulations sits squarely with the lead contractors.

 

If housing associations were instead made to absorb these costs, not only would it divert funding away from building new social housing and other key services, it could delay remediation. Not-for-profit housing associations have finite capacity and resources to remediate buildings each year, so any proposal to increase their liability for remedial works may add more years to their programmes. 

 

A system that is risk-based and evidence-led

The NHF firmly supports a risk-based and evidence-led approach to assessing and managing risks in buildings. Safety must be the very first priority. The sector has followed government guidance very closely ever since the fire at Grenfell Tower.

 

The government expects that the use of a new specification from the British Standards Institute – PAS 9980 – to assess risks in mid-rise blocks will lead to fewer buildings falling into scope of the crisis. It is much too early to tell if that assumption is correct.

 

The Department for Levelling Up, Housing and Communities (DLUHC) has carried out its own survey of buildings between 11 and 18m to understand what proportion of blocks in this category may need extensive remedial works. We urge the Department to release this data to support fire engineers’ and building owners’ decision-making.

 

Potential impact of the announcements and the effect on wider social housing policy

Speed of delivery

Clarity and certainty have always been at the heart of delivering swift resolutions where buildings are found to need remediation works.

 

The Secretary of State’s announcements have been an important step on the journey to resolving this crisis. It is vital that the negotiations with those companies that are responsible for the country’s building safety issues result in urgent and decisive action to end the misery leaseholders are experiencing and ensure people are safe in their homes.

 

We urge the government to ensure that its building safety policies remain tenure blind, so that resources for inspections and remedial works are directed first to buildings that need them most.

 

Building and improving social housing

The Secretary of State recognises the unique position of registered providers of social housing in this crisis.  We welcome his statement in the House of Commons on 10 January that delivering new social housing and improving existing homes is a “core mission” of the department.

 

Housing associations are already remediating buildings and will continue to do so on buildings that present a risk to residents’ safety until the work is complete. These not-for-profit organisations are covering the costs of work on homes where social renters live.

 

This work is likely to result in a multi-billion pound bill for the sector which means housing associations having to divert resources away from other key areas of their work, including building new homes, making routine improvements to existing homes and meeting their sustainability ambitions.

 

Research we published in October 2021 showed that more than 1 in 10 (11%) new affordable homes to rent and buy in England can no longer be built over the next five years due to the costs of making buildings safe.

 

In a blog on the NHF website, the Chief Executive of Evolve – a specialist provider of housing and support for people experiencing homelessness – describes the devastating impact of these costs for vulnerable people in London:

 

The cost of remediating Alexandra House, an 80-bed service for vulnerable homeless people, has been in excess of £2.5m. Because of costs like this, we have delayed plans to build 60 new units that will house families and single people without homes. The amount of money available for planned renovations and improvements across our existing services has also been reduced.

 

The same 106 housing associations that responded to our survey also said they are having to divert £730m away from routine improvement work, such as upgrading bathrooms or kitchens, to pay for essential building safety work.

 

A risk to the Affordable Homes Programme

A letter from the Chief Secretary of the Treasury to the Levelling Up Secretary was leaked to the press days before the most recent building safety announcement. The correspondence stated that if money isn’t recouped from developers, contractors and manufacturers that are responsible for the building safety crisis, it must be found from within the existing DLUHC budget.

 

The NHF and our members are concerned that this could put the Affordable Homes Programme (AHP) under threat, risking a further reduction in the delivery of affordable housing.

 

The NHF wants to work closely with the Secretary of State to consider how the housing association sector and government can work together to balance the shared objectives of building safety, the new supply of affordable housing and making improvements to existing homes.

 

 

February 2022