Written evidence submitted by Ms Brady [BSB 102]
How well does the Bill, as drafted, meet the Government’s own policy intentions?
Whilst I appreciate that the government is taking action towards improving the safety of people’s homes, I belong to several groups of leaseholders, all of whom are extremely concerned that the Building Safety Bill will end up bankrupting them. Below, I am sharing both mine and their views.
Does the draft Bill establish an appropriate scope for the new regulatory system?
There are no clear definitions that separate ‘historical defects’ from future ‘building safety costs’ and future ‘improvements’.
Many of us are caught up in the Cladding Scandal and are mortgage prisoners of the EWS1 form. The thought that a new Bill is coming in which might make us financially responsible for the historical defects of apartments we bought in good faith, expecting that developers had built them correctly, is abhorrent. If we had purchased a car from a manufacturer and it was found to have safety defects, the manufacturer would have to pay to make it safe. The Building Safety Bill needs to make developers and building owners accountable for historic defects and not put the burden on leaseholders.
The draft bill gives the Secretary of State the power to change and bring more things in scope in the future. This means that rectification of any further defects discovered in future, which arise out of a failure of the regulatory regime or construction defects, which were not previously in scope, will be charged to leaseholders under the guise of building safety measures.
The scope of the buildings to which the Bill will apply will also cause problems. The gradual roll-out to existing buildings will take years and even a decade, by the government’s calculations. This will leave leaseholders in these buildings in limbo while they aren’t able to demonstrate that their buildings comply with new safety standards but still needing to insure, sell and re-mortgage their properties.
Will the Bill provide for a robust – and realistic – system of accountability for those responsible for building safety? Are the sanctions on those who do not meet their responsibilities strong enough?
The Bill does not place any responsibility on developers who have made significant profits from the current unsatisfactory regulatory regime. The only change introduced by the legislation that could affect the liability of developers is a change to the limitation period for claims to 10 years. This is completely inadequate and insufficient. The current building safety crisis demonstrates that many leaseholders are not aware of these defects until many years after the buildings were constructed and, in many cases, development companies have ceased trading. We are concerned that the Landlord and Tenant Act is being amended significantly to pass new building safety costs to leaseholders, but there are no significant changes to hold developers to account for building safety defects.
The Bill should introduce a developer bond/levy which should be used to pay towards historic remediation costs, similar to that which has been adopted in Australia.
The loophole which allows developers to build, sell leases and then immediately cease trading and reincarnate as new companies to prevent liability arising from future defects must be closed in law.
Will the Bill provide strong mechanisms to ensure residents are listened to when they have concerns about their building’s safety?
The introduction of resident engagement is a positive step, as is a system to make complaints and escalate them where necessary. However, the extent of mandatory engagement is limited and the subject of engagement is unclear.
Resident groups should be a requirement on all sites.
Right now the legal system is fundamentally skewed against leaseholders when trying to challenge building owners. Leases include clauses where, if challenged, leaseholders must pay the legal fees of the building owner and if they decide to withhold service charges due to problems not being rectified, they forfeit their lease and lose their livelihood.
Is the Government right to propose a new Building Safety Charge? Does the bill introduce sufficient protections to ensure that leaseholders do not face excessive charges and that their funds are properly managed?
The Bill allows building owners to circumvent current protections for leaseholders in order to recover building safety charges – i.e. paying within 28 days. This overwrites the terms of lease agreements and protections currently in place for leaseholders, which say that any charges over £250 must be subject to a Section 20 consultation. The Building Safety Charge bypasses the S20 process, and makes it very easy for building owners to bill huge extra charges to leaseholders without any consultation with leaseholders or due process, under the guise of building safety – and all are to be paid within 28 days, under threat of lease forfeiture.
Many first tier tribunal decisions already made show that any challenges to the Building Safety Charge by leaseholders are unlikely to be favourably considered by first tier tribunals, and leaseholders have no effective recourse to challenge these charges. The very short timeframe of 28 days places further burden on leaseholders to pay for building safety, which the government has previously said should be the responsibility of the building owner.
Table 36 of the Impact Assessment states a potential cost per leaseholder of £78,000, which excludes the costs of moving to the new regulatory regime. This is utterly unaffordable to the majority of leaseholders!
Even the weighted average cost of £9,000 will be too much for most leaseholders, many of whom will be first-time buyers or those needing affordable housing. In addition, there will be even more costs associated with moving to and maintaining the requirements of the new regulatory regime, all of which are currently passed on to leaseholders under the draft bill. This is unjust and at odds with the government’s proclamations that developers and freeholders should be paying to make buildings safe.
It is recommended that the costs of rectifying building safety defects, brought within scope in future by MHCLG or the Secretary of State, must not form a part of any building safety charge.
Any costs associated with the retrospective application of new, amended or newly clarified building regulations must not be made part of a building safety charge – it is this very principle which has caused the Cladding Scandal to arise and cause misery to millions of innocent people. The draft bill must be amended to clearly identify what is included and what is excluded from any building safety charge.
The arbitrary timeline of 28 days for payment must be removed.
Is it right that the new Building Safety Regulator be established under the Health and Safety Executive, and how should it be funded?
We believe the Building Safety Regulator should be funded by developers and not be funded by leaseholders in any circumstances.
Does the Bill present an opportunity to address other building safety issues, such as requirements for sprinkler systems?
We believe the bill should not indiscriminately mandate the requirements for specific measures such as sprinklers. In many existing buildings, sprinklers may not be possible to retro-fit. Mandating their installation without considering the specifics of the building will lead to such buildings not just becoming unsalable and unmortgageable in future, it will also lead to huge unaffordable increase in insurance costs for these buildings.
Putting in additional measures to address building safety issues in existing buildings such as fire alarms or sprinklers is welcome. However these measures have arisen because the buildings were constructed in an unsafe manner – they have not arisen out of the fault of leaseholders. Therefore, installation of additional safety measures such as fire alarms or sprinklers in existing buildings must be clearly described as an improvement to the building, for which the costs must be legislated to rest either with the freeholder, developer or government, not the leaseholder.