Written evidence submitted by Victoria Robinson [BSB 166]

Introduction and reason for submitting evidence

I am a leaseholder at Gladstone Place in Bow, East London – a flat development built in 2014 with most of the buildings below 18 metres which has been identified as having unsafe cladding, as defined in the Government’s guidance released in January 2020. The freeholder and managing company of Gladstone Place (Clarion Housing) has announced their intention to pass on costs for remedial safety works to the leaseholders. They estimate the costs could be up to £10m and state that costs will be apportioned across all leaseholders. With around 200 properties in the development, each leaseholder will have to pay tens of thousands of pounds each - far beyond the means of myself and most other leaseholders.

I am submitting evidence because I believe the Bill, as currently drafted, does not give adequate protection to leaseholders in situations like mine, and will leave us facing unaffordable costs that will lead to people losing their homes and/or being declared bankrupt.

How well does the Bill, as drafted, meet the Government’s own policy intentions?

I do not believe that the Bill, as drafted, meets the policy intentions to improve building safety or to give residents a stronger voice in the system. This is because the bill allows freeholders to pass on all the costs of improving safety, including the costs of rectifying historical problems, to leaseholders. This will be unaffordable for many leaseholders and cause significant financial hardship, including potential loss of homes and/or bankruptcy. Although the Government has committed some funds to support the completion of these works via the Building Safety Fund (and the Bill rightly requires these funds to be sought before costs are passed to leaseholders) these are not available for buildings under 18 metres and also do not cover all the costs likely to be incurred. Leaseholders, particularly those who like me live in buildings under 18m, are therefore highly likely to be put in a precarious financial position. This approach will also lead to delays in completing safety work as the work will not be carried out until building owners have collected the funds. If leaseholders are unable to pay, building owners are under no obligation to pay for these works themselves and buildings will remain unsafe.

The Bill also fails to meet the Government’s policy objectives because it is heavily reliant on secondary legislation (e.g. defining a “higher-risk building”). This will leave the situation open to continual updates which could result in unpredictable costs, long delays and uncertainty. The results of an unclear approach to building safety can already clearly be seen in the mortgage and insurance markets where many leaseholders have already found themselves unable to remortgage or insure their properties owing to a lack of resolution to questions around building safety. For example, I am currently unable to remortgage my property because lenders require an EWS1 form; despite these being designed for buildings above 18m, lenders are now requiring an EWS1 for all flats because of the lack of clarity on the funding of safety improvements to these buildings.

Does the Bill establish an appropriate scope for the new regulatory system?

I do not believe the Bill establishes an appropriate scope for several reasons:

1. It fails to distinguish between future safety costs and the costs of remediating historical defects. The Bill should explicitly exclude liability for historical costs and prevent costs arising from failure on the part of others (e.g. inadequate Government regulation/failures in building control) from falling to leaseholders. For example, when the Gladstone Place development was built in 2014, the cladding used was deemed to be safe according to building regulation at the time. Since the Grenfell tragedy, the Government has updated the guidelines on cladding and Gladstone Place has now been ruled not to meet fire safety standards. I now face the prospect of having to pay tens of thousands of pounds to rectify this, despite this being the result of a change in government regulation, not any fault of my own.

2. It overrides the terms of existing leases – something that has previously been raised as a human rights issue in regard to the ground rents freeholders can charge to leaseholder.

3. It gives the Secretary of State power to change the scope of the Bill in future, opening the way for future costs that arise from changes to building regulation to be charged to leaseholders. The rectification of further defects discovered or brought in scope should be explicitly excluded from the building safety charge and clear guidance provided on who pays in this situation. Under no circumstances should this cost fall to leaseholders.

4. The gradual roll out of the regulation will leave leaseholders in limbo, particularly those in buildings between 11-18 metres, of which Gladstone Place is one. As neither the highest, nor lowest risk buildings, leaseholders of these buildings like me are already facing difficulties remortgaging, selling, and insuring their properties as we are unable to demonstrate the building meets the new safety regulation. The bill should include interim measures to protect leaseholders from increased costs and from being unable to access finance/mortgages.

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?

I do not believe the Bill provides a suitable system of accountability as it does not make housing developers liable for their actions. The Bill will make leaseholders pay for the failures of the developers who built and profited from these properties. The Bill should apportion responsibility fairly to include developers. It should also close the loophole that allows developers to cease trading to avoid liability, only to start up again in a new guise later on.

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?

Whilst the ringfencing of the building safety charge is a positive step, the Bill does not give sufficient protection to leaseholders from facing excessive charges. The Building Safety Bill Impact Assessment states that the bill “includes numerous powers to limit [the costs borne by leaseholders], ensure that they are reasonably incurred and exclude certain costs from being charged”. I do not see sufficient evidence of this in the bill. The impact assessment also states, “it is our intention that leaseholders should not face unaffordable costs and we are exploring options to mitigate these if they arise”. Again, I do not see any evidence in the Bill that an adequate solution to this has been found and this must not be left to secondary legislation.

As I have explained, in my own situation as a leaseholder at Gladstone Place, the freeholder (Clarion Housing) has notified leaseholders that unless government funding is provided, they will be charging us the costs of replacing unsafe cladding on the development. They have warned us that this could well run to tens of thousands of pounds per leaseholder. Within the Bill I cannot find any powers that would prevent Clarion from passing these costs on to us as leaseholder or that would limit these costs as there is no Government funding available for these works as the building is below 18 metres. According to section 89 of the Bill, as long as Clarion provide us with a budget for the building safety charge in a timely manner and apportion the costs appropriately across all leaseholders, they are permitted to charge the full costs to me and my neighbours and require us to pay within 28 days. Not only does the Bill leave me vulnerable to these costs and place an arbitrary and unachievable timetable on paying them, it makes it my legal obligation to pay them. This would force me and most other leaseholders at Gladstone Place into an impossible financial position, leaving us facing debt, bankruptcy, or loss of our homes.

To prevent this, any costs for rectifying historic safety defects must not form part of the building safety charge and further funding should be made available from the Government to pay for these remedial works. The current Building Safety Fund is only available to buildings over 18 metres meaning thousands of developments, including Gladstone Place, have no funding available and management companies will be unable to pay without passing on the costs to leaseholders. The Building Safety Fund must be extended to cover all affected buildings.

Additionally, the building safety charge should be subject to the same protections as all other services charges and subject to Section 20 consultations. Finally, the timeline of 28 days for payment should be removed.

Is it right that the new Building Safety Regulator be established under the H&S Executive, and how should it be funded?

I believe it is right to establish this Regulator and that it should be funded by developers. Leaseholders should not be charged under any circumstances. Passing costs to freeholders or management companies would only be acceptable if they are prohibited from passing on costs to leaseholders.

September 2020