Written evidence submitted by the National Federation of ALMOs [BSB 246]
The National Federation of ALMOs (www.almos.org.uk) represents all 30 ALMOs which manage around 413,000 council homes across 33 Local Authorities in England stretching from Cornwall to Newcastle. ALMOs were first established in April 2002 to provide housing management services on behalf of local authorities. They are not-for-profit organisations, wholly owned by local authorities, used to manage council housing. ALMOs are led by an independent board usually made up of a third tenants, a third council representatives and a third independents, around two thirds of ALMOs have a tenant board chair and/or vice chair.
ALMOs provide tenants with local, tenant-focused, and cost-effective housing management services. The organisations allow local authorities to separate out the day-to-day operations of housing management from the wider strategic role of local authorities. They have been responsible for delivering the vast majority of the government’s Decent Homes programme and have an excellent track record of delivering new council housing, building over 7,000 new homes in the last five years.
Many of our members manage existing buildings which would fall under the draft bill’s framework in occupation and some are building or planning to build new blocks of flats which would also be “in-scope” under this legislation.
Introduction
The NFA welcomes the opportunity to submit evidence to the Committee regarding the draft Building Safety Bill. This is an area on which we have worked closely with our members and MHLCG and feel we have insights which will be of interest to share.
Below we summarise the key points from our response to the Building A Safer Future consultation in 2019 and our views on the current draft bill.
Summary
The NFA welcomes the publication of the draft Building Safety Bill, which is the outcome of a significant amount of work by Dame Judith Hackitt and others in the Independent Review of Building Regulations and Fire Safety, MHLCG and a range of stakeholders across the housing and construction sectors. We feel the government has responded to some of our comments in response to their earlier consultation on Building a Safer Future: Proposals for reform of the building safety regulatory system, in particular, making clearer who the Accountable Person is and their responsibilities and that of the Building Safety Manager.
We also welcome the strengthening and clarity given to the resident’s duties within the bill. We believe these responsibilities and the powers of the accountable person and the building safety manager to ensure residents comply are critical to the effective working of this legislation and the intended outcomes of a safer environment for all residents in which to live.
We believe that overall, the Bill, as drafted meets the Government’s own policy intentions and highlight only a few areas where further clarification or amendments are necessary to ensure the intention can be implemented on the ground.
We believe that the requirement for the Accountable Person to have a resident engagement strategy provides a strong mechanism to ensure residents are listened to in regard to building and fire safety in general and that the right culture is put in place within the organisations accountable for the homes as well as those managing those homes regarding listening to residents. Other provisions in the bill then give residents sufficient options to complain to the regulator if they feel they are not being listened to when they have concerns about their building’s safety.
We believe that the Government is right to propose a new Building Safety Charge. Without this mechanism council landlords would not be able to fund the necessary works to maintain a safe building for all residents. We believe that council leaseholders are protected from excessive charges through existing legislation and working practices. Council landlords do however operate in a different financial regime to other private sector landlords or even housing associations and we detail below a number of areas where we believe some exceptions should apply to councils as landlords as they are covered by alternative arrangements that protect the leaseholder from excessive charges and ensure funds are properly managed.
Issues for ALMOs
Part 4 of the bill which covers building in occupation is the most pertinent to our members and there is much to welcomed in this section, including
The Government are also taken forward reform in related areas such as strengthening the Fire Safety Order so it is clear flat entrance doors are included in the common parts and new rules on having personal evacuation plans in place for residents who request and require one. We believe that these measures together will assist our members in properly managing their high-rise blocks and working with residents to ensure everyone is living in a safe environment.
Definition of Roles
Section 61 sets out the definition of the Accountable Person. We believe that this clarifies that where the council own the buildings and the ALMO manages them on their behalf the council will be the accountable person but the ALMO will be the accountable person for any homes it owns itself.
However, although the draft bill has better clarified who the Accountable Person is in our situation and the role of the Building Safety Manager, in reality where a council has an ALMO managing its stock on its behalf many, if not all of the duties the Accountable Person has would ordinarily be undertaken by the ALMO.
For example many of our members will be best placed to either develop a Safety Case Report for each in-scope building they manage which then goes to the council for review and approval or to assist with developing a Safety Case Report which is then signed off by the council. The requirement to produce a Resident Engagement Strategy will always be best lead by our members as this is their area of expertise and central to their work across all housing management functions.
During discussions with MHCLG officials it was suggested that although the Council, as the Accountable Person would remain “accountable” for those requirements and have to set up methods for reviewing and monitoring compliance, it could delegate the actual carrying out of those duties to its ALMO. We would ask that these sorts of arrangements are outlined as being acceptable in either the bill itself or the explanatory notes that accompany them. We would argue that it will not only be Councils with ALMOs who will require this sort of arrangement but any landlord who then contracts out the management of the block to a managing agent, in the public or private sector. In our sector the management agreement would be a good route to make clear the delegations to the ALMO and the ultimate accountability and oversight of the Council.
Resident’s Duties
Further to its consultation on these proposals last year we believe that the government, in section 86, has gone a long way to ensuring that resident’s duties are clearly set out and that the accountable person (or building safety manger on their behalf) has more powers to ensure their compliance than previously. The accountable person can issue a notice to comply and set out the steps they will take if that notice is not complied with. The county court can then make an order if necessary, requiring the resident to do or not do a specified thing.
The term “relevant resident’s item” which is covered by this duty, means any electrical or
gas installation or appliance in the dwelling that the resident owns or controls and is not under a duty of repair by someone else, “relevant safety item” means anything that is in, or forms part of, the common parts and is intended to improve the safety of persons in or about the building in relation to a building safety risk. These terms look like they cover the relevant items our members would be concerned about.
However what our members would like to see is an explicit expectation that leaseholders in an “in-scope” building would have to supply the freeholder with annual gas and regular electric test certificates in order to show that they are compliant with the regulations. It makes a nonsense of ensuring that council tenanted flats are 100% compliant with their safety tests if up to half or more of the block is unknown. The explanatory notes to the Bill suggest that (rather than the certificates being routinely supplied) if the Accountable Person has reasonable grounds for believing the boiler is not being kept in good working order, they can serve a notice to require the leaseholder to have the boiler checked by an engineer – therefore it seems provision would be reactive / on demand, rather than routine and proactive. Making the process of providing satisfactory certificates mandatory would remove the ambiguity which currently exists and would ensure all properties within buildings in scope are compliant in this regard.
Although this requirement may appear to some to be unnecessary our members have experience of many instances where leaseholders have no regard to health and safety issues within their flat. Examples of these sorts of issues are still persisting post-Grenfell when you would expect residents to be more aware of the seriousness of issues within tower blocks on fire safety indicate there is still a lot of work to do to educate people and make them comply. For example, Nottingham City Homes are putting sprinklers in all their tower blocks at the moment and discovered some compartmentation comprised by utility company and plastered over so no-one knew. They rectified it but a few weeks later it was knocked through again. Manchester City Council are also putting in sprinklers in tower blocks and discovered a leasehold flat where they had removed all of the internal walls which were part of the fire safety structure. They have insisted the leaseholder re-instate them but they have refused, it has been to court but the judge refused a forfeiture of the lease even though this makes the whole block more unsafe for all its residents and would allow a fire to spread more quickly through the block.
Leaseholder charges
Section 88 is intended to make it easier to recover any costs associated with building safety work from leaseholders which is crucial for freeholders like the council to be able to fund the necessary works and this is generally welcomed as it means that there will be a mechanism for re-charging the cost of these works to leaseholders with non-improvement leases.
However, for council leaseholders the proposed accounting practices are more onerous than the current service charge legislation and the requirements of many of their leases. Public sector leases and the current service charge legislation have a different defined billing cycle than the one proposed by the draft Bill.
There is a requirement to introduce sinking funds or ringfenced trusts / monies specifically for the purpose of building safety works for possibly each block - this appears to be created for private sector block management as public sector accounting is transparent due to use of coded funds and does not use sinking funds as a rule. It would be helpful to have clarification that public authorities are exempt from the requirement based on open-book accounting already in place.
Recovery enforcement for non-payment of building safety charges rests with the County Court, whereas the determination and challenge route for service charges rests with the First Tier Tribunal. Therefore, it is possible that two routes of actions would be required against a single leaseholder for non-payment. Clarity is required regarding the role of the FTT and County Court in determining payment due and orders to pay building safety charges.
Definition of works – clear definitions of building safety works would be a useful introduction, to differentiate between normal capital works. We believe there is potential room for challenge if the Bill does not do so. A single scheme could cover a combination of revenue works, capital works, and building safety works – the consultation, billing, and recovery routes would then be defined by different pieces of legislation, potentially making the process complex and difficult to understand and administrate.
Insurance requirements
The implication from Section 77, is that it is the Accountable Person (i.e. the Council) who in the future is also required to have insurance to cover for operational building safety risks in addition to the physical buildings insurance already in place.
Normal arrangements within the ALMO sector seem to be that the cover provided by the Council insurers is limited to “damage” caused to the building. If a claim arose through lack of appropriate management of a block of flats, that claim would be passed from the Council to its ALMO (who are insured for this). It would be ideal if this point could be clarified – i.e. can the accountable person (the Council) fulfil its obligations around “adequate insurance” by ensuring that it insures the buildings and its Building Manager (ALMO) has adequate insurance for operational building safety risks?
In addition, many councils operate a combined approach to insuring the residential buildings they own. Some are insured with external providers, but others are self-insured. The approach varies from council to council and depends on what is affordable for each authority.
Where high-rise buildings are self-insured the draft Bill does not make provision for this in its requirements regarding buildings insurance and the need to produce a contract of insurance. We believe amendments will need to be made to allow for these accepted arrangements in the local authority sector.