Written evidence submitted by the Leasehold Advisory Service [BSB 305]
Introduction
We welcome the opportunity to respond to the Committee’s call for evidence. We have identified below those questions which we consider relevant to our experience of leaseholders seeking advice and information on their rights and obligations; and, as requested, sought to address specific clauses of the bill.
This is an important development in housing legislation and we recognise its challenge in balancing protection of residents, liability, enforcement and cost.
We should add that we welcome the proposals for a New Homes Ombudsman and to enable social housing complainants to escalate a complaint to the Housing Ombudsman service directly by removing the current requirement to make their complaint via an MP, Councillor or recognised tenant panel.
Background
The Leasehold Advisory Service (LEASE) is an Executive Non-Departmental Public Body whose principal sponsor is the Ministry of Housing, Communities and Local Government. The Welsh Government also provides grant funding. LEASE works at ‘arm’s length’ from both English and Welsh governments as an independent organisation.
Our mission is to empower leaseholders and Park Home owners through initial advice and information to engage more confidently with third parties like freeholders and site owners.
LEASE has a long history of responding to policy consultation and inquiries, this includes in 2018 responding to the Committee’s inquiry into Leasehold Reform; and in 2019 to MHCLG’s “Building a Safer Future: proposals for reform of the building safety regulatory system, Consultation Paper”.
Submission
1.0 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?
1.1 Clauses 61(1) and (2): It appears that the definition of the “accountable person” embraces management companies under a tripartite lease but it does not appear to cater for the situation where some of the dwellings in the building are not on long leases.
1.2 Clause 61(3): Works to rectify building safety risk (such as the presence of combustible cladding) may not fall into a category of repair or maintenance obligation. The Committee should consider whether this part of the definition of the accountable person needs to be re-visited.
1.3 Clauses 62(3), 64(3), 67(5), 81(3) and 90: We note sanctions for non-compliance by the accountable person with some of their duties are liability on summary conviction or on indictment to a fine or imprisonment or both. We further note that there is a duty on the regulator to enforce the provisions of Part 4 of the draft bill which include the duties of the accountable person. If it is intended that the process for sanctions should be less resident-led and with more involvement by the regulator this may have advantages. Our experience of sanctions is usually as advisers to leaseholders enforcing breaches of Sections 21 and 22 of the Landlord and Tenant Act 1985 which could lead to a conviction for a summary only offence. Pursuing a prosecution in the magistrates’ court is resident-led and subject to a time limit for commencing proceedings which in our experience is liable to be missed. We understand either way offences such as those in the draft bill are not subject to a statutory time limit for commencing proceedings. However, the regulator lies within the Health and Safety Executive whose Enforcement Guide states that, in all cases, this should be done as soon as possible. Generally, we hope the anticipated and active involvement of the Regulator will ensure the sanctions will be strong enough on those who do not meet their responsibilities.
2.0 Will the Bill provide strong mechanisms to ensure residents are listened to when they have concerns about their building safety?
2.1 Clause 82(1): We welcome the obligation on the accountable person to prepare a Residents’ Engagement Strategy to promote the participation of residents and flat owners in the decision-making about safety in their building.
2.2 Clause 82(3)(5) and (7): We await any regulations making further provision about the content of a strategy and note what the strategy must include and that a copy of the strategy must be supplied to each resident. We consider that more input is needed from residents into the content of the strategy both whilst it is being prepared and when it is being revised.
2.3 The Residents’ Engagement Strategy is a key development for the future of building safety. Sight of any further regulations in due course will provide a clearer view on the strength of the mechanisms to ensure residents are listened to when they have concerns about building safety.
2.4 Our experience is that leaseholders value communication free of jargon, provided regularly and meeting their diverse needs. This should be reflected in any engagement strategy.
2.5 We can see from paragraph 633 of the Explanatory Note the possibility of Good Practice Guidance supporting these provisions and LEASE is happy to offer its involvement in devising this guidance. We also consider that leaseholders should be properly educated to understand basic building safety issues to make residents engagement more effective.
2.6 Clause 83: We await sight of the regulations setting out the further and more detailed safety information/documentation that can be obtained by flat owners and residents on request and note from paragraph 638 of the Explanatory Note what they are currently envisaged to comprise including full, current and historical fire risk assessments.
2.7 Clause 84(3) and (4): We await the regulations in relation to the complaints process and system and note in sub-clause (4) what ought to be provided for, but not limited to, in the regulations. Nevertheless, we recommend that consumer representatives and property management redress providers in the private and public sector are asked to input into this to ensure that residents have a transparent, clear, and effective complaints process
2.8 Clause 85(2)to (4): We await the regulations setting out the detail on the requirements for the establishment and operation of the Building Safety Regulator’s complaints process and system and note what ought to be provided for but ,not limited to, in the regulations. In addition to consulting the Building Safety Regulator’s residents’ panel before the system is established, or before making any significant change to the system, we consider there should be input from the aforesaid property management redress bodies
2.9 Clause 86: We note the duties placed on residents of higher-risk buildings and consider that in promoting resident engagement it would be helpful if a detailed list were provided of the items covered by those duties such as, in the common parts, sprinklers, fire alarms, smoke alarms, warning notices and sprinklers.
3.0 Is the Government right to propose a new Building Safety Charge? Does the Bill introduce enough protections to ensure that leaseholders do not face excessive charges and that their funds are properly managed?
3.1 Our experience is that leaseholders are content to pay where they recognise value for money. It is key therefore that the building safety charge can be readily identified and its value for money apparent to leaseholders. In this regard the regulator’s oversight will need to be swift and helpful.
3.2 Clause 88/17A(2)(b)(ii), (c) and(d): There are various instances where the landlord has a duty to co-operate and it would be useful to have some published guidance with practical examples of what such co-operation means.
3.3 Clause 88/17A(2)(e): Residents would be assisted by the clarification of the expression “reasonable steps”. Does it go as far as, or fall short of, applying for judicial review if any grant or other funding is not made available? Is it intended to mean just filling in a form and providing information and/or documents to prove eligibility for funding?
3.4 Clause 88 /17A(3)(b) and (4): We recommend any person authorised by the landlord in writing to enter the dwelling should be properly vetted and carry identification.
3.5 Clause 88 /17B: The definition of a long lease is similar to that for long tenancies in Section 26(2) of the Landlord and Tenant Act 1985 and we welcome the clarification that it includes a shared ownership lease whether or not the tenant’s total share is 100 per cent.
3.6 Clause 88/17B(1)(a): The definition of a long lease in Section 7(1)(a) of the Leasehold Reform, Housing and Urban Development Act 1993 also embraces those which can be terminated before the end of the term exceeding 21 years by notice given to the tenant/leaseholder by the landlord although we have rarely encountered landlord break-clauses in a residential lease.
3.7 Clause 89/17G: We note the concept of building safety charges which exists to ensure that certain building -safety related work and services are readily identifiable from the normal run of service charge costs and expenses. The building safety measures whose costs are embraced by these charges will be prescribed by regulations and we note examples of possible measures are given in the Explanatory Note at paragraph 674 and include the commission and production of the safety case and the resident engagement strategy. If leaseholders are expected to contribute to the costs of the engagement strategy, then it should be incumbent on the accountable person to ensure their input into the strategy.
3.8 Clause 89/17H(1)(b) and (2):We note the landlord may not require payment of the building safety charge unless they have provided certain information to the leaseholder, of which the most interesting is a budget for the annual accounting period including an estimate of the building safety costs to be incurred and of the charges payable by the leaseholder. This promotes transparency and is an incentive on the landlord to produce proper and informative estimates. It is important that clear, accurate information is provided to leaseholders and model specimen budgets and reconciliation accounts should be developed.
3.9 Clause 89/17H (3) to (5): We note that a demand for building safety charges cannot be served at intervals of less than three months which would be consistent with many leases providing for quarter day payments. Giving leaseholders the power to withhold payment of the building safety charge until any overdue budget, estimate or reconciliation account has been provided is an important incentive on the landlord to comply.
3.10 Clause 89/17J: There is a reasonableness limitation for building safety charges similar to that in Section 19 of the Landlord and Tenant Act 1985 for conventional service charges .In applying Section 19 courts and property tribunals have developed case law some of which has been protective of leaseholders.
3.11 Clause 89/17K and (L): We look forward to seeing the regulations setting out the consultation procedure and note the Tribunal has a dispensing power in any case if it is satisfied that it is reasonable to exercise it. We further note an agreement to appoint a building safety manager will not be a ‘qualifying building safety agreement’; and that there is an exemption from the consultation requirements if the works are “urgent cases” or the works/services are whilst the building is in special measures. “Urgent cases” are defined in Clause 17M (1) as meaning where works are required to be undertaken in response to a compliance notice or an urgent action notice issued by the regulator.
3.12 Clause 89/17V(4)-(13): We welcome the power to be given to leaseholders to inspect and copy documents evidencing compliance with the requirement on the landlord to hold building safety charge contributions held on trust in a designated account at a relevant financial institution. Will provision be made for such documents to be inspected remotely (perhaps involving a shared platform?).We also welcome the power to withhold payment of the building service charge if the leaseholder has reasonable grounds for believing this requirement is not being complied with and await regulations setting out the circumstances when such withholding may take place.
3.13 Clause 89/17W (3): There should be an obligation on local housing authorities to bring a prosecution if the evidence meets the required standard of proof and that such authorities should be sufficiently resourced to take such action.