BBC2 Newsnight devoted an entire programme last night to the building safety crisis – and how England’s leasehold tenure has made it worse – without a single appearance from a government minister or spokesman.
Conservative MP, Father of the House – and patron of LKP – Sir Peter Bottomley was interviewed on the programme, but he was critical of the four-year unfolding shambles that has blighted the lives of hundreds of thousands of flat owners.
The programme highlighted the personal miseries of the leaseholders caught up in the debacle, but linked it, too, to the wider issue of exploitative leasehold tenure and the uniquely disempowered status of leaseholders – long tenants – in England.
Regulatory failures and the chase to the bottom culture of house builders and their suppliers were also covered, to explain why the UK has ended up with such badly built blocks of flats.
(In truth, these have been built elsewhere, such as in Australia, where former premier of Victoria Ted Baillieu who headed the task force to resolve the crisis pithily told the leasehold APPG in July that “we have been building crap”.)
Perhaps the weakest section concerned the impact of the building safety issue on the wider property market and exposure of mortgage lenders.
LKP trustee, and former Bank of England economist, Dean Buckner has issued repeated warnings that the building safety debacle has the potential to develop into a serious banking crisis.
The residential property market has largely ignored the faltering performance of flat re-sales, as Covid savings, low interest rates and the stamp duty holiday created a surge in price inflation for houses. Newsnight did point out that flat sales on the other hand were markedly down.
LKP suggested that Newsnight interview Rob Perrins, the CEO of the Berkeley Group, or David Thomas, CEO of Barratt, to discuss the current market in new flats in the UK – their abysmal reputation – for safety, for unexpected build safety bills – is now widely known in the investor markets of the Far and Middle East.
The programme interviewed LKP trustee Liam Spender, a City solicitor, who quoted Robert Jenrick’s words that the building safety crisis was overdone and that many, especially low rise, blocks should not have been dragged into it.
He also deprecated – as have many on social media – the complete absence of a government spokesman.
“If the government is so confident of its case, then why isn’t it here to defend it?” he asked.
Martin Boyd, LKP chair, discussed the issue of leasehold tenure with Mick Platt, the managing director of ground rent investor Wallace Estates.
Mr Platt suggested that commonhold was OK for blocks of five flats, perhaps unaware that Mr Boyd is also chair of Charter Quay in Kingston, Surrey, a fully enfranchised 240-flat, Thames riverside site with complex commercial below including a theatre.
It ejected its freeholder management, retrieved £400,000 in excessive service charges and purchased the site’s freehold off proprietor Vincent Tchenguiz: so it is as close to commonhold as leasehold laws allow.
It was a shame to hear from Mr Platt, rather than from his boss hedge-funder Italian Count Luca Rinaldo Contardo Padulli – apparently based in Suffolk – who put together Wallace Estates ensuring that anonymous investors hitch a ride on the income streams from ordinary families’ homes.
Newsnight viewers were informed that leasehold is the peculiarity of England and Wales, whereas versions of commonhold are the norm in the rest of the world.
Among other participants was Lucy Powell MP, Labour’s shadow communities secretary.
She is the only senior politician to have held a forum of leaseholders, freeholders, developers, lenders, insurers, build safety experts and lawyers to discuss how the building safety disaster should be resolved.
It is a matter of urgency that government adopts a similar approach, rather than officials – eager to cover up past regulatory failings – guess at possible solutions which subsequently backfire (eg the much stalled forced loan scheme).
While Australia has largely sorted its cladding / building safety crisis, the UK has still not thought through what it should do – more than four years after Grenfell.