By Martin Boyd
Martin Boyd is the chair of trustees at the Leasehold Knowledge Partnership. He is also chair of the enfranchised 243-flat Thames riverside, mixed use site Charter Quay, which is worth around £300 million
The ongoing tragedy that followed the Grenfell Tragedy
A report on the Building Safety Bill for those who do not want to read the 218-page bill, the 257-page explanatory note, the 106-page impact assessment or the other supporting documents and files.
Where are we at the moment
Four years after 72 people lost their lives in the tragic fire at Grenfell, the shockwaves continue to ripple through the whole housing market devastating the lives of hundreds of thousands of people.
Depending on which numbers you believe, we may have three-quarters of a million homes blighted by building safety issues, or it could be 1.8 million or maybe its 2.8 million.
The truth is we do not know. The government still has no idea how many under 18-meter buildings might be blighted, but does have some reasonable guestimates on the over-18 meter buildings
The inquiry into the Grenfell fire continues, but it is already clear that materials were used there, and at many other sites, that should never have been used. Some of those materials were certified as safe and are now deemed never to have been safe. Cladding systems were designed that should not have been agreed by architects, planners or fire engineers; costs were knowingly cut and perhaps most importantly residents’ views and safety concerns were actively ignored.
Yet nobody has been fined, prosecuted or even dismissed despite it being accepted there was a wholescale regulatory failure.
Instead, huge numbers of people now live in homes that are deemed unsafe and that they can’t sell. They face mental health issues. They may have been told that it will cost a fortune to fix their home. They may already be paying massive bills for insurance and waking watch. They may live in hope of government funding, or they may have had those hopes dashed.
Meanwhile, the government still pontificates on what should happen in what it regularly reminds us is “a very complex issue”.
Now the Building Safety Bill has finally arrived in Parliament. It is a Bill designed to implement Dame Judith Hackitt’s radical change of culture and bring about sweeping regulatory reform. It is meant to be something consumers would welcome, but instead they hate it.
This is a leviathan of a Bill. The Bill is so complex that it will take at least another two or maybe three years fully to implement.
The government trumpets cladding remediation as the biggest government investment in building safety. It fails to mention that not a penny may have been handed out had it not been for the years of campaigning by the leaseholders impacted. That is, leaseholders who simply bought a flat, after taking professional advice, who are now forced to spend their own time and money to get the government to “do the right thing”. Worth noting, too, that more than 50% of developers have been allowed “not to do the right thing” throughout the whole wretched saga, while continuing to be given government subsidies to build new homes.
Of the £5.1 billion pledged by the government, only a small proportion has been spent.
The government blames the sector for being slow to apply for the funds and for not sending in the right information.
The sector says the government approach has been to hide behind closed doors, and produce forms and processes that are akin to knitting fog.
Meanwhile, leaseholders have been kept in the dark: about which sites are most at risk; how much it is going to cost to remediate them; how long works will take. Officials have convinced themselves that to tell leaseholders would result in “security” issues.
Leaseholder’s stories are reported all over the press. ARMA and IRPM produce data quantifying the costs faced by leaseholders, which MHCLG dismisses as “misleading”. But somehow or other it is thought essential to keep the leaseholders in the dark.
As for the urgency post-Grenfell, instead of swiftly fixing the most at-risk sites, a third of private blocks of more than 18 meters high have their ACM cladding still in place.
The Building Safety Bill
Does the Bill address the problems. The short answer is partly yes but mostly no
The good(ish) parts in the Bill:
The Bill has a limited number of provisions that may help some leaseholders avoid the costs of remediation for historic defects which are not their fault.
1) An increase from 6 to 15 years in the right to bring action against developers for shoddy work is, in theory, good.
The problem is that the existing six-year rights now being extended were only a solution in certain circumstances with a limitation on the types of losses that could be claimed. LKP is only aware of a handful of sites less than six years old that had been able to use these rights
The Bill also makes clear that the 15-year rule is only available if it somehow does not impact the developer’s human rights – which, of course, they will or at least they will claim they will. The extension is only available if the developer is still in business – and, of course, many are not. It will only be available if leaseholders happen to have a couple of million pounds to take the developers to court and then wait some years for the lawyers to argue about whether the building did or did not comply with what Dame Judith Hackett accepts were deeply flawed regulations.
2) The Bill adds in s38 of 1984 Building Act that has somehow never been implemented until now. The s38 issue is a civil right to bring action against a failure to comply with regulations which again takes time money and effort.
This section of the law is obviously totally untested so will take years to test in the court with money the leaseholders simply will not have.
3) Good this has gone: There was a mistake in the draft Bill that would have allowed landlords to charge the leaseholder for historic building safety faults even if those repairs fell outside the terms of the lease under something called a building safety charge. This mistake has been removed. The new wording for the building safety charges now appears to allow “only” those costs which the bill adds for things like the cost of the building safety manager and the new safety improvements like the site information data the additional escape signage etc plus the contribution the site makes to funding the regulator.
4) Some or perhaps much of what is proposed is logical and should have been in place years ago. Leaseholders having the right to see safety information about the home they live in is hardly radical. It does not take a genius to work out that fire authorities having the right to have information about the safety-critical systems is a good idea.
The quite bad parts of the Bill
1) The new system for existing blocks will be expensive, will introduce new complexity and it is far from clear it will make a substantial difference to safety during the ordinary occupation phase rather other than during any substantial renovations. After four years of the government saying building owners need to do more to establish the safety of their buildings – and just as this Bill arrives – both Communities Secretary Robert Jenrick and Dame Judith Hackitt have said the sector is overreacting and that we should be proportionate. Some leaseholders will wonder if they have arrived in the land of Dr Dolittle and his two-headed Pushmi-Pullyu. Do we need to do more to make lots of buildings safe, or is everyone overreacting? Is their home worthless and dangerous, or should their lender and their insurance company and their managing agent just take some sort of chill pill?
2) The sector is now in full money-making mode from the changes.
RICS somehow deems its EWS1 survey system something that needs to be updated every five years, rather than when there are any substantial changes to the system.
The British Standards Institution (BSI) is introducing a new standard for assessing external walls, which means potentially an analysis will be in play.
The fire door specialists are looking forward to regular inspections that may be as often as every six months.
The very ugly parts of the Bill
1) A large section of the Bill is devoted to the mechanisms for introducing a new regulator who will validate the design and construction of all new high-rise homes. The regulator thereby takes over the roles of inspection, materials testing and approval. The regulator sets the standards that apply when flats are occupied and determines how various responsible, accountable, competent persons, and a building safety manager, interact with the people who pay all their wages – i.e the flat owners.
The regulator will operate through the Health and Safety Executive, a body that Dame Judith Hackett chaired some years ago. The government moves regulation from one government-endorsed body to another.
It upgrades the standards using the same body that failed to produce adequate standards in the past. The same people who were involved with the failed systems now advise on how to provide better systems. Those that criticised the past failed systems are excluded from the new systems
2) The Bill does nothing to increase the government’s powers to take action against developers or the producers of shoddy goods. It does nothing the lift that weight from the shoulders of the leaseholders. It does noting to address the huge increase in insurance costs. It does nothing to take away the deeply flawed waking watch system. It does nothing to remove the awful “independent” building safety advice EXPLAIN produced by Ken Knight and Roy Wilsher
3) The Bill photocopies sections of leasehold law that are known to be broken.
In 2014 the Competition and Market Authority reported on property management has one of its recommendations for the reform of section 20 major works schemes.
Three years of working group in-put to MHCLG followed: from the property tribunal, RICS, ARMA, barristers, social landlords, private landlords and LKP. All said radical reform of section 20 was needed. Nothing happened.
Now section 20 reappears in the Building Safety Bill. A broken system particularly for those in the social sector where landlords wrongly use what are known as “Qualifying Long Term Agreements” – the employment of building contractors for repairs and maintenance – where the only rights of leaseholders are to “make observations”. Observations that the landlord can almost always ignore with impunity.
4) The Grenfell inquiry demonstrated that the residents were aware of the dangers in the refurbishment long before the so-called experts. They were vilified for being critical.
Judith Hackitt said residents should be at the heart of building safety. The Bill does absolutely nothing to change the historic approach that landlords get to decide how residents will interact.
The law proposes a paternalistic system in which one of the building safety manager has to advise the regulator how he intends to engage with the residents. It is an appallingly weak piece of legislation produced by people who clearly have no knowledge of the issues or systems needed for effective resident engagement. Why is it even thought relevant that the building safety manager decides how to engage. The residents are the people who pay all the bills it should be for them to decide how they want the manager to engage with them and to do that we first need to change the rules so that residents can properly engage with themselves.
5) The need to change the rules on access to people’s homes had always been understood, but the new rules are another blunderbuss that seems to have come from the lobby that is happy for people to own a lease, but which still sees these properties as belonging to them. The law proposes that various people now have the right to enter your home at two days notice. If the resident refused for what may be a perfectly legitimate reason to allow entry immediately the landlord has the right to go to court and contempt of court can see a swift trip to prison. It seems odd how the law is always so keen to hand more power to those who have most power. but so slow to protect those who have least power. There are no protections in the bill for a potentially vexatious landlord who repeatedly demands access to your home.
6) The forced loan system is still missing for under 18-meter blocks. This ill-conceived idea was looked at by then Communities Secretary Sajid Javid’s team in early 2018 and rejected as not viable.
7) The levy proposal on housebuilders is mentioned but Treasury officials assert that £2 billion is all that ministers want to collect from the sector over 10 years. There is no certainty this level will add to the remediation pot or just disappear back to Treasury coffers.
8) There is consideration of things like removing VAT from remediation costs or prioritizing remediation on a risk basis.
There are a number of things in the Bill that are important changes.
However, the Bill has turned into a camel designed by multiple camel committees.
Industries that are far more dangerous and far more complex than housebuilding do not need to be regulated in the way this Bill proposes.
Looked at through a different prism, this is not a difficult problem to solve. If developers had been made more liable for their product years ago they would have built to a different – that is, higher – standard.
If homes were given the same protections as other consumer goods such as tumble dryers – we would not need this bureaucracy that creates a monster at the Health and Safety Executive. A google of Whirlpool tumble dryer recall tells you there are fixing for free machines made as long ago as 2004. Minister Lord Greenhalgh has twice felt it relevant to mention in Parliament that ear tweezers come with a lifetime warranty so why are we limiting the cover provided for flats to no more than we get for a garden fence.
To understand how the government squares the books, read page 4 of the impact assessment.
It says the Bill is expected to add £4-8.3 billion of actual costs paid by leaseholders over the next 15 years. But the Department has “hypothesized” that leaseholders will get £2-8.4 billion of “non-monetised” benefits to their mental health, and through the reduction in risk to their life from fire along with the fact that replacing shoddy products will mean they don’t need to be replaced in the future.