Dame Judith Hackitt’s uninterest in leasehold tenure is like ‘wanting to build cars with no idea how they are driven’, says LKP

No engagement with leaseholders throughout the Hackitt review, Communities Select Committee is told

By Harry Scoffin

Dame Judith Hackitt, the government’s de facto building safety tsar, was criticised by LKP on Monday at the Communities Select Committee for not bothering to understand the governance of blocks of flats.

LKP had tried to interest Dame Judith Hackett, the former Health and Safety Executive chair who headed the post-Grenfell review into the construction, occupation and maintenance of England’s high-rises, into the legal structures underlying freeholds and leases as well.

LKP chair Martin Boyd told the committee: “When we first met Dame Judith Hackitt, at the very beginning of her work, and tried to explain the impact that leasehold will have on how a building is managed, her view was that she was not interested in tenure type and that her interest was only in building safety. Unfortunately, that is like saying you are interested in making cars, but not how they are going to be driven.”

Mr Boyd observed that the Building Safety Bill, which will enshrine in law Dame Judith Hackett’s final recommendations, was silent on what happens to the big and complex mixed-use schemes where each section of interest within a block may involve “two, possibly three or even more accountable entities”.

Mr Boyd said that it was unclear who will assume ultimate responsibility with the new state-backed regulator on sites characterised by multiple and possibly competing building landlords.

Mr Boyd is himself chair of the enfranchised, mixed-use Charter Quay, on Kingston’s riverside. He argued that Dame Judith Hackett had failed adequately to distinguish between the construction of a development from its occupation phase:

“There is no clear evidence of defective behaviour during the occupation phase. What has not failed so far is property management, as far as this Bill is concerned. We are not seeing buildings that are being damaged while they are running in a steady state. We are seeing buildings that have defects in the construction phase, and we have obviously seen the tragedy with the refurbishment that took place at Grenfell.”

By assuming properly built apartment buildings in their occupation phase to be inherently “dangerous entities”, the Building Safety Bill could undermine a transition towards commonhold and other democratic forms of flat living, argued Mr Boyd.

“There is also the problem that you have to make a number of these roles such that an ordinary person is able to take them on. Buildings are not per se dangerous entities. They are not oil refineries. We all live in buildings. We do not have a safety officer outside our front door, most days.

“We appoint a professional managing agent to make sure that they look after the building for us. As we move to an era of commonhold, we are going to have that as the de facto system that exists. A commonhold is collectively owned by the people who live in that building.”

Mr Boyd made specific reference to the way the Bill conceives sanctions, putting home owners, who bought their properties in good faith, on the same level as developers, architects, engineers and inspectors – those actually responsible for the design and building of flats.

Under the new building safety regime, a failure to comply with the Hackitt-inspired regulations carries up to two years in prison and an unlimited fine.

Yet future flat-buyers would not be able to bring a civil case challenging the original developer for selling them a defective building. There is a precedent for this in other jurisdictions, such as Australia.

LKP is calling for a 10 year new-build defects period as many residential blocks are sold to last for 999 years.

“Ordinary people do not have the right to take these criminal actions. Are we reliant on Dame Judith Hackitt to decide to take action?” Mr Boyd told the committee.

Mr Boyd’s concerns around the impacts of the robust regulatory regime on self-governing residential towers, where the third-party freeholder is removed from potentially compromising the structural integrity of the property through neglect and aggressive income extraction, was shared by Nigel Glen, CEO of the Association of Residential Managing Agents (ARMA).

Mr Glen, who is himself a leaseholder who gets to direct the managing agent on his site, said that he too would not agree to be the accountable person designated in the Bill, and thereby risk being slapped with criminal charges by the building safety watchdog.

He advised the cross-party group of MPs that lay directors should be permitted to outsource the accountable person role to a professional who had the risk appetite and insurance cover, but cautioned that they would still need to be remunerated, which means higher service charges.

These issues will only grow as Mr Boyd pointed out the Building Safety Bill lacks provisions for commonhold ownership, which is set for a revival after this year’s Law Commission report urged it as the “preferred alternative” to the unique leasehold system in England and Wales.

Cladding crisis reveals why freeholders are an impediment to any solution

Mr Boyd suggested that Dame Judith Hackitt’s influence on the Bill has had the effect of propping up the current “divide and rule” system, where blocks of flats are run as fiefdoms by investor freeholders, housing associations and managing agents. These professionals decide amongst themselves how much information may be given to the leasehold owners – even though their combined financial stake in a block dwarfs the value of the freehold and can amount to 98%.

Mr Boyd was scathing of the qualified chemical engineer’s record on resident voice:

“We can sum it up by saying that Dame Judith Hackitt’s approach to resident engagement throughout the whole of her project was that she has had no engagement with private residents whatsoever.

“We have never met her to discuss the issues she thinks are relevant to residents. That tells you her mindset. The way she looks at this is that she is going to set up a committee at some point in the future, as is proposed in the Bill, to decide how these residents should be engaged with. It is a very top-down approach.”

Safer and better managed high-rises mean “a culture change” with an end to residents being treated as children, he said.

“If we are going to engage properly with residents, we have to give them the resources to organise themselves professionally.”

Every block of flats should have a built-in residents’ organisation with none of the current restrictions on who can participate, said Mr Boyd.

He cited the fact that leasehold law prevents the rental tenant from joining the recognised residents’ association as a formal member.

Under LKP proposals submitted to the committee and housing minister Lord Stephen Greenhalgh, residents of all tenures and none would be empowered to have a greater say over the management of their homes without having to go through the rigmarole of being legally recognised.

Here is an example of an aggressive freeholder spending £74,000 on a QC to resist recognition of a Recognised Tenants’ Association:

West India Quay’s victory against £74,560 legal onslaught … for a recognised residents’ association

They would be freed from the bureaucracy that saw just five successful tribunal applications for recognition in the first year following a shakeup of the rules in 2018.

There would also be no room for stalling tactics and other game-playing from landlords.

Adriatic Land and HomeGround, part of the £1.8bn freehold fund Long Harbour whose chief executive Richard Silva appeared remotely before the cross-party group of MPs in the second session, for example, sat on a request by leaseholders of east London’s New Festival Quarter.

In a statement to LKP, leaseholders at the cladding site in Poplar said:

“In order to get the residents association recognised the leaseholders at the New Festival Quarter site in Tower Hamlets in London approached our freeholder (Adriatic Land) through its agent (HomeGround) back in 2018 following us finding out that the development had a cladding issue. Even though we had sufficient number of members the freeholder found various reasons not to recognise our association for approximately 1.5 years despite our persistence.

“It is unacceptable that the freeholders/managing agents are not properly regulated. Our estate is comprised of c. 500 flats – we feel that we don’t have many rights as leaseholders in this country and the freehold/leasehold regime is an anachronism which is heavily abused by the developers.”