I was explaining to the Committee that an existing service charge has a line headed “Health and safety”. Under Schedule 8, that line will have to be removed and relocated under the new building safety charge—or it will appear again under the building service charge with an appropriate credit because you have already paid it in your safety charge. Crucially, leaseholders will have to bear the costs of running, in effect, another set of service charges. The noble Baroness, Lady Fox, touched on some of these issues in an earlier debate.
I have read Schedule 8 and the Explanatory Memorandum. While, as far as I can see, it does not expressly forbid the incorporation of the building safety charge with the normal service charge, the whole structure of Schedule 8 certainly gives that impression, because the Secretary of State is able to apply different dates for the building safety charge and the service charge; and he can specify different deadlines for paying the two charges and for landlords to respond
to requests from leaseholders. The whole impression given by these pages is of unnecessary, bureaucratic parallel invoicing processes, with all the business of reconciling accounts and all the costs to be borne by the leaseholders. I hope that the Minister will be able to assure me that this is not the intention and that it will be possible to incorporate the building safety charge into the service charge—and that the necessary amendments will be made if that is not the case.
On a related point, if you develop a building safety charge that is separate from the service charge, the entire body of case law that we have that relates to the service charge will not apply to the new building safety charge and we will have to start from scratch. So I very much hope that we can streamline the whole process and, with all the transparency that is necessary, incorporate the building safety charge into the existing service charge.
My other amendment is Amendment 131, which is very much a probing one. It is a continuing injustice that leaseholders are paying the costs of others’ mistakes. Some leaseholders have paid the full cost of remediating their buildings. For example, at Skyline in Manchester, they have had to pay the whole amount and have had to borrow substantial sums for remediation. Others continue to pay for waking watches and increased insurance costs. Ideally, there should be some means of compensating these leaseholders, who are, in the words of the Secretary of State, “innocent”. But I recognise the problems of retrospection, even though there are precedents.
This amendment requires the Secretary of State to commence a public inquiry to inquire into the costs of remediation and mitigating measures incurred by leaseholders after 10 January 2022 that are not otherwise recoverable through the Bill. The date of 10 January has been chosen because it is the date of the announcement in the other place about statutory protection for leaseholders.
The proposed inquiry’s aim would be to come up with methods of compensating affected leaseholders for the sums they paid after that date—which, as I said, are not covered by the Bill. Perhaps my noble friend can shed some light on exactly what protection is intended. There may be measures to stop freeholders pressing ahead now, before the Bill comes into effect, and passing costs on to leaseholders who would otherwise be protected. There are certainly leaseholders who think they have statutory protection now—but what about invoices received but not paid for work that is in progress? What about service charges payable when the next quarter begins on 1 April, possibly before the Bill has become an Act? There is a grey area here, on which some light should be shone, and I hope that in his reply my noble friend will be able to shed some illumination.
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I shall touch very briefly on two other amendments. My noble friend Lord Leigh of Hurley has tabled Amendment 94ZA to government Amendment 92. That would simply avoid the double payment of remediation costs, from which the freeholder would
benefit. If that protection is not applied elsewhere in the Bill, I hope that my noble friend the Minister will smile sympathetically on that amendment. My noble friend Lord Naseby has tabled Amendment 65, which excludes buy to let investors; I touched on that subject in an earlier debate.
Finally, I very much welcome the assurances that the Minister has just given in introducing his government amendments, especially the fact that he will go after associated companies. However, if I understood what my noble friend said, there is nothing for buildings under 11 metres. That exception seems difficult to reconcile with the principle that the polluter, not the leaseholder, should pay, and that leaseholders are innocent—and also with some of the statements made by the Secretary of State, which I read out on Amendment 24.
New subsection (3)(a) proposed by government Amendment 63 excludes freeholders who have enfranchised. I simply do not understand that. Those people are exactly as innocent as leaseholders who have not enfranchised. As my noble friend said in response to an earlier debate, the whole thrust of government policy has been to encourage enfranchisement. Yet here is the biggest disincentive to enfranchisement that we could possibly have: if people have enfranchised, they do not get protection from the Bill. I find that perverse, and difficult to defend. New subsection (2)(d) in government Amendment 64 excludes buy to let; I shall let my noble friend Lord Naseby deal with that.
Throughout his speech the Minister referred to cladding and non-cladding costs. But in government Amendment 66—which introduces a new clause entitled “Meaning of ‘relevant defect’”—subsection (2) says:
“‘Relevant defect’ means a defect as regards a building that … causes a building safety risk”.
There is nothing there about cladding and non-cladding, but I distinctively heard my noble friend, when he rattled through his opening speech, use the words “non-cladding”. I just wonder where in the amendments that distinction appears. I am sure it is there somewhere, but for the life of me I have not been able to find it. As I said, there was a lot in my noble friend the Minister’s speech that I want to look at and digest. In the meantime, I beg to move Amendment 56.