My Lords, it is a pleasure to follow the noble Earl, Lord Lytton, who has been at the forefront of the campaign to extend protection to leaseholders since the Building Safety Act was passed. I say at the beginning that I will miss the contributions to our debates from the noble Lord, Lord Stunell, who was a regular contributor to housing debates and spoke with great authority.
This group of amendments is for many leaseholders the most important, and it differs from the rest of the Bill. The rest of the Bill gives rights to leaseholders that they did not have when they bought their lease. This group restores rights that leaseholders thought they had when they bought the lease but have now discovered that they did not. That right was to live in a building that complied with the safety regulations at the time. These leaseholders took all the necessary precautions, employing professional people before buying, but now find that they are faced with unaffordable bills, unsaleable properties and, quite often, repossession. As the noble Earl referred to, the Sunday Times revealed that more than 15,000 residents have been forced to leave homes due to fire or fire safety defects. These decants are on the rise, with residents decanted from 21 buildings last year. Until these injustices are addressed, the Bill, with its new rights, is meaningless to those leaseholders.
I welcome the steps the Government have taken through the Building Safety Act, and I am grateful to my noble friend the Minister for patiently listening to me during our many meetings. But despite the steps forward in recent years, there is still a gap between
what the Government promised at the outset and where we are now. I will not repeat the quotes I gave at Second Reading but here is one I did not use, from Michael Gove:
“Most importantly, leaseholders are shouldering a desperately unfair burden. They are blameless, and it is morally wrong that they should be the ones asked to pay the price
”.—[Official Report, Commons, 10/1/22; col. 283.]
I will come back in a moment to those who fall outside the protection.
Amendment 102 asks for a progress report. It covers the same ground as my Amendment 101, which was down for Monday but which I was unable to speak to owing to an aggressive Covid jab over the weekend. I am grateful to Giles Grover and the team at End Our Cladding Scandal for their briefing.
According to the department’s own figures on overall remediation, of the 4,329 buildings identified with unsafe cladding, over half had not started remediation at the end of March this year—seven years after Grenfell. Only 23%, 976 buildings, have completed remediation works. Within that overall figure there are 1,501 buildings 11 metres and over in height that have life-critical fire safety defects and where developers have committed to remediate or pay to remediate, but over half have not started remediation. Some 1,001 of the developers’ buildings have not even been assessed.
Looking at the cladding safety scheme, there are now 1,105 buildings within the scheme after the pilot was launched in November 2022. Work has been completed on not one. Work has started on two and the rest are in various stages, the largest number being in “pre-application”. Nor am I reassured by the statement by the department:
“All residential buildings above 11 metres in England have a pathway to fix unsafe cladding, either through a taxpayer-funded scheme or through a developer-funded scheme, protecting leaseholders from these costs”.
Having a pathway is like a traveller having a map. It does not follow that he has begun his journey. Where there is grant funding, the money is not being disbursed at pace. Because of these delays, the department had to surrender nearly a quarter of a billion pounds to the Treasury last year. We need a firm grip and oversight of remediation through the available schemes—which have no visible oversight or co-ordination—and that is what Amendment 102 provides.
The rest of my amendments have broadly the same objective as those tabled by the noble Earl, Lord Lytton, while getting there by a slightly different route. They would ensure that the Building Safety Act operates as intended, as was the Government’s stated objective in the King’s Speech last year. On Amendment 96, on buildings under 11 metres, the department’s view was set out by the Minister, Lee Rowley, on 22 April:
“Of those, we can count on one hand where there has been a problem. We are working with each of those three buildings to make the progress we need to make
”.—[Official Report, Commons, 22/4/24; col. 636.]
Those three require full remediation but leaseholders are now reliant on the good will of their developer, without any mechanism in place to compel work to take place to the necessary standard. In Inside Housing on 26 April, it was reported that there are 586 homes under 11 metres in Barnet with defective cladding.
One 25% shared owner has a bill of £23,000, and this falls outside the Building Safety Act. The other 75% is owned by a housing association, Notting Hill Genesis, which has said that under the terms of the lease the shared owner is responsible for all remediation costs. Mortgage lending on buildings under 11 metres is still inconsistent. Based on data from four or five mortgage lenders, an EWS1 certificate was deemed to be required for mortgage valuations on approximately 2,000 low-rise flats last year, although the Government have said that it is not necessary.
Insurance in low-rise buildings is another quagmire, with several insurers mandating work as a requirement of providing cover. There are many cases of difficulties with insurance; I cite only one. Aviva was the only insurer that would give cover on one low-rise block, but on the condition that HPL cladding would be removed within an urgent timeframe of four months. The judge at the First-tier Tribunal hearings was satisfied that this was the case, having seen the correspondence. There was no means of funding other than leaseholders. Cladding was removed in 2022 as instructed. It has taken two years to raise funds to replace the cladding, with the replacement due to begin in February 2024. The total cost will be £45,000 per leaseholder.
I remain concerned over resident-owned—or enfranchised —buildings, which were referred to by the noble Earl, Lord Lytton, and are covered by Amendment 99. Last November the department issued a press release confirming that this Bill would
“include measures to amend the Building Safety Act 2022 to make it easier to ensure that those who caused building-safety defects in enfranchised buildings are made to pay”.
Five months later, it remains unclear what measures these will be. Those who were encouraged by the Government to take ownership and control of their buildings remain beset with uncertainty on how and when their homes will be made safe. They do not have the protection afforded to those who did not enfranchise. The same press release also said that the Government would ensure that
“the leaseholder protections are not unfairly weighted against those who own properties jointly”.
This is addressed in Amendment 100. This is known as the marriage penalty, whereby a couple owning four properties together do not have this part-ownership accounted for in the leaseholder protection, despite tax law recognising this pro rata weighting. A call for evidence on this was opened in early April. However, time seems to be running out for the Government’s commitments to be kept in respect of joint-owner leaseholders—unless my noble friend can tell me otherwise.
The Secretary of State has repeatedly expressed his desire to ensure that
“those with the broadest shoulders must pay”,
so Amendment 100 would also help those who invested in buy to let but whose shoulders are not broad. It would ensure that all received protection for the first three flats that they owned, rather than the current cliff edge, and introduce a leaseholder wealth criterion, which is the same basis on which freeholders and developers are tested to assess whether they have the means to pay. The department is well aware of the case of Malcolm in Salford, a leaseholder of a number of properties with a total value below £1 million, who
asked the department for help two years ago but has now been forced to enter into bankruptcy. Who will now pay his share of the remediation costs?
Finally, that amendment would end
“the distinction between qualifying and non-qualifying leases once prescribed conditions are met”—
once remediation is complete. This would ensure that the value of flats owned by leaseholders who are still deemed to be non-qualifying would be returned to somewhere near their market value without the severe impairment that non-qualifying leases currently suffer, even where no work is required.
Without this set of amendments, ordinary people across the country will still shoulder a desperately unfair burden, still face financial ruin and still be no closer to moving on with their lives, all at odds with the assurances that Ministers have given. I know my noble friend is sympathetic and I look forward to her reply.