We will now hear oral evidence from Councillor Jayne McCoy, deputy leader of Sutton Council and chair of the Housing, Economy and Business Committee of London Councils, and from Andrew Bulmer, chief executive of the Institute of Residential Property Management. For this session, we have until 11.25 am. Please will the witnesses introduce themselves for the record, starting with Andrew, remotely?
Andrew Bulmer, chief executive of the Institute of Residential Property Management. The IRPM is a professional body of 5,000 members who are qualified to various levels from level 2 to level 4. They manage big scary residential buildings, both leasehold and in the build-to-rent sector. We do not have firms as members. Our membership is confined to individual professionals.
Q Good morning and thank you for joining us. In the light of what you may have heard from leaseholders and other people who are affected by this crisis, do you believe that the scope of the Bill is sufficient?
London Councils feels that the scope of the Bill needs to be expanded. We think that the focus on height is a rather rough approximation of risk. As we know from experiences in Bolton, in Samuel Garside House in Barking and Dagenham, and in my ward, Worcester Park, we have had fires in buildings under 18 metres that would have resulted in loss of life if it had not been for luck—it was a matter of minutes. We know that there are fire safety risks in buildings under 18 metres. We think that height should not be the only approximation for risk.
We think all new buildings—so all heights—should be covered by the Bill. For remediation purposes, we think a risk assessment tool should be applied to look at the holistic assessment of a building. I think a tool is being developed in response to the Fire Safety Act that could be adapted and used for this measure.
In conjunction with the Fire Safety Act and noting that this Bill now extends its tentacles to below 18 metres for some limited functions—fire risk assessments and identification of a responsible person—the scope of the Bill is wider than it was and I feel it is a good place to start.
A lot of additional clarification is needed regarding the accountable person, the building safety manager and their responsibilities. A lot of detail is required. We need that detail and clarification because the industry, including councils in particular, needs to gear up to meet those responsibilities. Until they know what those responsibilities are, they cannot effectively gear up and commit the resources.
In particular, I would talk about the skills within building safety management. There is a lack of skills out there at the moment. There is a lack of resource out there at the moment. We cannot recruit as a council. My council cannot recruit to building control at the moment because people are not out there. Until we have clarification about what the skills are, and a framework for that, we cannot build up the capacity and skills needed. I would also flag that councils need the resources to be able to do that, because an awful lot of burdens are falling on councils.
I concur with the councillor. There is a lot of detail in the regulations, especially when it comes to the role of the building safety manager. We would like to see the regulations brought forward. They can either go in the Bill or be introduced promptly. Until then, we are operating a little one-handed. We are anxious to prepare and gear up for this, but without that information we are struggling.
That is one thing that is missing from the Bill; the other is protection for leaseholders from historical building safety defect costs. We understand that the Bill has to be written in a way that allows the reasonable costs of safety maintenance going forward to be recovered. That is fair and reasonable, but at the moment there is no protection for leaseholders from existing building safety failures that they did not cause.
Q The draft Bill is largely a framework Bill, sometimes referred to as an enabling Bill, which provides for key parts of the new regulatory regime to be established by delegated legislation and building regulations. Do you find that acceptable? Is enough tied down to get the secondary legislation done quickly enough? There is no timescale—just what is “reasonable”. Is that acceptable, or do you have any concerns?
We have some concerns. You are right that timeliness is key. It reflects the points that I made earlier about having time for industry to gear up. There needs to be a proper, informed transition period. That is London Councils’ view. There needs to be a transition period that allows time for the capacity to be built. It needs to be fully funded, and there needs to be prioritisation within it. Obviously, we are very keen to see the safety measures implemented as soon as possible, but there needs to be a prioritisation of high-risk buildings in the meantime. That goes back to a holistic assessment of those buildings. We think that we need a transition period of about five years, and we need that clarity as soon as possible.
I am relatively unexercised about whether it is done through enabling legislation or written in from day one; what I am exercised about is getting the regulations delivered quickly. We are trying to prepare for the future regime. Dame Judith Hackitt called for a culture change and we, as an organisation, are driving that hard into our membership. They are receptive, and wish to adapt and move to the new regime as quickly as they can. It is difficult to prepare without the information, so I am less concerned about the mechanism; I am just concerned that we need to see the rules.
Q The previous panel had a representative who owns the freehold of a lot of blocks. Andrew, you represent the property management sector. Both of you have painted a picture of the Bill causing investors to leave freehold ownership. In your submission, you said that the legislation as drafted could mean that there is nobody willing and able, particularly within residential management organisations, to take on the responsibility of residential management. I think you said that the freehold interest could revert to the Crown. What should be in the Bill to prevent that from happening?
I will lead with that one, Chair. I think that question was directed at me. I will come back to what needs to be in the Bill. The commentary behind this is that there is a clear and understandable push through the Law Commission and through the work being done by Government to vest the freehold or commonhold interest or the management of the development in the hands of the residents themselves, who thereby have democratic control over their development, and we find the logic of that compelling. The challenge is that it means those residents will be in charge of their own affairs. We can see in the example of Miami—the building that collapsed there—that the residents association was challenged in terms of its competence to manage the building safely. That does not mean that we abandon the adventure. I think we progress with it, but we progress with our eyes open and that means we have to support those directors.
I would like to see a support mechanism for directors who wish to actively manage their own affairs, so they can feel supported and get guidance where they need it. There would also need to be support for those directors in terms of quality assurance of their suppliers. For building safety managers, for example, it is important there is some form of a register of quality assurance. We would like to see the managing agents they will depend on being regulated as per Lord Best’s RoPA report.
In the Bill, there would need to be the option for directors to decide if they choose—purely optional—to appoint an external director to take on the role of the AP or principal accountable person. The danger is that lay directors will look at the risks involved, and they will all step back and not take up directorships. That is already happening and is already a significant problem.
Every property manager will tell you that it is difficult to get directors to come forward these days as the responsibilities become clear. When the responsibilities of the Building Safety Bill are made clear to those directors, we expect it will be difficult to get people to take up those responsibilities voluntarily, unpaid and without the necessary expertise or competence to fulfil them. The ability to appoint an external director would be likely to mean overriding the articles of association of the development and implying covenants into the leases to enable the external director to be paid for. It would require protections for leaseholders from a director who went rogue. These provisions would need to be in the Bill to enable leaseholders to outsource their responsibilities to a professional if they chose to do so.
Q We received evidence this morning from witnesses from the Health and Safety Executive. They described how they had been working closely with Government officials in developing this new framework. They said they had received assurances from the Government that they will get the resources and staff they need and they seemed to think that, on the whole, most of the new roles created under this framework were reasonably clear. That seems to me to be in reasonably stark contrast to some of the evidence we are hearing now. I am interested to hear from Jayne in particular on behalf of London Councils whether you have also enjoyed a close working relationship with Government officials in developing this framework, and whether London Councils have been given any assurances that they will receive the staff and resources they need to implement this new system.
Yes, London Councils and the Local Government Association have worked with MHCLG all through the process since the Grenfell Tower tragedy to help shape the legislation. Obviously, a lot of the time we are responding to things, but we are trying to feed in and push. I would flag up at this point that London Councils would like to see a wholesale review of the building regulation framework.
At the moment, the Bill addresses and improves the existing regulation. We have been pushing quite hard for a wholesale review across all the legislation, which is a bit more in line with the Dame Judith Hackitt report. However, we have been working closely throughout to assist and get the best out of this, and, yes, we have been working with the Health and Safety Executive. We are quite pleased with our progress so far and the way it has been coming across to the HSE.
We would like to see a requirement that the HSE works with the local authority’s building control regulator, local councils and the fire authority in the first instance—that they call on their expertise—because that helps us as London Councils to build our capacity and resources. That is important, as are the resources to go with it, and I do not think we have had any firm commitments to those resources. We keep making the case that we are going to need to bring those resources forward. I would just emphasise that making this Bill deliverable and achieving its aims of improving building safety cannot be done without the staff and skills required, and we cannot upskill without the funding to do that. To make it practically deliverable, it needs to be fully funded.
Q You may have already covered this in your submission, Andrew Bulmer. We have covered the knowledge required for the responsible person, but is there a risk of duty holders struggling to access professional indemnity insurance?
The wider comment on the PI insurance market is that it is in serious difficulty, and has been for some time. Any professional who is giving advice on building safety, especially fire safety matters, is having their premiums either severely increased, cover withdrawn entirely, or significant restrictions placed upon them, so accessing any professional on a fire safety matter at the moment is problematic. You used the phrase “duty holder”: if that were to refer to an RMC, for example, I cannot comment on PI insurance for RMCs. I think that is something that requires further investigation.
Q I asked a previous witness a question about the duty to co-operate in mixed use buildings with complex ownership structures. The Government have incorporated a duty to co-operate between the different accountable people and responsible people under fire safety legislation, who can be different people in a mixed-use building. Will this suffice, or do you see problems arising?
I see problems arising in so far as it is complex, and I can see litigation taking place as to who is the principal accountable person. That said, I am struggling to see what a better model could be. We may have to live with the complexity.
Q Councillor McCoy, in relation to building control and buildings below 18 metres, are there any changes you would like to see in the Bill?
Yes, particularly in relation to the scope of buildings within the gateway scheme. At the moment, buildings that followed a permitted development are not covered by that, so we particularly want to make sure that all buildings are covered by the gateway process, otherwise a raft of buildings are out of that scope. It also needs to align with any future legislation: the planning reform White Paper contains some serious concerns for us, because it effectively puts swathes of large areas into permitted development and takes them out of the regime. The gateways have to apply to all buildings, or all new buildings.
This question is directed more to Andrew, and it is about residents having the ability to challenge the building safety charge. Is the Bill adequate if they want to make such a challengeQ ?
The building safety charge is problematic. The fact that payment can be demanded within only 28 days will make it difficult for a leaseholder to investigate and mount a challenge. You should not challenge until you have sought further understanding. Then, if you are not happy with the information that you have, you need to mount a challenge, but 28 days is not long, so there is a problem with that.
The building safety charge itself is a flawed concept and we would like to see it gone. Running a separate service charge regime means that there will be additional tasks, which means additional costs, and it will be the leaseholders that end up paying for that. Introducing a new regime also introduces a lawyers’ charter. The existing service charge regime is decades old. For many decades we have found ourselves testing the meaning of words in different circumstances, and much of service charge law is case law. If we introduce a new regime, we restart the clock.
Also, we have an existing service charge regime, which I know is not perfect—far from it—but health and safety matters will be included in that, so we will be in a situation where the resident will receive two different bills: the building safety charge for health and safety, fire safety and structural, and then another bill for a whole service charge, which will include other health and safety works, as well as any remediation that the building safety charge regime has brought up. The consumer will be nothing but confused while paying for a more expansive and complex regime. What I would prefer to see in the Bill is the existing service charge regime finessed in a way that brings more standardisation and clarity to the consumer about what the Bill includes.
Q I will direct my question to Andrew first and then Councillor Jayne McCoy. What do you think of the responsibilities placed on the accountable persons? Is it reasonable to expect all accountable persons to be sufficiently knowledgeable to assume the responsibilities in the Bill?
If you have a professional third-party landlord, it would be reasonable; that is their job. If you are a lay director of an RMC and you are the principal accountable person, you may be a highly intelligent and thoughtful individual—perhaps a surgeon or the lead violinist at the London Philharmonic Orchestra—but you are not a property expert. It takes two to three years to qualify as an IRPM member just to level 4, and it is a complex thing. I do not see how the majority of lay directors will truly have the knowledge and competence to be able to discharge their responsibilities. They will be heavily dependent on advisers. If we are going to be democratic and empower our people to be masters of their own destiny, which I support, we need to make sure that they are protected. I would like to see a quality assurance regime for the building safety manager and for property managing agents, who will be the go-to people for recommendations and for all matters property. I would like to see them regulated.
It is essential that there is an accountable person. Trying to find somebody to hold to account for some of the failings that have gone on has been problematic. There needs to be clarification about whether that will be an individual person. It can be an organisation or a representative of the organisation, particularly where councils are landlords, but we need to know who that person will be. Will it be the chief executive or the housing portfolio holder? We need clarification about who that should be. Obviously, they will need to be supported with expertise and skills, and I would expect them to rely on external sources for that expertise; it is important. There are also issues with special purpose vehicles, which have quite complex ownership. To ensure that the work is done and someone is held responsible for getting it done and for ensuring the building is safe, there needs to be a clear line of accountability.
Q Staying on the subject of accountable persons, they will need access to residents’ premises to fully discharge their responsibilities. How big a problem do you think that could be, and do you think the provisions on that point are appropriate?
That is a key concern of London Councils. We welcome the additional powers that have been put in here, but we do not think they go far enough, especially given that, when you are trying to deal with safety issues, you want to deal with them quickly. At the moment, if people are not co-operative, you have to take people to court and get the access that way. It places some responsibilities on residents, but for an accountable person to be fully accountable for the safety of the building, it has to cover all areas.
We have a problem currently. A leaseholder of a flat in a large building could have all sorts of problems within the flat that, in theory, compromise the safety of the whole building. No one can be accountable for that if they cannot even access the property, so we think that needs to be looked at and worked on with the industry in order to figure out how to address that problem. Without those powers, a person cannot really be held accountable.
We take a similar view. Ultimately, you are balancing safety against somebody’s right to deny access to their home, and Ministers must decide whether you have to have a court order to go in. That is how it is written now. Getting a court order can be slow, expensive and obstructive, but perhaps that is the right approach if we are to respect people’s rights to the privacy of their own home. From a property manager’s point of view, being purely selfish, it would be much easier if the Bill were written so that we could just go in, but we must recognise that that is potentially an infringement of liberty, and that is for Ministers to decide.
Q Engagement with residents will be a key part of this, particularly for the accountable persons. I have at times seen some very good engagement models, where residents feel they are in a partnership with property management, but I have also seen some pretty horrendous ones where that engagement is not representative of residents. Given your different perspectives and the different way you come in on this, how do you both feel we can maximise the resident engagement model? What interventions do you think Government can bring in to try to do so, to ensure an effective partnership between residents, property managers and freeholders?
Embedding a culture of the tenant’s or resident’s voice being heard is important. That is the key thing, and it is probably not addressed sufficiently in the Bill. We have heard feedback about ensuring that the tenant’s voice is there. The Government giving a strong line that the tenant’s voice should be heard is what the industry needs in order to listen. We think councils are reasonably good at doing that, although not all are perfect, but we want to protect and talk to our residents and tenants, and engagement is a key part of that. My view is that there should be a clear ambition and steer in the Bill that the tenant’s voice should be heard, so that any issues of fire safety raised are taken seriously, maybe with a formal process involved.
You use the word maximise; I would use the word optimise. We are working with HSE on the customer engagement piece, and it is quite interesting. We have voices that say, “We want as much communication as possible,” and others that say, “Actually, we don’t want to be communicated with all the time. Just go and do your job.” Different audiences and different individuals will want communicating with in different ways, so I think the challenge for the industry is how we communicate in a way that meets the various needs of our customers.
If you look back at property management through the ages—I am going back many decades—a property manager was a servant of the landlord. The culture shift towards consumerism within the leasehold sector is now all but complete. Long since now, property managers very much understand that it is service charge payers who are paying for the service, and that they are the customers. That is a culture that is well embedded now in the majority of the industry. While we have seen examples of poor practice—like you, I have seen them myself—the direction of travel toward good practice is encouraging. I can certainly say that our members will be keen to understand the outcomes of the HSE project on customer engagement.