Clause 69 - Meaning of “Accountable Person” Etc

Building Safety Bill – in a Public Bill Committee at 10:00 am on 19th October 2021.

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Photo of Eddie Hughes Eddie Hughes Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities) 10:00 am, 19th October 2021

I beg to move Government amendment 41 in clause 69, page 85, line 34, at end insert—

“This subsection is subject to subsection (2C) (special rule for commonhold land).”

Photo of Peter Dowd Peter Dowd Labour, Bootle

With this, it will be convenient to debate Government amendments 42 to 51 and clause stand part.

Photo of Eddie Hughes Eddie Hughes Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

This group of amendments makes provisions on who the accountable person is for higher-risk building when the title to the building is held in commonhold. The commonhold association owns and manages the common parts of the building in accordance with the commonhold community statement framework. Amendment 48 ensures that the Bill is explicit in providing that where the title to the building is held in commonhold, the commonhold association will always be the accountable person for the building. That works to ensure that the building safety risk will be properly managed by providing that an accountable person is both identifiable and, more importantly, responsible when considering that building ownership type.

Amendment 49 aligns the definitions of commonhold land and commonhold associations with the Commonhold and Leasehold Reform Act 2002, thereby maintaining consistency across the interacting pieces of legislation. Amendment 41 makes consequential changes necessitated by amendment 48. Amendments 42 to 46 and amendments 50 and 51 are technical and deal with the definition of an accountable person in relation to higher-risk buildings, where the right to manage has been exercised. Currently, the Commonhold and Leasehold Reform Act 2002 provides that where the right to manage has been exercised by leaseholders, the right to manage company takes on all the management functions for a building under the lease. That includes the repairing obligations for common parts. By virtue of clause 69(1)(b), the Bill provides that a right to manage company will therefore become an accountable person for the higher-risk building. Amendments 42 and 46 ensure that when that is the case, a person who is an accountable person by virtue of clause 69(1) is now expressly excluded if all the remaining obligations in relation to the common parts are subsequently the obligations of the right to manage company.

The amendments clarify where the responsibility for building safety duties sit when the right to manage has been exercised, thereby avoiding any confusion where it may appear that there is more than one accountable person captured by the definition for the same common parts of the building. I point out to the Committee that where repairing obligations are not provided for under a lease, and do not therefore become functions of the right to manage company, persons will still rightly also be captured as an accountable person under clause 69(1)(a) or (b) for their respective parts of the building. That maintains a whole-building approach to building safety management.

Amendment 50 aligns the definition of a right to manage company with the existing definition in the 2002 Act to maintain consistency across the interacting pieces of legislation. Amendments 43, 44 and 45 make consequential changes necessitated by the changes made by amendment 42. Amendment 51 is consequential on the motion to divide clause 69 into two separate clauses. Subsection (3) will now form its own clause entitled “Part of building for which an accountable person is responsible”.

On amendment 47, the Committee will be aware that clause 69(1) defines an accountable person for a higher-risk building as

“a person who holds a legal estate in possession in any…of the common parts”.

However, in some complex leasehold arrangements it may be that the person who has the active repairing obligations for some of the common parts holds a legal estate in the building but does not have the legal estate in possession. Under the current Bill provisions, that would mean that those persons are not currently being captured as accountable persons but they should be, as they have the active repairing obligations for some of the common parts. The amendment addresses that issue by ensuring that where such leasehold arrangements are in effect, the landlord or superior landlord who has the relevant repairing obligations pursuant to a lease for any of the common parts will be accountable persons for those respective parts of the building. In that scenario, the person with the active repairing obligation will therefore be the accountable person instead of the person who holds the legal estate in possession in those common parts under clause 69(1)(a). The amendment gives due consideration to the whole building approach to building safety by ensuring that where a superior landlord or landlord is under a relevant repairing obligation for only some parts of the common parts, both they and the person with the legal estate in possession will be captured as accountable persons for their respective parts of the building.

Turning to the clause itself, the independent review concluded that having a clear and identifiable person with responsibility for managing building safety during occupation and maintenance was clearly necessary. Clause 69 enacts that recommendation, and creates the statutory definition that identifies who the accountable persons for occupied higher-risk buildings under the new building safety regime are. These accountable persons will have legal requirements under the Bill to ensure that fire and structural safety for their parts of the building are being properly managed in accordance with the new building safety regime.

Having clearly identifiable accountable persons is critical to managing buildings safely, enabling residents to feel safe in their homes and enabling the Building Safety Regulator to regulate effectively. The effect of this clause is that accountable persons could therefore be landlords, freeholders, right to manage companies, management companies or commonhold associations that are in charge of repairing the common parts of a building. The clause defines common parts to include the structure, exterior and any other part of the building provided for the common use of the residents.

Clause 69 allows the Secretary of State to make regulations to amend the definitions of accountable persons, to ensure that the new regime is adaptable and fit for purpose for many years to come. To provide further clarity to accountable persons about the areas that fall under their remit for the purposes of fulfilling their duties, the clause allows the use of regulations to define the parts of a building accountable persons are responsible for. The Government recognise that the success of the enhanced building safety regime rests with ensuring that it is clear where responsibility lies, so that building safety obligations can be adequately complied with.

Photo of Mike Amesbury Mike Amesbury Shadow Minister (Housing, Communities and Local Government)

Many of these amendments are technical tidying-up exercises, looking at the legislation coming through the other place at the moment on leasehold, ground rents and commonhold. In principle, these measures support that direction of travel on commonhold, but to get the new regime right, to stop the ping-pong of people passing the buck that we are all familiar with, there is still more work to be done on the accountable person—the principal accountable person. I noted that on, I think, Thursday 14 October, 200 factsheets were published by the Department. I know every Member on this Committee will have read them in great detail over the past few weeks.

The amendment tries to add some clarity, but again it relies on secondary legislation. The Minister mentioned the right to manage and commonhold, the relationship with the building owners and the demarcation of who will be the principal accountable person versus the accountable person. How will the disputes that will undoubtedly arise be resolved?

Photo of Eddie Hughes Eddie Hughes Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

I thank the hon. Gentleman for his questions. My understanding is that, if there is contention over who is responsible, the principal accountable person will first and foremost be the person responsible for the exterior of the building. That gives us an easily defined headline position, but, as he rightly points out, there is incredible complexity in English law when it comes to property ownership. It is good that the opportunity arises within the Bill to allow flexibility for the Secretary of State to redefine the accountable person, should it transpire that for some reason there is an entity that has escaped the clutches of this clause. Hopefully we have covered everybody now, given the complex amendments we have tabled; but, should the need arise in future, the Secretary of State has that flexibility.

Amendment 41 agreed to.

Amendments made: 42, in clause 69, page 85, line 35, after “person” insert

“(‘the estate owner’) who holds a legal estate in possession in the common parts of a higher-risk building or any part of them (‘the relevant common parts’)”.

This amendment and Amendment 46 provide that a person within subsection (1)(a) is not an accountable person if their repairing obligations in relation to the relevant common parts are obligations of a right to manage company.

Amendment 43, in clause 69, page 85, line 35, leave out “a higher-risk” and insert “the”.

This amendment is consequential on Amendment 42.

Amendment 44, in clause 69, page 85, line 37, leave out paragraph (a).

This amendment is consequential on Amendment 42.

Amendment 45, in clause 69, page 86, line 1, leave out “person” and insert “estate owner”.

This amendment is consequential on Amendment 42.

Amendment 46, in clause 69, page 86, line 4, at end insert “, or

(c) all repairing obligations relating to the relevant common parts which would otherwise be obligations of the estate owner are functions of an RTM company.”

This amendment and Amendment 42 provide that a person within subsection (1)(a) is not an accountable person if their repairing obligations in relation to the relevant common parts are obligations of a right to manage company.

Amendment 47, in clause 69, page 86, line 4, at end insert—

“(2A) Subsection (2B) applies where—

(a) under a lease, a person (‘the estate owner’) holds a legal estate in possession in the common parts of a higher-risk building or any part of them (‘the relevant common parts’), and

(b) a landlord under the lease is under a relevant repairing obligation in relation to any of the relevant common parts.

(2B) For the purposes of this section and section 70—

(a) the legal estate in possession in so much of the relevant common parts as are within subsection (2A)(b) is treated as held by the landlord (instead of the estate owner), and

(b) if (and so far as) the landlord’s actual legal estate in those common parts is held under a lease, the legal estate in possession mentioned in paragraph (a) is treated as held under that lease (and, accordingly, subsection (2A) and this subsection may apply in relation to it).”

This amendment provides that where, for example, a landlord of a person within subsection (1)(a) has covenanted to keep the common parts held by the person in repair, the landlord is the accountable person (instead of the person).

Amendment 48, in clause 69, page 86, line 4, at end insert—

“(2C) Where a higher-risk building is on commonhold land, the commonhold association is the accountable person for the building for the purposes of this Part.”

This amendment provides that where title to a higher-risk building is held in commonhold, the commonhold association is the accountable person for the building.

Amendment 49, in clause 69, page 86, line 15, at end insert—

“‘commonhold association’ and ‘commonhold land’ have the same meaning as in Part 1 of the Commonhold and Leasehold Reform Act 2002 (see sections 34 and 1 respectively);”.

This amendment, which is consequential on Amendment 48, defines “commonhold association” and “commonhold land” for the purposes of this clause.

Amendment 50, in clause 69, page 86, line 21, at end insert—

“‘RTM company’ has the same meaning as in Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002 (right to manage).”

This amendment, which is consequential on Amendment 46, defines “RTM company” for the purposes of this clause.

Amendment 51, in clause 69, page 86, line 23, leave out “subsection (3) or”. —(Eddie Hughes.)

This amendment is consequential on the motion to divide this clause into two clauses.

Photo of Eddie Hughes Eddie Hughes Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities) 10:15 am, 19th October 2021

I beg to move,

That Clause No. 69 be divided into two clauses, the first (Meaning of “accountable person”) consisting of subsections (1) to (2C) and (4) and (5) and the second (Part of building for which an accountable person is responsible) consisting of subsection (3).

The motion, which would divide amended clause 69, moves the power under subsection (3) into a separate clause, creating two distinct clauses. That is so that all the clauses relating to the identity of the accountable person are in one place, and the ability to make regulations to help identify the parts of the building for which the accountable person is responsible can be in the other.

Question put and agreed to.

Photo of Peter Dowd Peter Dowd Labour, Bootle

As a result of the Committee’s decision to divide clause 69 into two clauses, I now propose, in accordance with the precedent, to ask the Committee to come to a formal decision separately on the two clauses created. For the purpose of putting these questions, I think it will be convenient to the Committee to describe the two clauses as clause 69A and 69B, and to debate them together. When the Bill is reprinted after the conclusion of the Committee stage, these clauses and the remaining clauses of the Bill will be renumbered accordingly.

Question proposed, That clause 69A, as amended, stand part of the Bill.

Photo of Peter Dowd Peter Dowd Labour, Bootle

With this it will be convenient to discuss clause 69B stand part.

Photo of Eddie Hughes Eddie Hughes Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

We have already debated clause 69 in detail at an earlier stage. Therefore, I will briefly touch on the core functions of clause 69A and clause 69B. Clause 69A creates the statutory definition that identifies who are the accountable persons for occupied higher-risk buildings under the new building safety regime. Clause 69B will allow the use of regulations to define the parts of a building that accountable persons are responsible for.

Question put and agreed to.

Clause 69A, as amended, accordingly ordered to stand part of the Bill.

Clause 69B ordered to stand part of the Bill.