Clause 124 - Service charges in respect of remediation works

Building Safety Bill – in a Public Bill Committee at 11:45 am on 21st October 2021.

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Question proposed, That the clause stand part of the Bill.

Photo of Christopher Pincher Christopher Pincher Minister of State (Department for Levelling Up, Housing and Communities)

I welcome you back to the Chair, Mr Dowd. On the point raised by the hon. Member for Brentford and Isleworth about the late Emily Davison, if she is still resident here, she has rather a lot of back council tax to pay because she has been here for 108 years.

The Government are committed to ensuring that landlords exhaust all other avenues of cost recovery before billing leaseholders, and this clause puts that commitment in statute. It places a new legislative requirement on landlords to take reasonable steps to pursue other cost recovery avenues before passing on the cost of remediation works to leaseholders. We know that some building owners are not fully exploring all the cost recovery avenues and are passing costs on to leaseholders as a default. Many are, but too many are not. The clause will help to bring those unfair practices to an end.

The clause will enable the Secretary of State to prescribe the reasonable steps that the landlord must take, and how that landlord can demonstrate to leaseholders that they have taken them. Landlords will need to comply with guidance issued by the Secretary of State, which will provide clarity on the reasonable steps that the landlord must take. The guidance should act as an important resource for all leaseholders and landlords alike, providing clarity and transparency for landlords, and assurances for leaseholders that the requirements have been met.

The clause also requires landlords to provide leaseholders with details of the steps that they are taking and their reasons for their course of action. The Government will be able to prescribe in regulations the information that must be provided to leaseholders. That will mean that leaseholders have sufficient understanding of decisions taken about their building and why any remediation costs have been passed on to them. Landlords will be required to have regard to observations made by leaseholders or a recognised tenants association.

Photo of Selaine Saxby Selaine Saxby Conservative, North Devon

Could the Minister clarify whether the provisions on special measures will apply solely to leasehold blocks, or whether they will apply to rented commonhold blocks as well?

Photo of Christopher Pincher Christopher Pincher Minister of State (Department for Levelling Up, Housing and Communities)

They will apply to all appropriate buildings—my hon. Friend can take it as read that it is a wide definition.

The clause contains a power to define the scope of works that can be classified as remediation works for the purposes of this clause. That will ensure that the Government have sufficient flexibility to make sure that works defined as remediation works are those that are essential for ensuring that buildings are safe. We will define remediation works and relevant buildings in secondary legislation, and that will create scope to amend the regulations at pace, so that they remain relevant and respond to changes in our analysis of risk over time.

The clause is vital to ensuring that all possible avenues for funding remedial works are explored by the landlord and evidenced to the leaseholder before any remediation costs are sought from them. Leaseholders should not have to pay for works when there are other routes for funding. I commend the clause to the Committee.

Photo of Rachel Hopkins Rachel Hopkins Labour, Luton South

The Minister raises a pertinent point for many leaseholders in my constituency relating to cases in which builders, companies or developers have folded since they built a building. Those companies may have been originally responsible for remediation costs. I seek reassurance from the Minister that the need in the guidance and any regulations to explore every avenue will cover subsequent builders who took on folded companies or the relevant buildings. Just because the landlord cannot find the original company, or the company no longer exists and so that avenue does not exist, that is not an excuse for bundling the costs on to leaseholders. Those concerns have been raised with me and we need reassurance. I hope we will get that in any regulations and guidance.

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

I thank the Minister, and my hon. Friend the Member for Luton South for her contribution.

In principle, the clause seems to be a step forward, but in reality, it will hardwire into the Bill the injustice that thousands—indeed, millions—of people are familiar with: they are trapped in their properties, and the Bill will ensure that historical remediation falls on the shoulders of leaseholders. The Ministers and the Department have been in a difficult position because it looks as though the Treasury’s door has been closed to any further financial progress.

Photo of Ian Byrne Ian Byrne Labour, Liverpool, West Derby

Let me read out something to put in context what my hon. Friend says about hardwiring and what the clause does. Darren Matthews says:

“I am ruined. Shared owner (50% for £63,000) and in May was billed £101,500 for remedial works. Block 13.5m tall so doesn’t qualify for BSF but possibly new loan scheme that’ll take 161 years to repay. Madness!”

That is a perfect example of what we are talking about. The clause hardwires unfairness into the Bill. As my hon. Friend the Member for Luton South has just mentioned, many leaseholders will be in the same position as Mr Matthews. How can that be fair?

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

I thank my hon. Friend for his powerful and insightful intervention. He mentions the case study of somebody who is trapped in this nightmare, which the Ministers and the Department are very familiar with. I will give the Minister another example from social media; it is 47 minutes old. Lucy Brown is a leaseholder trapped in this nightmare that we are, hopefully, collectively trying to resolve. She wrote:

“15 months in the BSF”— that is, the building safety fund—

“application process. Our managing agent/FH”— that is, the freeholder—

“won’t agree to the BSF terms (likely those requiring the FH guarantee the works be done to an acceptable standard). The joys of the leasehold system—you own nothing, you control nothing + you pay everything.”

How will the clause solve the problem when that particular landlord—the freeholder in this case—has already decided that they have exhausted the process? The levy is thousands and thousands of pounds, and people are going bankrupt in the current climate. How will this move things forward?

Photo of Christopher Pincher Christopher Pincher Minister of State (Department for Levelling Up, Housing and Communities)

I am grateful for the questions that the hon. Gentleman and the hon. Member for Luton South asked. I will try to address them in toto.

The Government have already committed a significant amount of public money to the remediation of unsafe tall buildings—£5.1 billion—and I am sure we will discuss these matters further when we come to the new clauses tabled by various members of the Committee, so there will be several opportunities to come back to this point.

In the clause, we are attempting to change the Landlord and Tenant Act 1985 to allow leaseholders, under regulations, to ask their landlord to demonstrate that they have taken all reasonable steps to find means of paying for mediation before asking the leaseholders for the money. “Reasonable steps” could be: going back to the original builder; checking warranties; or—in the instance that the hon. Member for Weaver Vale raised—asking for grant funding through the various mechanisms that have been made available. If the landlord cannot reasonably show that they have done those things, the leaseholders can seek redress. It will be for the first-tier tribunal to determine whether those reasonable steps have been taken. There is plenty of case law to that effect. As we develop the regulations through secondary legislation, we will have a mind to exactly how those terms are defined.

Photo of Shaun Bailey Shaun Bailey Conservative, West Bromwich West 12:00 pm, 21st October 2021

Will statutory guidance be issued to landlords on what constitutes “reasonable steps”? If not, what engagement work will the Department do to ensure that landlords properly understand their regulatory duties under the clause?

Photo of Christopher Pincher Christopher Pincher Minister of State (Department for Levelling Up, Housing and Communities)

Yes, we will produce statutory guidance, and will consult on it. We will certainly make sure that we consult not only landlords but leaseholders on the guidance, so that leaseholders have input on what constitutes “reasonable steps”. I appreciate that not all leaseholders are legally savvy, so we will make that guidance as plain as possible, to allow them as much power as possible to seek redress when they need to.

Photo of Daisy Cooper Daisy Cooper Liberal Democrat Spokesperson (Education), Liberal Democrat Spokesperson (Health and Social Care)

Does the Minister recognise that throughout the Bill, leaseholders are not only being left to pick up the tab for these enormous costs, but are having to become lawyers to navigate complex statutory instruments that have not even been published, so that they can get their head around what “reasonable steps” might be? Once that guidance is published—it has not been published yet—there will be reams and reams of litigation, which can drag and drag, because there may well be a disagreement about what constitutes reasonable steps. Does he honestly think it is fair that leaseholders, who are entirely innocent and have done everything absolutely right, are being left to pick up the tab, and are having to become lawyers in order to understand the guidance and the clause?

Photo of Christopher Pincher Christopher Pincher Minister of State (Department for Levelling Up, Housing and Communities)

I am obliged to the hon. Lady for that point; I understand it, and the passion that she brings to the issue. We need to get this right, and to make the process as transparent and digestible as possible. She refers to reams and reams of litigation; if we get the guidance right by consulting the right people, including leaseholders and their groups, we can make it as simple, clear and effective as possible. As for applying to the first-tier tribunal, there is plenty of case law already, and the tribunal has experience of working expeditiously; we will try to make sure that that continues.

I am grateful to Committee members for their questions. Clause 124 is key to making certain that the landlord explores and evidences to the leaseholder—that is very important—all possible avenues for funding remedial works before any remediation costs are sought from the leaseholder. I commend the clause to the Committee.

Question put and agreed to.

Clause 124 accordingly ordered to stand part of the Bill.

Photo of Peter Dowd Peter Dowd Labour, Bootle

Before we come to clause 125, for the smooth running of the sitting, may I exhort Members to intervene when the Minister, shadow spokesperson or whoever is speaking is still on their feet? Secondly, may I also exhort Members to be clear if they want to intervene, especially if they are sitting behind the person they want to intervene on? It is the person speaking who decides whether to allow the intervention, not me. Thirdly, when Members intervene, can they keep it as short and sharp as possible? Otherwise, they should make a more substantive intervention in due course. I hope that is clear. Thank you.