The end is in sight for the long-awaited Building Safety Bill as each House’s amendments are considered prior to it being passed into law.
A number of proposed changes by Lord Greenhalgh, the Minister of State for Building Safety and Fire at the Department for Levelling Up, Housing and Communities and the Home Office, caused a particular stir in the industry in February 2022.
On 25 March 2022, we spoke to experts Nigel Glen, Executive Chair of The Property Institute and Bob Smytherman and Jonathan Gough, Directors of the Federation of Private Residents’ Associations (FoPRA), to get their take on the revisions.
What did Lord Greenhalgh propose?
Lord Greenhalgh submitted an amendment introducing a waterfall system whereby, in the first instance, developers will be expected to pay for anything safety-related in all blocks above 11 metres. In cases where the developer cannot be found or is no longer in existence, the cost would then pass to third party freeholders/landlords, but with an affordability criterion, before finally being passed onto leaseholders. The bill for leaseholders will be capped at £10,000 for those outside London and £15,000 for those in the capital, with exemptions for landlords with three or more flats. Following this, it was announced that qualifying leaseholders with properties valued at less than £175,000 (or £325,000 in Greater London) will now be protected entirely from other costs relating to historic fire safety defects.
What issues does this raise?
On 13 April 2022, the Government secured an agreement from the country’s 35 leading house builders to agree to pay for remediation of cladding on any building over 11 metres tall that they have developed over the past 30 years. But where does this leave other developers and manufacturers of cladding systems?
“Secretary of State, Rt. Hon. Michael Gove separately said that responsible manufacturers are all overseas, so we probably can’t go very far on that,” says Nigel. “But if the manufacturers can be held accountable, how will they and the developers agree on a fair share between them?” he asks. “And what if a developer has gone bust? From what we understand, the Secretary of State is then asking other developers to chip in [to cover those costs] even though they didn’t build it. And that’s expanded to no-fault issues, so if you take the cladding down and the walls have got a bit old – in the past, leaseholders might have had to have pay for that, now will the developers have to pay for those works as well?”
Jonathan and Bob concur: “Clear guidance is needed, so everyone understands what is covered. Cladding is only one element of the external wall system, and we know that problems have been found with other parts of the cladding system. Internal compartmentation is another significant area of concern. For example, remediating the outer skin but leaving problems with the internal compartmentation does not improve the safety of residents. Holistically solving the issues is key.”
What about landlords and leaseholders?
Similar issues are raised at the landlord stage. “Firstly, the landlords don’t see why they are expected to pay for something that wasn’t their fault – so they are reluctant to sign the Grant Funding Agreement (or allow their managing agents to sign on their behalf). Even if that were not the case, how the affordability issue is to be answered is unclear,” observed Nigel. “Can the landlord afford it? How would this work?”
If the landlord cannot afford the entire costs, they will be able to pass some of them to leaseholders. “It’s a lot of money, and the more your flat is worth, the more it jumps,” says Nigel.
“We don’t see how that works—or who polices it. It’s all very unclear. It would seem that what was once a clear route to remediating has now stopped dead, and we are right back to where we started: there’s potentially lots of money around, but nobody knows when it’s going to be available, from whom or how to access it. We are all rather standing like deer in the headlights at the moment trying to figure this out.”
Jonathan and Bob observe other issues: “The cost cap is not high enough. We are already seeing inflated construction costs, so what will happen once the cap is reached? Will the government fund the rest, and what mechanism will be in place to allow leaseholders to claim? Is the government proposing to extend the cladding fund and will help be available for the “layperson” to open a claim and manage large construction projects?”
How can the Government solve this?
“We just want clarity” explains Nigel. “Where’s the money coming from, when do we get it, how do we get it, and who’s going to put everything right? The problem is that it’s been put out there without the vast raft of detail underneath it, and we need the detail.”
Jonathan and Bob advise that a clear process should be published by the Government for leaseholders, outlining, as a minimum:
- What parts of a cladding system are covered by funding?
- Their approach to internal compartmentation problems, including those not part of the original build
- Guidance on what to do if the cost cap is reached
- What proportional action leaseholders can take to manage the risk whilst the building is being remediated
- Access to FREE impartial advice services
- Support for leaseholders to work together to take control of their own buildings
Though its exact provisions await final confirmation, the Building Safety Bill is sure to shake up the role of block managers, requiring even greater diligence towards maintaining and tracking the safety of a block and its residents. Fixflo’s block management solutions enable efficient management of assets and the automation of compliance, ensuring that important safety works never fall through the cracks.
