Thank you for contacting me about protecting leaseholders from cladding remediation costs.
I am concerned by any suggestion that building owners trying to shift the costs and burden of responsibility onto leaseholders. Decisive action is precisely what is needed to end this cladding scandal, which is why I welcome the announcement of a further £3.5 billion in funding toward cladding remediation, bringing the total funding to £5 billion.
The Housing Secretary has confirmed that the Government will fully fund the replacement of unsafe cladding for all leaseholders in residential buildings 18 metres and higher in England, which have been independently judged to be the highest risk buildings. For leaseholders in lower-rise buildings between 11 and 18 metres, a new scheme will protect against unaffordable cladding removal costs through a financing arrangement where leaseholders pay no more than a maximum of £50 per month towards remediation when the building owner cannot pay for the work. Ministers are aware of the strength of feeling about the loan and I will continue to monitor the situation closely.
In its recent announcement, the Government is seeking to provide security to leaseholders and protect them against excessive costs. This funding should mean that banks and mortgage lenders have certainty that remediation costs for these buildings will be covered, and also balances the Government's commitment to help leaseholders while maintaining its responsibility to the wider taxpayer.
Indeed, remedying the failures of building safety cannot just be a responsibility for taxpayers. That is why plans to introduce a new Gateway 2 developer levy have also been announced, which will apply to developers seeking permission on certain high-rise buildings and is expected to raise £2 billion over a decade. This will help to ensure that taxpayers do not foot the bill for remediation and that large property developers contribute to the national remediation effort.
These measures will provide certainty to residents and lenders, boosting the housing market, and reinstating the value of properties. Work is underway with lenders and surveyors to make this happen.
Looking towards the future, new legislation is expected to be brought forward this year to protect future generations from similar mistakes and to prevent malpractice arising again. The legislation will seek to tighten regulation of building safety and to review the construction products regime to prevent malpractice arising again.
Taxpayer funding should not be the only means used to remediate buildings. In more than half of cases where Aluminium Composite Material (ACM) cladding is present in private sector residential blocks, the original developer or building owner has agreed to pay, or such costs are covered through an existing warranty.
The McPartland–Smith Amendment to the Fire Safety Bill
The Fire Safety Act has now passed into law and that it will clarify that the responsible person or duty holder for residential buildings must ensure fire risk is managed and reduced for certain parts of the building. These include cladding, balconies, windows and entrance doors to individual flats opening into common areas. I welcome the fact that this will provide fire and rescue services with the power to take enforcement action and hold building owners to account, further supporting residents.
I understand that during this piece of legislation's passage through Parliament, a series of amendments were tabled which sought to prohibit the passing of remediation costs on to leaseholders and tenants. While I understand that you would have liked to see them included, I do want to point out that these amendments, though well-intentioned, would not have protected leaseholders from all costs associated with building remediation, and would have delayed this legislation becoming law. More importantly, the Fire Safety Act does not have the required legislative detail which was needed to underpin the proposed amendments. These would have resulted in significant delays to the implementation of the Fire Safety Act and the crucial measures it puts forward to improve the fire safety regulatory system.
External Wall System 1 Forms (EWS1)
I know that my ministerial colleagues recognise the difficulties some people are facing on mortgages and expect lenders to do all they can to unblock these issues for leaseholders. The Government does not support the blanket use of External Wall System Review forms and encourages lenders to accept equivalent evidence that demonstrates buildings are safe for valuation purposes. Owners of flats in buildings without cladding will no longer need an EWS1 form to sell or re-mortgage their property – thanks to an agreement reached between the Government and the Royal Institution of Chartered Surveyors (RICS), UK Finance and the Building Societies Association.
Furthermore, the Government has announced nearly £700,000 to train more assessors, speeding up the valuation process for homeowners in cases where an EWS1 form is required. This training will be delivered by RICS from January and will mean up to 200 additional assessors will be qualified to carry out the EWS1 assessment within a month, 900 within three months, and 2,000 within six months.
I welcome the commitment to introduce a targeted, state-backed indemnity scheme for qualified professionals who are unable to secure indemnity insurance for the completion of EWS1 forms. I have been assured that further information on this scheme will be published soon.
Building Safety Bill
The Building Safety Bill will introduce a new era of accountability, making it clear where the responsibility for managing safety risks lies throughout the design, construction and occupation of buildings in scope. There will be tougher sanctions for those who fail to meet their obligations.
The Bill also includes provision for the building safety charge which is designed to give leaseholders greater transparency about the costs incurred from maintaining a safe building. These costs would otherwise be recovered from the annual service charge as per the terms in most leasehold agreements. The Bill includes a number of protections, including allowing the Government to limit the scope of what can be recovered from leaseholders.
Parliamentary scrutiny of any legislation is vital and I will bear in mind points raised by colleagues about this important Bill.
Under the new statutory terms, the landlord commits to the leaseholder to carry out the necessary measures, apply for any available financial support and observe the statutory requirements in relation to raising charges. In return, the leaseholder commits to the landlord to pay a fair share of reasonable charges and co-operate with the building safety regime. I was glad to learn that Ministers are particularly committed to scrutinising the issue of costs as the Bill is finalised for introduction.
Leaseholders should not have to worry about the unaffordable costs of fixing safety defects in high-rise buildings that they did not cause – and should be protected from large-scale remediation costs wherever possible.
The Building Safety Bill is due to be introduced after the recommendations of the Select Committee have been considered.
Non-cladding work costs
The Government is also addressing concerns about the costs of non-cladding building safety work. In the aftermath of the Grenfell tragedy, the independent expert panel recommendation was to focus on unsafe cladding, which is why the remediation of cladding has been at the centre of making buildings safe. Other defects in buildings are a matter for the building owners and responsible persons.
The Government intervention is based on independent advice and prioritises public safety and providing fairness both to leaseholders and the broader taxpayer, many of whom are not home-owners themselves.
Action continues to be taken to remove unsafe cladding, support leaseholders, restore confidence in this part of the housing market and ensure a situation like the tragic fire at Grenfell Tower never arises again.
Thank you for taking the time to contact me.
Craig Whittaker MP