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Building Safety Bill must not leave behind leaseholders saddled with ruinous remediation costs

Building Safety Bill must not leave behind leaseholders saddled with ruinous remediation costs
4 min read

The Building Safety Bill will be a great opportunity for the government to commit to helping leaseholders whose homes are deemed not safe through no fault of their own.

Earlier this year, after several rounds of ping-pong with the Lords, the McPartland/Smith amendment to the Fire Safety Bill was defeated by the government. It was, of course, disappointing for me, but that was nothing compared to the disappointment felt by leaseholders up and down the country.

In the forthcoming parliamentary session, the Building Safety Bill will be introduced and that is to be welcomed. The 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 includes a number of protections, including allowing the government to limit what can be recovered from leaseholders. 

I am pleased that the MHCLG has carried out a survey asking for leaseholders’ opinion on the Leasehold Advisory Service and that the Treasury is running a consultation on the new Residential Property Developer Tax until late July. This tax is one of a number of measures announced by the government to fund remediation of unsafe cladding and provide reassurance to homeowners and restore confidence in the housing market.

Owners have been kept worrying whether they have poured their life savings down the drain on a flat that is worth much less than what they paid for it

While the Building Safety Bill will be important in protecting leaseholders in the future, leaseholders who have been affected by the cladding and fire safety defect crisis must not be forgotten, and a fair solution must also be available to them.

Hundreds of thousands of homeowners are facing financial ruin from the costs of remediation, extortionate insurance costs, and waking watch charges. Frequently, the size of the bills leaseholders receive are larger than the equity in the property. During the passage of the Fire Safety Bill, Ministers said the issue of leaseholders would be addressed in the Building Safety Bill. We will hold them to their word and remind them that protection must be for all leaseholders, not just for the leaseholders of the future.

The Building Safety Fund is a welcome intervention by the government. But as of the end of May 2021, of 2820 private residential buildings registered, only a quarter have proceeded with an application. Apart from those who are ineligible - for example, those whose homes are in buildings less than 18 metres in height - one-third of applicants are in limbo because they have no available evidence or insufficient evidence to allow verification, so still cannot complete an application for funding. And because one of the criteria for the application is each leaseholder’s commitment to meet remedial costs if their applications fail, most owners have been kept worrying whether they have poured their life savings down the drain on a flat that is worth much less than what they paid for it. 

Applications to the Building Safety Fund will close at the end of June 2021. The deadline extension will mostly benefit homeowners in buildings that need to supply further information to support their application. Given the time it takes to gather the documents required to proceed with an application for funding, many homeowners will likely miss out. 

The Building Safety Bill will be a great opportunity for the government to commit to helping leaseholders whose homes are deemed not safe through no fault of their own.

The government should reopen registrations and applications to the Building Safety Fund and extend the criteria to include buildings below 18 metres in height, so homeowners who fail to recover remedial cladding costs through insurance or legal action will not have to bear the costs themselves.

 

Royston Smith is the MP for Southampton Itchen.

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